Kapoor’s Opioid Debt Is Over $300 Million, Prosecutors Say
Kapoor’s Opioid Debt Is Over $300 Million, Prosecutors Say
(Bloomberg) -- Insys Therapeutics Inc. founder John Kapoor and other former executives convicted of bribing doctors and lying to insurance companies to boost sales of an opioid painkiller should pay $306 million in restitution to insurers, federal prosecutors said in a court filing.
The former billionaire and four other ex-executives “defrauded and misled insurance companies to extract payment for these opioids,” the prosecutors said. “Defendants committed these crimes to boost profits, and did so at the expense of victims nationwide.”
The five would all be responsible for the total restitution. Prosecutors will address prison time in a subsequent filing.
Kapoor, the first chief executive of an opioid maker convicted at trial, was found guilty in May of a racketeering conspiracy that illegally drove sales of Subsys. The jury also convicted sales executives Michael Gurry, Richard Simon, Joseph Rowan and Sunrise Lee.
The scheme included operating an in-house call center whose representatives were trained to dupe insurance companies into covering the costs of the liquid opioid Subsys by claiming patients had cancer, the jury found. Jurors heard hours of recorded calls in which Insys employees misrepresented patient records.
Phoenix-based Insys filed for bankruptcy protection from creditors in June to deal with a wave of lawsuits and investigations over its handling of Subsys. The filing came just after the company agreed to pay hundreds of millions of dollars to settle a probe by U.S. prosecutors over its marketing of the highly addictive drug.
Insys then won a judge’s approval to have creditors vote on a bankruptcy plan that would pay them less than a 10th of the $997 million they say they’re owed. U.S. Bankruptcy Judge Kevin Gross, in Wilmington, Delaware, will decide whether to give final approval to the plan next month.
The government seeks restitution totaling about $170 million for commercial insurers, $137 million for Medicare and $10,198 for a handful of patients who paid out-of-pocket expenses and submitted claims. Of the total, Caremark should receive $76 million, the U.S. said, the largest amount out of seven insurers named as victims in the government’s restitution claim.
Kapoor, 76, the four other former executives, and the company’s former chief executive officer and an ex-vice president, who pleaded guilty, are scheduled for sentencing in Boston in January.
The case is U.S. v. Kapoor, 16-cr-10343, U.S. District Court, District of Massachusetts (Boston).
--With assistance from Riley Griffin.
To contact the reporters on this story: Janelle Lawrence in Boston at jlawrence62@bloomberg.net;Jef Feeley in Wilmington, Delaware at jfeeley@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Peter Jeffrey
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