RI Doctor Admits to Healthcare Fraud, Accepting Kickbacks for Prescribing Highly Addictive Version of Fentanyl

WASHINGTON — Dr. Jerrold N. Rosenberg, 63 of North Providence and Jamestown, R.I., the operator of a now-defunct pain management practice in Rhode Island, pleaded guilty in U.S. District Court in Providence, R.I., today to conspiring to solicit and receive kickbacks in connection with his prescribing of the drug Subsys, a fast-acting, powerful, and highly-addictive version of the opioid drug Fentanyl that is administered as an under-the-tongue spray, and to committing healthcare fraud.

“Doctors who engage in healthcare fraud violate their oaths and put greed ahead of their patients,” said Deputy Attorney General Rod Rosenstein. “The Department of Justice is relentless in pursuing healthcare fraudsters. Earlier this year we conducted the largest healthcare fraud takedown in American history, charging more than 400 defendants with $1.3 billion in fraud, much of it related to our country’s ongoing drug epidemic. Since then, Attorney General Sessions assigned a dozen experienced prosecutors to focus on opioid-related health care fraud. This conviction is another step toward our goals of saving taxpayer dollars and protecting the American people from deadly drugs.”

Subsys is manufactured by Arizona based company Insys Therapeutics, Inc. (“Insys”). This spray was approved by the U.S. Food and Drug Administration in 2012 exclusively for “the management of breakthrough cancer pain in . . . patients who are already receiving and who are already tolerant of opioid therapy for their underlying persistent cancer pain.” As a result, many insurance companies require a diagnosis of breakthrough cancer pain before approving coverage of the drug, which costs approximately $2,000 to over $16,000 for a thirty day supply.

Appearing before U.S. District Judge John J. McConnell, Jr., Rosenberg admitted to the Court that he participated in a healthcare fraud scheme in which he falsely and fraudulently indicated that his patients had breakthrough pain from cancer when they did not, in order to secure insurance approvals for prescriptions of Subsys. As an example, Rosenberg admitted that in 2012, as part of the scheme, he falsely claimed that one patient suffered from cancer pain from basal cell carcinoma. While the patient had in fact had a potential skin cancer lesion on his nose removed many years before, it had not recurred, and was wholly unrelated to his pain. Rosenberg admitted that, in total, the healthcare fraud scheme resulted in losses of over $750,000; in many cases, the cost of the drug was reimbursed, at least in part, by the Medicare program.

Rosenberg also admitted that, between 2012 and 2015, he conspired with Insys officials to receive kickbacks, in the form of purported speaker fees, from the manufacturer of the spray. Rosenberg admitted that he accepted these payments, which totaled over $188,000. In addition, according to court documents, Rosenberg’s son was a sales representative for Insys Therapeutics from June 2012 – September 2013 and made substantial amounts in commissions as a result of the defendant’s prescribing Subsys to his patients. Rosenberg admitted that the speaking fees he received from Insys were a significant motivating factor in his decision to prescribe Subsys to his patients.

Rosenberg’s guilty plea to healthcare fraud and conspiracy to receive kickbacks is announced by Deputy Attorney General Rod Rosenstein; Acting U.S. Attorney for the District of Rhode Island Stephen G. Dambruch; Phillip Coyne, Special Agent-in-Charge of the Boston Office of Inspector General for the U.S. Department of Health and Human Services (HHS-OIG); and Rhode Island Attorney General Peter F. Kilmartin.

“These provider kickbacks pervert medical decision making and undermine the integrity of government health programs,” said Phillip Coyne, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “We will aggressively work with both Federal and State Medicaid Fraud Control Unit law enforcement agencies to fight the opioid scourge.”

“Patients trusted Dr. Rosenberg to make medical decisions based on the best available treatment, not based on speaker fees, kickbacks and other financial incentives. He violated the law and his oath as a physician to do no harm when he placed greed over patient care, thinking little of the long-term consequences of patients taking this extremely powerful, highly-addictive opioid,” said Rhode Island Attorney General Peter F. Kilmartin. “Our office, working with our federal, state and local law enforcement partners, is committed to rooting out fraud and abuse in our healthcare system.”

Rosenberg is scheduled to be sentenced on January 16, 2018. The statutory maximum sentence with respect to the healthcare fraud scheme is up to 10 years imprisonment; a maximum sentence of five years imprisonment on the charge of conspiracy to accept kickbacks, followed by up to three years of supervised release and a fine of up to $250,000.00 on each charge. Under the terms of a plea agreement filed with the Court, Rosenberg has agreed to the entry of a restitution order in the amount of $754,736.48.

The case is being prosecuted in the District of Rhode Island by Assistant U.S. Attorneys Lee H. Vilker and Zachary A. Cunha.

The matter was investigated by the United States Attorney’s Office for the District of Rhode Island, the U.S. Department of Health and Human Services Office of Inspector General and the Rhode Island Department of Attorney General’s Medicaid Fraud and Patient Abuse Unit.