Kickbacks Come Back to Bite: NY Doctor’s Prison Sentence Intended to Deter Future Corruption

Last year, five New York doctors were indicted for taking money and other kickbacks in exchange for prescribing Subsys, the powerful fentanyl spray sold by Insys Therapeutics.  Four of them have now plead guilty, and last month osteopathic doctor Todd Schlifstein was the first to be sentenced.  A federal judge in Manhattan gave Dr. Schlifstein two years in prison, stressing the need to deter other doctors from similar conduct in the future.  At the sentencing hearing, Judge Kimba M. Wood noted that she was deeply concerned about payments from pharmaceutical companies corrupting a doctor’s care for patients.

At first, the judge’s emphasis on deterrence to other physicians may seem strange.  Many doctors may understandably think that respectable, honorable physicians like themselves don’t need a court’s reminder to ensure that they exercise independent judgment when prescribing medications—particularly highly dangerous and additive ones like fentanyl and other opioids.  “What does that have to do with me?” they may ask.  “I’m an experienced, responsible doctor. I don’t run a pill mill.  I’m nothing like those guys.”

The reality is much more nuanced.  Court records reflect that Dr. Schlifstein was not a stereotypical villain in the opioid epidemic.  He wasn’t a shadowy figure pocketing cash to write prescriptions for patients he’d never met.  Court records reflect that Dr. Schlifstein had a distinguished 25-year career as a pain management and rehabilitation doctor.  Dozens of Dr. Schlifstein’s patients, staff, and colleagues wrote letters to the Court praising his dedication, generosity, and professionalism.  He volunteered to treat athletes participating in Special Olympics, Golden Gloves, and the New York City Marathon.  He helped found and lead the New York Pain Management Society, an organization dedicated to serving patients with chronic pain that also works to educate physicians about safe opioid prescription practices.  In 2016, the New York State Assembly issued a Proclamation on behalf of the people of New York expressing gratitude for Dr. Schlifstein’s work.

So, how did things go off the rails for a doctor that seemed like one of the “good guys”?  It began when Dr. Schlifstein joined Insys’s Speaker Bureau.  Of course, as the Government acknowledged in its submission prior to sentencing, this was not inherently wrong, as doctors may accept fees from pharmaceutical companies to conduct legitimate educational speaker programs.  “Conducted properly,” the Government noted, “these programs enable physicians to use their expertise and experience to teach other doctors about potentially beneficial treatments.”  Indeed, Dr. Schlifstein had served on speaking series for many other pharmaceutical companies over the past decade without crossing any ethical boundaries.

However, prosecutors alleged that the Insys Speaker Bureau was not an educational program at all—rather, it was a scheme designed to get doctors to prescribe more Subsys and thus dramatically increase the company’s profits.  (In a separate case, Insys’s founder and four executives were convicted of racketeering and the company has since filed bankruptcy in the wake of multi-million dollar judgments related to its role in the opioid epidemic).  In its Court filing, the Government contended that these Insys speaker programs were “predominantly non-educational social affairs held at fancy Manhattan restaurants” where Dr. Schlifstein drank heavily and treated his family and staff to social outings.  The Government also alleged that sign-in sheets at the speaker programs were often falsified with names and forged signatures of people who had not attended.  Perhaps most importantly, at one point Insys representatives demanded a quid pro quo, explicitly telling Dr. Schlifstein that he would only be assigned—and paid for—more Subsys speaker programs if he personally prescribed more Subsys to his patients.  It was an offer that Dr. Schlifstein did not refuse.

In his plea agreement, Dr. Schlifstein admitted that he accepted $127,000 in purported speaker fees over an 18-month period, and that the fees compromised his independent judgment in favoring Subsys over other competing medications for his patients.  Dr. Schlifstein maintained that each of his patients to whom he prescribed Subsys stood to benefit from the medication, but the Government argued that the corrupt payments actually induced Dr. Schlifstein to prescribe Subsys to many patients who otherwise would not have received a transmucosal immediate-release fentanyl (“TIRF”) product at all.

At sentencing, the Government asked the Court to impose a sentence at the high end of the Guidelines range of 46-57 months imprisonment.  Dr. Schlifstein’s attorneys requested a sentence of home confinement, arguing that incarceration was unnecessary because he had already suffered severe consequences for his actions, including the loss of his medical license and livelihood, the revocation of his appointment at NYU Medical School where he had lectured for 25 years, public humiliation and ridicule, and at least $127,000 in restitution.  Ultimately, although Judge Wood recognized that Dr. Schlifstein had suffered “a tremendous loss” and that he was unlikely to commit new crimes, she believed that a prison sentence was necessary so that other doctors would take the possible loss of their freedom into account when contemplating financial arrangements with pharmaceutical companies.

Based on Dr. Schlifstein’s case, doctors would also be well-advised to keep these additional points in mind:

• Doctors should establish policies and procedures for carefully vetting all speaker programs, gifts, and engagements with pharmaceutical companies to ensure that they do not give even the appearance of impropriety. In this case, the Government emphasized that Dr. Schlifstein had attended a dinner with an Insys executive that did not include any educational presentation, but ended with a visit to a strip club where the group spent thousands of dollars on drinks and lap dances.

• Doctors must be cognizant of their own prescribing patterns and habits. Schlifstein maintained that all his Subsys prescriptions were medically necessary, but the Government cited the number of TIRF prescriptions Dr. Schlifstein wrote each quarter— both before and during his time on the Insys Speaker Bureau—to demonstrate that his habits changed dramatically during the period he was promised or paid bribes.

• Legitimate speaker programs do not condition payment or further engagements on the speaker’s number of prescriptions written. Schlifstein should have quit the Insys Speaker’s Bureau immediately when Insys representatives told him he would not be given future speaking engagements unless he increased his own Subsys prescriptions.  Failing to do so likely contributed to the Court’s decision to sentence him to prison.

• If contacted by any government agent, doctors should decline to make any statements and contact an attorney immediately. Far more than just their medical licenses may be at stake.