Doc Is Sued In Huge Prescription Fraud Case

He was part of the largest prescription fraud case in Chicago, feds say. They allege he received kickbacks from Teva Pharmaceuticals. The 140,000 scripts were for medications with serious side effects.


A psychiatrist who lives in Skokie is being sued for orchestrating what federal authorities are calling the largest prescription fraud case ever in Chicago.

The defendant, Dr. Michael J. Reinstein, received illegal kickbacks from pharmaceutical companies and submitted at least 140,000 false claims to Medicare and Medicaid for antipsychotic medications he prescribed for thousands of mentally ill patients in area nursing homes, according to a civil health care fraud lawsuit filed today. 

Reinstein also submitted at least 50,000 claims to Medicare and Medicaid, falsely stating that he provided “pharmacologic management” for his patients at more than 30 area nursing homes and long-term care facilities, the lawsuit alleges.

Earlier: Elderly care firm charged with fraud

The lawsuit seeks triple damages under the False Claims Act, plus a civil penalty of $5,500 to $11,000 for each alleged false claim.

“This is the largest civil case alleging prescription medication fraud against an individual  ever brought in Chicago,” said Gary S. Shapiro, Acting United States Attorney for the Northern District of Illinois.  

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Reinstein, 69, has provided psychiatric medical services in the Chicago area since 1973.  Since at least 1999, he has maintained an office in Chicago’s Uptown neighborhood, which has the densest concentration of mentally ill nursing home residents in Illinois.

According to the lawsuit, Reinstein routinely prescribed antipsychotic and other psychiatric medications knowing that, because most of his patients are indigent nursing home residents, pharmacies dispensing the medications submitted claims to Medicaid, and beginning in 2006, to Medicare Part D, authorities said. 

Reinstein also submitted Medicare and Medicaid claims for pharmacologic management of his patients, knowing that he did not engage in substantive evaluations of his patients’ medical and psychiatric conditions to properly manage their medications.  Instead, he allegedly prescribed medications to his patients based on his receipt of kickbacks from pharmaceutical companies, according to the state's attorney.

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The lawsuit involves Reinstein’s use of clozapine, a rarely-used medication that has serious potential side effects and is generally considered a drug of last resort, particularly for elderly patients, authorities said.  While clozapine has been shown to be effective for treatment-resistant forms of schizophrenia, it is also known to cause numerous side effects, including a potentially deadly decrease in white blood cells, seizures, inflammation of the heart muscle, and increased mortality in elderly patients. 

Prior to Aug. 2003, Reinstein prescribed Clozaril, the trade name for clozapine manufactured by Novartis, and he often had more than 1,000 patients using the medication at any given time.  For many years, Novartis paid Reinstein to promote Clozaril, the complaint alleges.  After Novartis’ patent for Clozaril expired in 1998, Reinstein resisted pharmacy and drug company efforts to switch his patients to generic clozapine and he continued to be the largest prescriber of Clozaril to Medicaid recipients in the United States.  In July 2003, Novartis notified Reinstein that it would be withdrawing its support for Clozaril, and ended the regular payments that it had been making to Reinstein.

In Aug. 2003, Reinstein finally agreed to switch his patients to generic clozapine manufactured by Miami-based IVAX Pharmaceuticals, Inc., the suit alleges, if IVAX agreed to pay Reinstein $50,000 under a one-year “consulting agreement;” pay his nurse to speak on behalf of clozapine; and fund a clozapine research study by a Reinstein-affiliated entity known as Uptown Research Institute.  IVAX agreed and Reinstein immediately began switching his patients from Clozaril to IVAX’s  clozapine.  He quickly became the largest prescriber of generic clozapine in the country. 

“Reinstein’s inordinate prescribing of clozapine stands in stark contrast to its extremely limited use by other physicians,” the lawsuit states. 

Between 2003 and 2006, Reinstein allegedly requested, and IVAX provided, additional direct and indirect benefits to Reinstein and his associates, including:

  • Paying airfare, lodging, meals, and entertainment expenses for a pharmacy owner and spouse, Reinstein’s nurse, his accountant and spouse, his administrative assistant and spouse, and Reinstein and his wife to travel to IVAX’s headquarters in Miami.  IVAX also paid for Reinstein and his entourage to go on a fishing trip, a boat cruise, and a golf outing;
  • Annual renewal of Reinstein’s $50,000 “consulting agreement;” and
  • tickets to sporting events and free IVAX-manufactured medication for Reinstein’s personal use.

 In Jan. 2006, IVAX became a subsidiary of Teva Pharmaceuticals Industries, Ltd., an Israeli company.  About seven months before the merger, Reinstein began moving large numbers of his patients to a form of clozapine manufactured by a competitor of IVAX/Teva.  In April 2006, Teva paid all expenses for Reinstein and his entourage to travel to Miami, including a $2,300 boat cruise, and at least two dinners costing more than $1,700 each, according to the lawsuit.  During this trip, Teva employees asked Reinstein what the company could do to induce Reinstein to prescribe more clozapine, and Reinstein suggested that Teva hire an associate of his from Chicago, the lawsuit alleges.  Teva agreed and in the months after the hiring Reinstein put several hundred patients back on Teva’s clozapine. 

From 2007 to 2009, the suit alleges, Teva and Reinstein entered into annual “speaker agreements” that resulted in Teva paying Reinstein more than $100,000.

The suit also alleges that Medicaid received and paid more than 100,000 false claims from various pharmacies for IVAX/Teva clozapine prescriptions written by Reinstein between August 2003 and July 2011 as a result of illegal kickbacks he solicited and received from IVAX and Teva.  Between 2006 and July 2011, Medicare Part D received and paid more than 40,000 false claims involving similar kickback-induced prescriptions. 

Likewise, between Aug. 2003 and July 2011, Reinstein allegedly submitted more than 40,000 false claims and received payment from Medicaid for purported pharmacologic management, as well as more than 10,000 similar false claims to Medicare, according to authorities.  


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