Medicare Compliance & Reimbursement

Serono, S.A. out a bundle after fraud surrounding Serostim.

Think the era of blockbuster health care fraud cases is over? Think again.

Swiss drug manufacturer Serono, S.A., and its U.S. subsidiaries have agreed to pay $704 million to settle criminal charges and civil allegations of illegal schemes to market and sell Serostim, a drug to treat AIDS wasting, the Department of Justice announced on Oct. 17. Serono Laboratories has agreed to pay a nearly $137 million criminal fine and its affiliates will pay $567 million in civil settlements.

Recovery Nearly Sets Record

With all the fines tallied, the settlement is the United States' third-largest health care fraud recovery, according to the DOJ.

"The Medicaid program and each of the state Medicaid agencies which paid for Serostim during the time frame of the investigation, 1996 through 2004, will recoup all monies paid based on Serono's illegal activity," the DOJ says. The illegal activities include offering physicians an all expense-paid trip to a medical conference in Cannes, France if they wrote 30 new prescriptions of Serostim at $21,000 per treatment.

Serono Labs pleaded guilty to the kickback charges and to "charges that the company conspired with medical device manufacturer RJL Sciences to market bioelectrical impedance analysis computer software packages for use in calculating body cell mass and diagnosing AIDS wasting," the DOJ notes. The device wasn't Food and Drug Administration-approved, and Serono allegedly used the marketing for the device to increase the market for Serostim.

Serono will pay nearly $262 million in a separate civil settlement to resolve allegations that the company knowingly submitted fraudulent Medicaid claims for unnecessary and off label uses of Serostim, and for kickbacks-induced claims. The criminal conviction will exclude Serono Labs from participating in federal health care programs for at least five years, the DOJ reports. The federal government will also subject Serono's U.S. subsidiary, Serono Holding and all of its American affiliates to a strict Corporate Integrity Agreement for five years.

Find it online: To read the announcement, go to http://www.usdoj.gov/opa/pr/2005/October/05_civ_545.html.