Business Crimes Hotline

According to the allegations revealed in the settlement, beginning with Rebif's release and continuing through the end of 2009, Serono paid health care providers to induce their promotion and prescription of the drug, including via payments for attending events such as marketing meetings and speaker training programs at upscale resorts. As alleged, these actions resulted in the submission of false Medicare and Medicaid claims.

In announcing the resolution, Tony West, Assistant Attorney General for the DOJ's Civil Division, made the following statement: “It's imperative that medical determinations are guided by a patient's needs, not tainted by illegal incentives or fraud ' We are committed to ensuring that the chronically ill and other vulnerable members in our communities who rely on Medicare and Medicaid programs receive the best possible care.”

In connection with Serono's settlement, the Office of the Inspector General for the Department of Health and Human Services extended the company's pre-existing corporate integrity agreement (CIA) for an additional three years, along with making several substantive enhancements to its requirements. Particularly, as announced by the DOJ, the CIA now places responsibility for Serono's compliance in the hands of its executives and directors.

SEC Issues First DPA As Part of FCPA Settlement with Pipe Manufacturer Tenaris S.A.

On May 17, in connection with a combined DOJ and SEC settlement of Foreign Corrupt Practices Act (FCPA) allegations against steel pipe manufacturer Tenaris S.A. (Tenaris), the SEC announced its first-ever use of a Deferred Prosecution Agreement (DPA). Tenaris, a Luxembourg-based publicly traded company, was accused of bribing Uzbekistan officials to gain access to confidential competitors' bids in attempts to secure oil pipeline contracts, along with a corresponding failure to accurately record those payments on the company's books and records.

As part of the settlement, Tenaris agreed to pay a $3.5 million criminal penalty in connection with a non-prosecution agreement from the DOJ, in addition to $5.4 million in disgorgement and prejudgment interest paid to the SEC as part of the two-year civil DPA.

According to the DOJ, “[t]he criminal penalty in this case constitutes a substantially reduced monetary penalty and reflects the department's commitment to providing meaningful credit to Tenaris for its extraordinary cooperation with the department.”

The SEC's use of a DPA represents an additional step in pursuing its enforcement cooperation initiative, first announced on Jan. 13, 2010. As part of the initiative, the Commission announced its intention to utilize cooperation tools traditionally employed in criminal enforcement.

Business Crimes Hotline and In the Courts were written by Matthew J. Alexander. He is an associate at Kirkland & Ellis LLP, Washington, DC.

DISTRICT OF COLUMBIA

$44.3 Million False Claims Act Settlement Reached With Pharmaceutical Manufacturer Serono

On May 4, the Department of Justice (DOJ) announced that pharmaceutical manufacturer Serono Laboratories Inc., along with affiliated entities EMD Serono Inc., Merck Serono S.A., and Ares Trading S.A. (collectively “Serono”), had reached an agreement to pay $44.3 million to resolve allegations under the False Claims Act. The charges arose from Serono's marketing of Rebif, the company's recombinant interferon injectable that was introduced in the beginning of 2002. Rebif is used to treat relapsing multiple sclerosis.

According to the allegations revealed in the settlement, beginning with Rebif's release and continuing through the end of 2009, Serono paid health care providers to induce their promotion and prescription of the drug, including via payments for attending events such as marketing meetings and speaker training programs at upscale resorts. As alleged, these actions resulted in the submission of false Medicare and Medicaid claims.

In announcing the resolution, Tony West, Assistant Attorney General for the DOJ's Civil Division, made the following statement: “It's imperative that medical determinations are guided by a patient's needs, not tainted by illegal incentives or fraud ' We are committed to ensuring that the chronically ill and other vulnerable members in our communities who rely on Medicare and Medicaid programs receive the best possible care.”

In connection with Serono's settlement, the Office of the Inspector General for the Department of Health and Human Services extended the company's pre-existing corporate integrity agreement (CIA) for an additional three years, along with making several substantive enhancements to its requirements. Particularly, as announced by the DOJ, the CIA now places responsibility for Serono's compliance in the hands of its executives and directors.

SEC Issues First DPA As Part of FCPA Settlement with Pipe Manufacturer Tenaris S.A.

On May 17, in connection with a combined DOJ and SEC settlement of Foreign Corrupt Practices Act (FCPA) allegations against steel pipe manufacturer Tenaris S.A. (Tenaris), the SEC announced its first-ever use of a Deferred Prosecution Agreement (DPA). Tenaris, a Luxembourg-based publicly traded company, was accused of bribing Uzbekistan officials to gain access to confidential competitors' bids in attempts to secure oil pipeline contracts, along with a corresponding failure to accurately record those payments on the company's books and records.

As part of the settlement, Tenaris agreed to pay a $3.5 million criminal penalty in connection with a non-prosecution agreement from the DOJ, in addition to $5.4 million in disgorgement and prejudgment interest paid to the SEC as part of the two-year civil DPA.

According to the DOJ, “[t]he criminal penalty in this case constitutes a substantially reduced monetary penalty and reflects the department's commitment to providing meaningful credit to Tenaris for its extraordinary cooperation with the department.”

The SEC's use of a DPA represents an additional step in pursuing its enforcement cooperation initiative, first announced on Jan. 13, 2010. As part of the initiative, the Commission announced its intention to utilize cooperation tools traditionally employed in criminal enforcement.

Business Crimes Hotline and In the Courts were written by Matthew J. Alexander. He is an associate at Kirkland & Ellis LLP, Washington, DC.