Biotech company Genzyme to pay $22.3 million in Tampa whistle-blower case

TAMPA — A Massachusetts-based biotechnology company has agreed to pay $22.28 million to resolve allegations brought by whistle-blowers in Tampa and Miami that it marketed an inappropriate use for a surgery medication, U.S. government attorneys said.

Genzyme, a corporation known for its research into drugs for rare genetic diseases, is paying the settlement in a lawsuit over Seprafilm, a material it manufactures for use in the operating room.

According to court documents, Genzyme sales representatives encouraged doctors to use the product in a manner not approved by the U.S. Food and Drug Administration, leading to improper claims for reimbursement from hospitals.

"I think these cases are among the most important that our office handles. Health care fraud is a major problem in our country," said A. Lee Bentley III, acting U.S. Attorney for the Middle District of Florida. "These do serve a very important deterrent effect."

The settlement is the result of a civil suit brought under the federal False Claims Act, a 19th-century law that encourages private citizens to expose fraud by government contractors. Whistle-blowers can file suit on behalf of the government and then share in any financial settlement that results.

The Genzyme action was brought by two company sales representatives in 2009.

The amount of the settlement that will be diverted to the whistle-blowers has not yet been determined. One of the private plaintiffs' attorneys, Barry Cohen of Tampa, said they hope to receive between 23 and 24 percent of the settlement, or about $5.2 million.

"They were pharmaceutical salesmen, and they recognized that this was a potential danger," Cohen said. "They saw other people doing it, and they knew it wasn't right."

Sarah Connors, a spokeswoman for Sanofi, Genzyme's parent company, said that Genzyme cooperated with the government investigation and that the company's sales force no longer markets Seprafilm for the unorthodox procedure that spawned the lawsuit.

"Genzyme did take proactive action to address and prohibit this conduct," she said.

According to court documents, Seprafilm is intended to be applied during open surgery to prevent organs and muscle tissue from sticking together. However, the whistle-blowers and lawyers for the federal government alleged that Genzyme sales representatives taught doctors to use it in less invasive procedures — such as laparoscopic or "keyhole" surgeries — by mixing it into a liquidlike "slurry" that could be injected into the body.

Cohen and Bentley said they were not required to prove in the lawsuit that patients had been harmed, only that this use of the drug was not approved by federal regulators and hence not subject to reimbursement by Medicare and Medicaid.

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The hefty Genzyme settlement follows two other large payouts secured in recent years by the U.S. Attorney's Office and the Cohen Law Group, including a $217.5 million settlement from WellCare Health Plans and a $10.17 million settlement from Morton Plant Mease Health Care.

Peter Jamison can be reached at pjamison@tampabay.com or (813) 226-3337. Follow him on Twitter @petejamison.