Feds Using “Responsible Corporate Officer Doctrine” in Criminal Prosecutions of Healthcare Executives

Health care executives are facing a renewed threat of criminal prosecutions for pharmaceutical violations, according to a report from The Wall Street Journal. The Department of Justice stepping up enforcement of a little-used provision of the 1938 Food, Drug and Cosmetic Act that allows corporate officers to be held personally and criminally liable for violations.

Supreme Court interpretations of the so-called “responsible corporate officer doctrine” allow prosecution without evidence that an executive knew a crime was being committed, the Journal said, because violations of food and drug safety laws can lead to personal injury and death.

The last time the Justice Department made use of the “responsible corporate officer” doctrine was back in the 70’s, The Wall Street Journal said. But recent events indicate a new enthusiasm for such prosecutions.

Earlier this year, for example, Marc Hermelin, CEO of KV Pharmaceutical Co. pleaded guilty to two misdemeanor violations as a “responsible corporate officer” in a case involving the company’s production and distribution of two oversized morphine sulfate tablets, the Journal said. He agreed to pay a $1 million fine, forfeit another $900,000, and will serve a jail sentence less than 30 days.

In 2009, four Synthes executives pleaded guilty in federal court to a misdemeanor associated with shipping the misbranded bone filler, Norian XR, across state lines. They acknowledged hat they were “responsible corporate officers,” in a case that involved the running of an unauthorized test of the product, in which three patients died, the Journal said.

None of the executives admitted knowledge of or involvement of the testing, the Journal said. Under current law, they could receive up to a year in prison and a maximum fine of $100,000 per count. The feds are currently arguing with defense attorneys about what evidence they can introduce before sentencing.

One Justice Department official did confirm that prosecutors are interested in pursing such cases against healthcare executives.

“There’s more focus now on trying to identify whether it’s a case where it’s appropriate to charge corporate officials with wrongdoing,” John J. Pease, chief of the health-care fraud unit in the U.S. Attorney’s Office in Philadelphia, which brought a recent “responsible corporate officer” prosecution told the Journal.

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