on Apr 12th, 2011The Responsible Corporate Officer Doctrine
I’ve written a paper entitled “The Responsible Corporate Officer Doctrine: Defending Individuals in FDCA Cases” (available here). The paper will be included in the materials available at the ABA’s 21st Annual National Institute on Health Care Fraud in Miami Beach, Florida on May 11-13, 2011 (brochure available here). I’ll be participating in a panel discussion on May 12th entitled “Enforcement Actions Against Individuals.” The panel members will address the recent increase in criminal and civil enforcement actions against individuals and the basis for individual liability in health care fraud cases. Jonathan Diesenhaus from Hogan Lovells will be the moderater. Other participants will include officials from the Department of Justice, the Department of Health and Human Services, and the Food and Drug Administration. Here are the first two paragraphs of the paper:
To the extent intended by Congress and permitted by the Constitution, courts may impose criminal sanctions on individual corporate officers who were in positions of authority to have prevented or corrected wrongdoing within a corporation but failed to do so. That concept, which has come to be known as the responsible corporate officer (RCO) doctrine, was first developed under the Food, Drug & Cosmetic Act of 1938 (FDCA). See United States v. Dotterweich, 320 U.S. 277 (1943); United States v. Park, 421 U.S. 658 (1975); 21 U.S.C. §§ 331(a), 333(a)(1), 352. Under the RCO doctrine, the government is not required to prove that an officer participated in wrongdoing or even knew about it. The RCO concept also exists outside of the FDCA context – principally under environmental laws. See, e.g., United States v. Hanousek, 176 F.3d 116 (9th Cir. 1999) (construing the Clean Water Act to allow conviction of a misdemeanor offense punishable by a prison term not exceeding one year without a showing of mens rea).
Sometimes characterized as imposing a form of strict vicarious liability, and sometimes characterized as requiring a showing of negligence, the RCO doctrine under the FDCA is a powerful weapon for federal prosecutors and (at least indirectly) the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA). The potential criminal consequences of a FDCA conviction under the RCO doctrine include a term of imprisonment up to 12 months and at least a six figure fine. The potential collateral consequences of such a conviction include, as a practical matter, exclusion by HHS from participation in the medical device and pharmaceutical industries. Given the lack of a mens rea requirement and the potential sanctions involved, the RCO doctrine provides profound leverage to federal prosecutors to resolve cases through plea agreements, stipulated facts, and uncontested proceedings. As a result, it gives great leverage to other federal enforcement agencies, especially HHS in the exercise of its exclusion authority, and stands as a tool for efficiently advancing the broader regulatory goals of the FDA. Whether that approach to law enforcement is fair or appropriate in any given case is another question.
