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Execs face tougher penalties for company wrongdoing

Government increasingly turning to “responsible corporate officer” doctrine

A little-known legal doctrine could mean trouble for executives of companies accused of wrongdoing.

Lately, the government is issuing stiffer penalties to executives through the “responsible corporate officer” doctrine, which holds officers who are in the position of responsibility to prevent offenses liable for a company’s misconduct even if they aren’t aware of the law-breaking.

Although prosecutors have used the doctrine sparingly over the past few decades, it is getting major play in recent high-profile health care prosecutions after a recent government report criticized the Food and Drug Administration’s handling of its criminal investigations.

On Nov. 21, three former executives of medical-device company Synthes Inc. were sentenced to between five and nine months in prison for their roles in illegal testing of a bone-cement product used to repair bones. The government claims the company attempted to hide its conduct after three patients treated with the product died during surgery.

Today, the Department of Health and Human Services is seeking to have an appeals court uphold a 12-year exclusion from government business for three former Purdue Pharma execs who pleaded guilty in 2007 to misbranding the painkiller OxyContin. Experts say the case could be an important test case in establishing how tough of penalties the government can issue without evidence that corporate officers knew of wrongdoing. Read Thomson Reuters for more about the case.

Ashley Post

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