Health lawyers and industry executives should be aware of two recent government anti-fraud developments that are consistent with a shifting enforcement climate that focuses specifically on individual accountability for alleged illegal actions committed on behalf of a corporation. The first such development involves the latest efforts of the government to exclude a health industry corporate executive under the "Responsible Corporate Officer Doctrine"-based provisions of the U.S. Department of Health and Human Services, Office of Inspector General's (OIG) permissive exclusionary authority. The second such development is the U.S. Department of Justice's (DOJ) re-indictment of a health industry general counsel on obstruction of justice grounds.
It has been reported that on April 12, 2011, the OIG sent the CEO of a pharmaceutical company a notice of intent to exclude him from participation in federal health care programs (e.g., Medicare and Medicaid), giving him 30 days to explain why he should not be excluded from these programs. Based on information made available by the pharmaceutical company, the OIG's action against the CEO was based on his association with the company, which had settled and pled guilty to criminal offenses in connection with the marketing of FDA-regulated pharmaceutical products. The OIG's action is significant in that it would extend the scope of its permissive exclusion authority and the Responsible Corporate Officer Doctrine to senior officials of a company, when the company—and not the senior official—settles a case and pleads to criminal offenses, even when the senior official was not named in the case. The company has stated that its CEO will challenge the OIG's action in litigation if the OIG proceeds with the exclusion action.
OIG perceives its permissive exclusion authority as a necessary enforcement deterrent to what it describes as the "too big to fire" mentality. It has expressed concern that some alleged "unethical" health care corporations (including but not limited to health care providers, pharmaceutical manufacturers and other companies) may incorporate into the "cost of doing business" the cost of paying civil fines and penalties and of implementing Corporate Integrity Agreements, and that these companies perceive themselves as so critical to the health care delivery system that OIG would never exclude them and risk compromising the welfare of Medicare/Medicaid beneficiaries. From OIG's perspective, even if it determines that such an entity's exclusion is indeed not in the best interests of its beneficiaries, it may nevertheless seek to exclude those executives who held positions of responsibility at the time of the alleged fraud.
On April 13, 2011, the government re-indicted an associate general counsel of a pharmaceutical company on charges of obstruction of justice and making false statements to the FDA regarding the alleged off-label promotion of one of the company's products. The original indictment was dismissed by the court last month based on a finding that prosecutors had misled the grand jury about the legal significance of the "Advice of Counsel" defense. The new indictment largely tracks the original indictment, but adds several new factual details, including quotes from the defendant's handwritten notes. Notably, the new indictment does not contain any language that could be construed as an attempt by the government to rebut the anticipated "Advice of Counsel" defense.
Save the date: Effective "Privilege" Practice: A General Counsel's Guide webcast, May 18, 2011