Effective Compliance Means Imposing Individual Liability

• Publication year: 2018

Effective Compliance Means Imposing Individual Liability

Reuben A. Guttman

EFFECTIVE COMPLIANCE MEANS IMPOSING INDIVIDUAL LIABILITY

Reuben A. Guttman^*

Deputy Attorney General Sally Yates said it in a memo dated September 9, 2015, and her successor, Rod Rosenstein, said it in remarks dated October 6, 2017: corporations act through individuals, and compliance enforcement must necessarily account for holding individuals liable for the wrongs they orchestrate under cover of the corporate umbrella.¹

The logic is reasonable and necessary. We blame corporations for catastrophic environmental events² , misbranded drugs that cause injury, and financial products that destroy the life savings of those who have toiled for a living; yet at the helm of the corporations—guiding their path of impropriety—are people, many of whom who have benefited handsomely from the corporate misconduct that they have captained. Unfortunately, in comparison to the guilty pleas that are taken by corporations, which cannot be put behind bars, prosecutors—both criminal and civil—barely scratch the surface when it comes to pursuing the individual human culprits.

This is not to say that there have been no criminal prosecutions of individuals for corporate crime. Insider trading cases are quite common, and when the wrongdoing has catastrophic consequences, as in Enron, Tyco, WorldCom, and the Madoff organization, prosecutors have put real people behind bars.³

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There are, however, too many instances where individuals have put a corporation on a destructive tear, and still managed to elude personal liability. Considering that many of the large drug companies have either taken guilty pleas or paid fines to the government for conduct that has placed patients at risk by causing the consumption of powerful, unnecessary drugs, it is astounding that few, if any, pharmaceutical executives have been pursued criminally for conduct tantamount to battery.⁴ Imagine, for example, if an intruder broke into your house, opened your medicine cabinet, and loaded the cabinet with bottles of pills that were either not medically necessary—or worse—could cause physical injury or illness? How far removed is this from marketing schemes that cause doctors to write prescriptions based on misinformation, that cause dangerous products to be placed in medicine cabinets and ultimately consumed? Or what about the drug companies that funnel kickbacks to doctors disguised as "speaker fees" or "consulting agreements" while monitoring prescription data to confirm that the doctors are writing the "scripts" as directed.

In 2012, Abbott Labs, one of the largest pharmaceutical companies in the world, plead guilty to illegally marketing the powerful drug, Depakote, which is a limited indication anti-epileptic. Among other things, Abbott marketed the drug to elderly patients in nursing homes for off-label purposes and for pediatric use, even though Depakote was not approved to treat anyone under the age of 18. After the entry of a guilty plea, the U.S. Attorney for the Western District of Virginia, Timothy Heaphy, noted in a Department of Justice press release that, "Abbott unlawfully targeted a vulnerable patient population, the elderly, through its off-label

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promotion."⁵ Think hard about this statement; a company that holds itself out as a manufacturer of life-saving drugs was knowingly placing patients at risk for the purpose of making a buck.

In 2013, Wyeth Pharmaceuticals agreed to pay $490.9 million in criminal and civil penalties for engaging in proscribed marketing practices regarding the prescription drug, Rapamune. Rapamune is an immuno-suppressive drug—that is, it prevents the body's immune system from rejecting a transplanted organ. At the time of the guilty plea, Wyeth had merged into Pfizer, and was no longer a standalone entity. Wyeth plead guilty to a criminal information, charging it with a misbranding violation under the Food, Drug, and Cosmetic Act. In characterizing the case, Antoinette V. Henry, Special Agent in Charge of the Metro-Washington field office of the FDA's Office of Criminal Investigations noted, "Wyeth's conduct put profits ahead of the health and safety of a vulnerable patient population dependent on life sustaining therapy."⁶ Also in 2013, pharma-giant GlaxoSmithKline plead guilty and paid $3 billion to the government in order to resolve fraud allegations and the failure to report safety data. As part of a global settlement, the company also settled a series of civil claims under the False Claims Act, stemming from marketing derelictions including kickbacks.

Time and time again, large pharmaceutical companies have engaged in conduct that placed patients at risk, and, at times, caused real harm, yet, virtually no individual has been prosecuted or put behind bars.⁷ The idea that misrepresentations, kickbacks, and assorted fraudulent schemes can be employed to cause patients to put drugs in their bodies at personal peril without anyone going to prison is stunning. Our jails have no shortage of inmates sentenced to long terms for selling illegal drugs and/or engaging in various batteries. Yet, when white collar executives engage in schemes to drive revenue by causing the consumption of extra drugs, or the use of drugs for improper purposes, individual liability is rare.

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Consider that this nation is immersed in battling what the press now calls the "opioid crisis"⁸ or the "opioid epidemic."⁹ This crisis reared its head at least a decade ago when the U.S. Attorney in the Western District of Virginia prosecuted the drug manufacturer Purdue Pharma, and three corporate executives for illegally marketing the drug Oxycontin. On July 23, 2007, the United States District Court for the Western District of Virginia (James P. Jones, Judge) issued an Opinion and Order approving a criminal plea agreement and summarizing its provisions. Among other misdeeds...