RCOD responsibility for subordinates has its cost: the once obscure "responsible corporate officer doctrine" holds that executives can be held liable for subordinates' misconduct if they have authority to correct or prevent them and fall to do so. Here are implications of RCOD and steps for dealing with a potential indictment.

• Author: Levin, Joel R.
• Position: Legal Issues - Responsible corporate officer doctrine

When a corporation engages in misconduct, government prosecutors typically try to pin the blame on the most senior executives who authorized or condoned the wrongdoing. But, in a series of recent cases, the government has taken this a step further by reviving the once obscure "responsible corporate officer doctrine" (RCOD). RCOD provides that executives can be held criminally liable for certain offenses if they have the authority to correct or prevent the corporation's unlawful conduct and fail to do so, even if they were unaware of the misconduct.

For this reason; an RCOD conviction can be based solely on the executive's position in the corporation and the duties and responsibilities that come with that title. The doctrine has recently been used to target executives for corporate violations of the Food, Drug and Cosmetic Act (FDCA), and could potentially expand to other areas. All executives should be aware of this doctrine to avoid becoming the next target of its unusual theory of criminal hability.

Origins of RCOD

RCOD has its origin in a 1943 Supreme Court case (United States v. Dotterweich). in which the president of a pharma-ceutical company was charged with the corporation's mislabeling and shipment of adulterated drugs under FDCA.

The Court held that a corporate officer can be criminally liable even without "the conventional requirement for criminal conduct--awareness of some wrongdoing," if the officer was in a position to prevent the misconduct and failed to do so.

The Supreme Court clarified the doctrine in a 1975 case (United States v. Park) when it upheld the conviction of the president of a 36,000-employee retail food chain based on an infestation in a handful of warehouses, despite the fact that the president had delegated responsibility for this issue to a vice president. In upholding Park's conviction, the Court held that in order to be convicted under RCOD, the officer must merely be in a "responsible relation" to the corporation's misconduct--that is, he or she must have the responsibility and authority to prevent or correct the violation and fail to do so.

The Court acknowledged, however, that a corporate officer cannot be held liable for conduct which he did not have the power to prevent, or could not prevent despite the exercise of "extraordinary care" (the so-called "impossibility defense"). But this is a very narrow defense that the executive has the burden of proving.

Health Care Industry Enforcement

RCOD was used...