A $250 fine and 60 days probation.  Almost seventy years ago, that was the punishment drug company president Joseph Dotterweich received when the U.S. Supreme Court upheld his strict vicarious liability sentence for the company’s shipping of adulterated products.  Today, health care company managers can be fined millions of dollars and have their careers ended through exclusion from participating in federal health care programs even if they are unaware of and played no part in an employee’s unlawful conduct.

On April 13, Washington Legal Foundation hosted a Web Seminar program titled Strict Liability Crimes for Managers: Targeting of Responsible Corporate Officers and Strategies to Minimize Exposure at which two Ropes & Gray LLP attorneys, Gregory Levine and Kirsten Mayer, delved into the “responsible corporate officer doctrine,” invented by the Supreme Court in the 1943 case U.S. v. Dotterweich.

While the 5-4 ruling acknowledged the onerous nature of imposing criminal penalties without proof of knowledge or intent,  Justice Frankfurter and his four colleagues put their trust in “the good sense of prosecutors, the wise guidance of trial judges, and the ultimate judgment of juries” to prevent abuses.  As the seminar’s speakers noted, if  the “good sense of prosecutors” doesn’t forestall an indictment, the only way managers can fight a misdemeanor charge under this doctrine is to show that it was objectively impossible to prevent the employee’s unlawful act.  But for senior executives these days, Levine explained, it’s virtually impossible to prove such impossibility.

To learn more about this issue, see WLF’s amicus brief  in Friedman v. Sebelius, a case in which three drug company managers are challenging their exclusion from health care programs based on their responsible corporate officer guilty pleas.  WLF also released this Legal Backgrounder on the subject and the Friedman case last week.

Finally, for those interested in a director and officer liability perspective on this doctrine, see this commentary by D&O Diary‘s Kevin LaCroix.