“The court should reject the Government’s sweeping attempt to bypass its burden of proof based on ‘collective’ knowledge.”
—Cory L. Andrews, WLF General Counsel & Vice President of Litigation
Download WLF’s brief here.
WASHINGTON, DC—Washington Legal Foundation (WLF) yesterday joined a coalition of leading business groups in an amicus curiae brief asking a federal trial court to dismiss a federal regulatory action. The lawsuit seeks to impose billions of dollars in liability on a company without proving that any employee whose conduct gave rise to the action had any knowledge of wrongdoing.
Although no federal law or regulation requires a pharmacist to verify the medical justification for any drug prescription written by a licensed physician, the U.S. Department of Justice (DOJ) brought an enforcement action against Walmart under the Controlled Substances Act (CSA). The DOJ’s complaint faults Walmart pharmacies for filling, and for failing to notify the Drug Enforcement Agency about, allegedly “suspicious” prescriptions. DOJ seeks up to $67,627 for each “unlawful” prescription filled and $15,691 for each “suspicious” order not reported. As a result, Walmart faces billions of dollars in potential liability.
In an amicus brief joined also by the U.S. Chamber of Commerce and the National Retail Federation, WLF urged the U.S, District Court for the District of Delaware to reject the DOJ’s “collective scienter” approach to liability. Under that theory, a corporation can be found to have “knowingly” violated a regulation if one employee, acting in good faith, makes a report of information to a compliance department, and another employee—however distant from the first—fills a prescription without knowing the reported information. As WLF’s brief explains, DOJ’s approach to scienter is not only wrong, it will have far-reaching, unintended consequences.
WLF’s brief was prepared by Megan Brown, Stephen J. Obermeier, Christopher Kelley, and Wesley E. Weeks, of Wiley Rein LLP.