Product News and Recalls

Individual charges rare in corporate fraud cases

According to a story in the New York Times, a renewed U.S. Justice Department emphasis on prosecuting corporate fraud is expected to bring in as much as $8 billion this year from pharmaceutical companies, military contractors, banks and other corporations charged with defrauding the government, which amounts to a record sum.

Still, the lack of charges against executives at those companies is resurrecting questions about accountability, and just how much of a disincentive for wrongdoing those settlements represent.

The story quotes U.S. Sen. Jack Reed of Rhode Island as saying: “A lot of people on the street, they’re wondering how a company can commit serious violations of securities laws and yet no individuals seem to be involved and no individual responsibility was assessed.”

Recent cases have involved some of the largest and most prominent companies. In July, for example, GlaxoSmithKline said it would pay $3 billion to settle criminal and civil accusations of fraudulently marketing its medications.

Widespread lawsuits also allege that GlaxoSmithKline and other manufacturers of antidepressants classified as selective serotonin reuptake inhibitors failed to adequately warn pregnant patients of studies linking the drugs to potentially dangerous heart and lung defects in newborns. SSRI antidepressants include Prozac and Zoloft.

Similarly, Johnson & Johnson is reportedly facing a settlement of about $2 billion to settle federal charges that the company used illegal tactics in marketing its antipsychotic drug Risperdal.

Johnson & Johnson is also facing widespread litigation from patients harmed by the company’s products. Both the company’s DePuy Orthopaedics all-metal hip implants and transvaginal mesh implants have generated thousands of reports of premature failure, injury and even death for clients who had them implanted.

A number of factors contributed to the recent surge in penalties, including the resolution of longstanding actions against companies, and the Justice Department’s focus on corporate fraud. But the biggest settlements have brought relatively few prosecutions against individual executives.

According to New York Times, lawyers say the government is more likely to go after companies than individuals. Civil cases against businesses – which have a lower burden of proof than criminal charges — can produce larger financial awards without the risk inherent in a trial.

But the story also cites an unnamed a top government enforcement official who says it’s often too difficult and expensive to find evidence that clearly links individual actions to corporate wrongdoing.

Patients should consult their doctors before making any changes in their medication. And you should consult with a doctor if you have any ongoing symptoms or health concerns from a transvaginal mesh or metal-on-metal hip implant. If you or a loved one have significant injuries from a medical implant or an SSRI, you should also consult with an SSRI, DePuy hip or transvaginal mesh lawyer to discuss your legal rights.

http://www.nytimes.com/2012/08/08/business/more-fraud-settlements-for-companies-but-rarely-individuals.html?_r=1&emc=tnt&tntemail0=y#h[AevIiM,1]