Department of Justice’s Focus On “Individual Accountability” Hits Healthcare Industry

Friday, March 4, 2016
By Miles Indest, J.D./M.B.A candidate, and George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On September 9, 2015, the Department of Justice (DOJ) Deputy Attorney General Sally Yates issued a memorandum emphasizing increased attention to individual criminal accountability for corporate wrongdoing.

The Yates memo outlined six measures to strengthen the DOJ’s pursuit of individuals engaged in fraud, two of the most important being:

(1) to be eligible for any cooperation credit, corporations must provide the DOJ with all relevant facts about the individuals involved in corporate misconduct; and
(2) absent extraordinary circumstances, no corporate resolution will be allowed to provide protection from criminal or civil liability for any individuals.

Recent charges against the former executive of pharmaceutical company Warner Chilcott demonstrate that the Yates memo has significant implications for the healthcare industry.

Warner Chilcott Subsidiary Pays $125 Million to Resolve Civil and Criminal Liability.

On October 29, 2015, the DOJ released a $125 million settlement with a subsidiary of Warner Chilcott, regarding charges related to health care fraud, kickbacks, and false claims. According to the DOJ release, the company’s management team directed employees to pay kickbacks to physicians to induce them to promote Warner Chilcott drugs. The company also allegedly submitted false authorization requests to federal health care programs and insurance companies. The DOJ settlement resolved the Warner Chilcott subsidiary’s criminal and civil liability, including liability from a lawsuit filed under the whistleblower provisions of the False Claims Act.

The company’s settlement did not resolve individual liability for its executives.

Former Executive of Warner Chilcott Charged for Individual Involvement in Company’s Kickback Scheme. The same day that the DOJ reached a settlement with Warner Chilcott, former president of its pharmaceuticals division, Carl Reichel, faced similar charges for his individual involvement in the company’s scheme—conspiring to pay physician kickbacks. According to the indictment, Reichel provided sales representatives with “virtually unlimited expense accounts” for free dinners and “speaker” payments to induce healthcare professionals to prescribe Warner Chilcott drugs. The case, United States v. Reichel, is currently pending in the U.S. District Court for the District of Massachusetts, case number 1:15-cr-10324.

DOJ’s Emphasis on Individual Accountability Will Impact Healthcare Organizations.

Healthcare organizations and executives must proactively address the implications of Reichel’s indictment and the DOJ’s emphasis on individual accountability. When the DOJ announced the Warner Chilcott settlement, the DOJ stressed that it will “continue to hold companies and responsible individuals accountable when they use improper incentives . . . to promote their products.” Enforcement actions against Warner Chilcott and executive Carl Reichel make clear that the government “will seek not only to hold companies accountable, but will identify and charge corporate officials responsible for the fraud.” No longer can the corporate shield be counted on to protect executives from prosecution. Hospitals, nursing home chains, and other healthcare entities that settle with the government will no longer automatically get a “pass” from criminal prosecution for their employees. Further, healthcare corporate counsel may have the incentive to hire separate attorneys to represent certain executives and employees during DOJ investigations. Employers will not only bear the costs of providing independent counsel for the alleged wrongdoers, but also expend additional resources conducting investigations of those wrongdoers to earn cooperation credit with the DOJ.

Healthcare organizations can avoid these increased costs of possible fraudulent activities by proactively deterring them through greater internal reporting and self-policing efforts.

In 2015, the DOJ’s policies and enforcement actions emphasized its commitment to investigating fraud and punishing wrongdoing to the fullest extent of the law. Moving forward, healthcare providers and corporate counsel must view their compliance and reporting programs as more of an asset than an expense, winning greater respect from employees, ensuring protection of the assets of the organizations, and protecting against a decrease in shareholder value.

Contact Health Law Attorneys Experienced in Representing Health Care Professionals and Providers.

At the Health Law Firm we provide legal services for all health care providers and professionals.
This includes physicians, nurses, dentists, psychologists, psychiatrists, mental health counselors,
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The lawyers of The Health Law Firm are experienced in both formal and informal administrative
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To contact The Health Law Firm, please call (407) 331-6620 and visit our website at


Overlay, Jeff. “Ex-Warner Chilcott Exec Charged In Kickback Scheme.” Law360 (October 29, 2015). Web.

About the Authors: Miles Indest, J.D./M.B.A. candidate, will graduate in May 2016 from Tulane University Law School and the Freeman School of Business. George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealth The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone; (407) 331-6620.

KeyWords: healthcare industry, Yates memo, corporate wrongdoing, Pharmaceuticals, Department of Justice (DOJ), healthcare fraud, kickbacks, criminal, civil, whistleblower, False Claims Act, president, indictment, healthcare professionals, individual accountability, internal reporting, compliance, defense lawyer, health law, Florida health law attorney, The Health Law Firm.

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