Health and Human Services' Office of the Inspector General is writing criteria to employ its previously little-used power to exclude individuals from participation in federal health care programs, similar to the authority it already wields with companies.

The move is another attempt to promote individual and managerial responsibility among those who deal with the programs, and fits with FDA's effort to write standards for corporate officer prosecution under the Park Doctrine (Also see "Off-Label Prosecution May Be Where FDA "Parks" Aggressive Enforcement Tools First" - Pink Sheet, 18 October, 2010.).

Like the Park Doctrine standards, the exclusion standards could implicate managers and corporate officers without evidence they knew of the violations. However, the exclusion rules would employ two separate standards, one for company owners and one for managers and company officers.

Mary Riordan, senior counsel in the HHS Office of the Inspector General Administrative and Civil Remedies Branch, said the new criteria are in development and due for release “in the near future.” They employ powers the government has had for some time, but has rarely used, she noted Sept. 21 during a presentation at the Food and Drug Law Institute Advertising and Promotion Conference.

Individual corporate officers find themselves more the focus of OIG and Department of Justice scrutiny as part of a change in how both agencies are structuring corporate integrity agreements.

Individual accountability has become more important at the manager and board of director levels, Riordan said, since it is not fair to expect responsibility to fall entirely on companies’ compliance officers.

Riordan said a higher threshold has to be met for a company owner or someone who has a controlling interest to be excluded because the law requires that the owner knew should have known of the criminal behavior, she said.

Corporate officers and managers can be implicated if they don’t have knowledge of the violations, she said. There was no mention of the potential length of an exclusion at the conference. Existing rules allow the government to impose mandatory exclusions of at least five years if someone is convicted of a fraud or some other felonies. Misdemeanor convictions for fraud or other crimes could result in a permissive exclusion of at least three years.

“Among the things that we will look at obviously are the circumstances of the underlying misconduct and the seriousness of the offense,” Riordan said. “We’re going to look at the individual role in the sanctioned entity, what action an individual took in response to the underlying bad conduct and we’ll definitely seek to get an understanding of how the entity is organized….”

Along Corporate Responsibility Lines

The move is similar to FDA’s intention to use the Park Doctrine, which arose from a 1975 Supreme Court decision, to design prosecution standards for corporate officers responsible for violations they could have prevented.

In March, FDA Commissioner Margaret Hamburg sent a letter to Sen. Chuck Grassley, R-Iowa, explaining her intention to increase the use of misdemeanor prosecutions “to hold corporate officers accountable.”

Early Park cases targeted high-level executives, but that likely will change, John Fleder, an attorney with Hyman, Phelps and McNamara and former director of the Department of Justice Office of Consumer Litigation, said during an Oct. 8 webinar on the Park Doctrine.

“One of the things that is pretty clear from the government’s enforcement discretion is that the government has and probably will continue … to look at prosecutions not only of high-level people, but also low-level people,” Fleder said.

CIAs Include New Audit, Transparency Sections

Newer corporate integrity agreements also have more liberal auditing and other provisions to force companies to ensure compliance throughout the organization, especially the sales and consulting forces.

New auditing rules in the agreements allow OIG to pick items to be included in annual audits each year, instead of at the start of the agreement, Riordan said.

Following on to the individual accountability idea, OIG is requiring company officials to ride along with sales representatives when they visit physicians. The agency also is reviewing speaker programs, grants and charitable contributions.

AstraZeneca signed a corporate integrity agreement earlier this year amid allegations of off-label promotion of its antipsychotic Seroquel (quetiapine) that included a field monitoring program to ensure sales reps remained in compliance with federal standards.

The agreement also included speaker training and required written agreements outlining fees and that a scope of work be made with each consultant (Also see "AstraZeneca's Seroquel Settlement With DoJ Is Fourth Targeting Antipsychotic Off-Label Promotion; Firm Avoids Criminal Charges" - Pink Sheet, 3 May, 2010.).

Public disclosure of payments made to doctors also is being required as part of corporate integrity agreements, Riordan said (Also see "Industry-Funded CME Is Next Battleground On Drug Promotion" - Pink Sheet, 21 June, 2010.).

“A big risk area and the heart of many problems that we see is this relationship between sales representatives and doctors,” Riordan said. “And so we really need that to be examined.”

Once a settlement is reached in a case, OIG also is mandating companies to tell the physicians sales reps met with about it as well as to operate websites where physicians can ask questions or report problems.

“We do want companies to be scrutinizing the relationships that they have with doctors and make sure that they are appropriate and that the doctors are being paid appropriate amounts of money for actual services that they are providing,” Riordan said.

By Derrick Gingery

OIG Developing Exclusion Standards For Individuals

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