Recent Prison Sentences Demonstrate Increased Exposure for Corporate Officers

Author:Mr Bradley Gould, Michelle T. Hess and Patrick C. O'Brien
Profession:Holland & Knight

William Gould is a Partner in our Washington, D.C. office Michelle Hess is an Associate in our New York office Patrick O'Brien is a Partner in our Washington, D.C. and San Francisco offices

Last week, three former executives of a medical device company were sentenced to federal prison terms for their roles in managing a company that marketed a device for an unauthorized use and conducted unauthorized clinical trials that were associated with the deaths of three participants. The government proved no intent to commit any crime against these executives, nor did the executives admit any such intent. In fact, they denied having any knowledge or belief that the conduct they oversaw was a violation of law. They pleaded guilty merely as responsible corporate officers who happened to be at the helm of a medical device company when the company violated the Federal Food, Drug, and Cosmetic Act (FDCA). High officials of the U.S. Department of Justice (DOJ) and the U.S. Food and Drug Administration (FDA) for the past few years have stated publically, and rather consistently, that they were looking to convict officers – not just companies – of criminal violations. Last week in Philadelphia, Pennsylvania, they ratcheted up this endeavor and were successful in seeking prison terms following responsible corporate officer pleas. The case is United States v. Norian Corp, et al., Case No. 2:09 CR 00403.

Sentences for the Former Synthes Officers

Synthes, Inc., is a medical device company based in Switzerland with a subsidiary, Synthes USA, located in Pennsylvania. Synthes focuses on bone-related medical devices used to treat skeletal injuries. At the sentencing hearing on November 21, 2011, Michael Huggins, the former president of Synthes USA, was sentenced to nine months, as was Thomas Higgins, the former leader of Synthes' spine division. John Walsh, the former head of regulatory affairs, received a five month prison sentence. Richard Bohner, the former vice president for operations, still remains to be sentenced. Each defendant was also ordered to pay $100,000 in fines and will face a period of supervised release after leaving prison. Mr. Huggins was ordered immediately incarcerated at the conclusion of the sentencing hearing to begin serving his sentence, with Mr. Higgins and Mr. Walsh given later reporting dates based on personal circumstances.

The Synthes matter is the second case this year in which corporate officers have pleaded guilty and received...

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