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Marsh and Allied World Launch Responsible Corporate Officer Doctrine Coverage

Posted on 08 Feb 2012

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To assist life science, pharmaceutical, and health care companies in managing the rising risk of their corporate officers being pursued for violations under the Responsible Corporate Officer (RCO) doctrine, Marsh and Allied World Assurance Company (U.S.) Inc.

(Allied World) announced today a new form of insurance protection—RCO Corporate Response—that covers the costs associated with RCO investigations and related enforcement actions.

Over the last two years, the Food and Drug Administration (FDA), Office of Inspector General (OIG), Department of Health and Human Services (DHHS), and other regulatory authorities have vigorously pursued corporate executives for violations of the Food, Drug, and Cosmetic Act (FDCA) using the decades-old RCO doctrine. The doctrine provides that criminal liability may be imposed upon individual corporate officers who are in positions of authority to prevent or correct wrongdoing within a corporation, but fail to do so. Government officials are not required to prove that a corporate officer participated in or was conscious of any wrongdoing.

Penalties associated with RCO violations include fines, imprisonment, and debarment/exclusion from working with federal health care programs including Medicare and Medicaid.

Developed by Marsh’s FINPRO Practice and Allied World, the “A” rated global insurer underwriting the policy, RCO Corporate Response reimburses companies for the costs associated with RCO prosecutions and administrative debarment/exclusion proceedings. Under the policy, corporate executives can also recover a portion of their annual compensation.

“The risk of an RCO-related investigation is a growing concern for life sciences, pharmaceutical, and health care companies as the number of prosecutions being pursued against corporate officers continues to rise,” said Maureen Gorman, a senior vice president within Marsh’s FINPRO practice.

“Not only is responding to such enforcement actions expensive and time consuming, executives who neither participated nor had knowledge of alleged wrongdoing are at increased risk of being criminally prosecuted,  losing personal income  and facing a potentially career ending event. RCO Corporate Response is designed to protect these executives from the financial impact that can ensue from such enforcement actions.”

“The new RCO Corporate Response product is another example of Allied World’s focus on crafting innovative solutions to meet the continually evolving needs of our insureds,” said Thomas Kennedy, Senior Vice President, Professional Lines. “This product specifically addresses the changing risks and exposures of the health care, medical device and pharmaceutical markets. Working with Marsh, we have created a product uniquely developed to address the ramifications of the increasing scrutiny of corporate officers.”