On July 27, 2012, a federal appeals court largely upheld draconian penalties imposed on three pharmaceutical executives after they pled guilty to misdemeanor charges under the “responsible corporate officer” (RCO) doctrine. The decision was a setback for WLF, which filed a brief urging that the penalties be set aside. WLF charged that federal officials who imposed the penalties misconstrued the limited nature of the RCO doctrine. The appeals court ruled 2-1 that the executives were properly excluded from the health care field under a statutes that permits exclusion of those convicted of a “misdemeanor relating to fraud.” Although the executives were not accused of fraud – indeed, the prosecutor who filed the RCO charges conceded that they had no knowledge of improper drug promotion that occurred at their company – the court held exclusion was permissible because there was at least some relationship between the executive’s supervisory responsibilities and the underlying misconduct.

Loss. Monitoring for further appeals.