The New Park Doctrine: Missing the Mark

BY Andrew C. Baird

This Comment focuses on the recent and increasing link between the Park method of conviction and the accompanying exclusion penalty, and examines the implications of this combination for corporate counsel and executive officers in the health care and pharmaceutical industries. The types of offenses that trigger exclusion eligibility are generally known as public welfare offenses, a class of offenses that fits neatly into other forms of criminal offenses (“such as those against the state, the person, property, or public morals”). Historically, penalties for these types of offenses were “relatively small, and conviction [did] no grave damage to an offender’s reputation.” However, the availability of the exclusion penalty in the wake of a Park conviction has changed the tenor of the historical relationship between violation and punishment. To demonstrate just how serious the concern around Park liability has become, insurance companies in early 2012 began offering personal insurance against losses resulting specifically from Park doctrine convictions, even covering losses stemming from exclusion penalties.

The combination of the Park prosecution and the application of the exclusion penalty raises legitimate fairness concerns. Combining a Park prosecution and the exclusion penalty represents a severe sanction against business leaders who, despite their best efforts, may simply have been unaware of the particular criminal conduct occurring at their company. But the main legal reason this new formulation of the Park doctrine should raise concern is that HHS did not possess the authority to exclude individuals from the health care industry until 1977, two years after the Supreme Court considered and narrowly approved the use of the Park doctrine and its controversial ability to extend liability to responsible directors, officers, and executives. In debating the legality of the government’s ability to secure convictions of individuals using the doctrine, the Court was operating in light of then-existing federal penalty and sentencing guidelines, which did not include exclusion. In other words, because the risks involved in the outcome of a Park prosecution are now so much more severe than those that existed under the original sentencing practices, there is no applicable Supreme Court precedent for the current doctrinal use.

DOWNLOAD PDF | 91 N.C. L. Rev.949 (2013)