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In a commentary recently published by The Daily Deal, Jenner & Block Partners Robert R. Stauffer and Thaddeus J. Malik argue that the Department of Justice’s closely-watched false claims lawsuit against Merck-Medco demonstrates increased governmental interest in effectiveness of corporate ethical compliance programs.
Messrs. Stauffer and Malik wrote that while legislation such as the Sarbanes-Oxley Act and the False Claims Act have spurred corporations to, at the very least, implement compliance programs, the Merck-Medco case demonstrates the importance of ensuring that such a program is effective.
Indeed, observed the authors: “While attention has been focused on the HealthSouth Corp. scandal and former CEO Richard Scrushy's ground-breaking criminal indictment under SOX, the Department of Justice has more quietly alleged for the first time that a company's failure to maintain an effective compliance program actually demonstrates that it knew of -- and is therefore liable for -- misconduct under the False Claims Act. The allegation is contained in a few pages of a lengthy whistleblower complaint, U.S. v. Merck-Medco Managed Care, filed Sept. 29.”
“The DOJ’s action in the Medco case also serves as an unmistakable warning that the department believes effective compliance programs are critical to stopping the recent plague of corporate scandals,” the authors added.
The December 4 article observes that in the case of the Medco misconduct with its financial misstatements, the government alleges that the inadequacies in the corporation’s compliance program demonstrated a “‘knowing’ violation of the False Claims Act.”
Although the commentary concludes that it is “premature” to read too much from the actions in the Merck-Medco case, corporate directors and compliance officers should “consider how your compliance program would measure up if subjected to similar scrutiny.”