Insurers Tailor Plans for Healthcare Executives Facing Misdemeanor Fraud Charges

A new type of insurance policy designed for healthcare executives can cover certain misdemeanor charges of healthcare fraud, according to a Philadelphia Inquirer report.

The policy's roots stem from 1975, when the Supreme Court ruled United States v. Park. The court held that responsible corporate officials could be convicted of a first-time misdemeanor based on their positions of authority to prevent violations of the Food Drug and Cosmetic Act. Under this ruling, there is no requirement for evidence that corporate officials participated in the alleged fraudulent activity or even knew about it. The theory has come to be known as the responsible corporate officer doctrine.

Corporate insurance broker Marsh, based in New York, and Bermuda-based insurer Allied World Assurance have affiliated to begin selling these healthcare fraud policies in early February. The policy is designed for hospital, pharmaceutical, medical device company and biotech company executives. An Allied spokesperson said the plan is "only for misdemeanor criminal prosecution that does not involve criminal intent," according to the report.

Depending on state laws, the plans can help an executive pleading guilty get reimbursed for lost pay and may cover some legal fees, according to the report. The policies do not reimburse a company for settlement payments to the government however.

"We recognized that the responsible corporate officer doctrine had become a more prevalent issue and with the increased scrutiny that pharmaceutical and medical-device companies are under, we thought there would be a market" for the insurance, Maureen Gorman, a senior vice president with Marsh, said in the report.

The spokespeople from the companies would not comment on how much these policies could cost, as it would vary by company size, executive compensation, risk, regulatory record and internal-auditing process, according to the report.

More Articles on Healthcare Fraud:

Former Medical Practice Executive Indicted For Alleged Mail, Wire Fraud
Beth Israel Medical Center in NY to Pay $13M for "Turbocharging"
18 Recent Lawsuits, Settlements Involving Hospitals


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