The Park Doctrine — Should Defective Product Makers go to Prison?

It’s little known and rarely applied but the Park doctrine does allow the U.S. government to file a misdemeanor criminal charge against corporate officials even if they didn’t intend to violate any law.

The law is based on the conviction of a Mr. John Park, who owned Acme Markets, a national retail food chain. The government said Park and his chain violated the Federal Food, Drug, and Cosmetic Act (FDCA) in Maryland by selling unsanitary food across state lines. In 1975, the U.S. Supreme Court upheld his conviction on the basis that those who manage a business that sells products have an affirmative duty to make sure the products are safe, even though he may not have had a hands-on role in the day-to-day operation of his business.

However fines for a Park case were often $30 to $50, not enough to amount to anything more than a slap on the wrist. Things began changing in the 1980s when the fines increased and the Department of Justice and FDA began a more aggressive interpretation of the Park Doctrine. Now a misdemeanor count can bring a $100,000 fine and prison time. Consider the resolution of some recent cases:

• When Sally Qing Miller and Stephen S. Miller sold adulterated pet food tainted with melamine, they faced charges of wire fraud and a 26 count indictment. In 2010, they were sentenced to three years probation.
• Synthes, Inc. a medical device company, made false statements to the FDA and sold a bone filler without obtaining a special exemption from the FDA. Four company officers were indicted, and last November were sentenced to nine and five months in prison. All have reportedly lost their careers and each agreed to a $100,000 fine. The company, owned by Norian Corporation, was charged with 52 felony counts and fined $23 million.
  Those sentences don’t come close to the death sentence for at least two patients who died after the bone cement was used off-label and injected into their spines. Johnson & Johnson bought Synthes for $21.3 billion last April.
• Howard Solomon CEO of Forest Labs was not excluded from prosecution over irregularities with the drugs Levothroid, Celexa, and Lexapro. The company paid a $149 million civil settlement but Solomon, 83, avoided prison since he was not personally charged. The government dropped efforts to have him resign after pressure from business groups.
• Five executives with WellCare were charged and indicted for making false statements and conspiracy to commit Medicaid fraud.  A billing analyst pled guilty to defrauding Medicaid. The executives resigned and each faces up to a decade in prison for each of four health care fraud counts.

Hefty fines do not tend to deter criminal behavior and negligent behavior as much as a prison sentence and the Department of Health and Human Services, which oversees the FDA, is clearly on a course to step up punishments. It may ultimately be up to the U.S. Supreme Court to determine the how much a corporate officer had to know to determine the degree of negligence before he can be held personally and criminally accountable.