RCO Corporate Response, an offering from Marsh FINPRO®, provides insurance coverage for pharmaceutical, life sciences, and health care corporate officers who may be held liable for their companies' actions under the Responsible Corporate Officer (RCO) doctrine.

Background on the RCO

The Food and Drug Administration (FDA), Office of Inspector General (OIG), Department of Health and Human Services (DHHS), Department of Justice (DOJ), and numerous other U.S. regulators continue to vigorously pursue corporate executives for violations of the Food Drug and Cosmetic Act (FDCA).

In their efforts to enforce the FDCA, government agencies have heightened their use of the RCO doctrine, which provides that responsible corporate officers may be held criminally liable under the FDCA, Medicare/Medicaid, or other public welfare statutes/programs regardless of whether the corporate officer charged with a crime had actual knowledge of the wrongdoing or participated in the offensive conduct. Neither intent nor negligence is required for a criminal conviction. Such cases are known as Park Prosecutions, named after the 1975 landmark U.S. Supreme Court case U.S. v. Acme Markets, Inc. and John R. Park, President.

In accordance with the RCO doctrine, liability for a criminal misdemeanor may be imposed on a corporate officer who is in a position of authority to prevent or correct wrongdoing within a corporation, but fails to so.

Penalties associated with RCO doctrine violations include fines, imprisonment, and debarment/exclusion from working with federal or state health care programs, including Medicare and Medicaid. The remedy of exclusion, often delegated to regulatory bodies via the Social Security Act, prohibits individuals and/or entities from participating or working with federal health care programs. Exclusion/debarment often translates into loss of professional position or entire career, loss of income, and other severe financial consequences.

Currently, media and legal reports indicate that there is a significant number of pending matters involving criminal misdemeanor charges. There are also a number of high profile cases on appeal seeking to overturn unreasonable time periods for exclusion/debarment.

RCO Corporate Response Coverage Highlights:

  • Provides coverage for defense costs incurred in the investigation or defense of any misdemeanor criminal proceeding, as well as administrative proceedings brought pursuant to the RCO doctrine.
  • Defense cost coverage is also available for potential RCO claims.
  • Pays lost future compensation to insured persons resulting from exclusion/debarment.
  • Unlike directors and officers (D&O) liability policies, RCO Corporate Response reimburses for “recoupment loss” and/or clawback awards, which is the value of any compensation that must be returned or repaid by an insured person as a result of a judgment, decision, or settlement of an RCO claim.
  • Acts as primary insurance to D&O liability insurance policies.
  • Definition of “RCO Claim” includes administrative proceedings brought by government entities, including those proceedings seeking debarment/exclusion in accordance with the authority delegated by the Social Security Act.
  • Definition of “Insured Person” includes all senior level officers and their functional equivalents.
  • Policy can be customized to match each entity’s organizational structure.
  • Limited policy exclusions.
  • Defense costs are payable on a current and as incurred basis prior to the final disposition of a claim.
  • Underwritten by Allied World Assurance Company (AWAC), a global provider of innovative insurance solutions that specializes in management liability needs for a broad-cross section of industry groups.

Who It’s for:

  • Any and all companies involved in the health care and life sciences sectors, including pharmaceutical companies, laboratories, hospitals, medical device companies, and senior care providers.

What You Get

  • Coverage for defense costs of RCO prosecutions and administrative debarment/exclusion proceedings.
  • Continuation of salary/compensation for excluded/debarred executives.
  • Reimbursement of a corporate officer’s compensation that must be returned or forfeited as a result of an adverse judgment or settlement.