Marsh and Allied World Launch Responsible Corporate Officer Doctrine Coverage

Published on Wednesday, 08 February 2012 10:13 Written by TradersHuddle Staff

LIFE SCIENCE, PHARMACEUTICAL, AND HEALTH CARE EXECUTIVES AT INCREASED RISK

NEW YORK, Feb. 8, 2012 /PRNewswire/ -- To assist life science, pharmaceutical, and health care companies in managing the rising risk of their corporate officers being pursued for violations under the Responsible Corporate Officer (RCO) doctrine, Marsh and Allied World Assurance Company (U.S.) Inc. (Allied World) announced today a new form of insurance protection—RCO Corporate Response—that covers the costs associated with RCO investigations and related enforcement actions.

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Over the last two years, the Food and Drug Administration (FDA), Office of Inspector General (OIG), Department of Health and Human Services (DHHS), and other regulatory authorities have vigorously pursued corporate executives for violations of the Food, Drug, and Cosmetic Act (FDCA) using the decades-old RCO doctrine. The doctrine provides that criminal liability may be imposed upon individual corporate officers who are in positions of authority to prevent or correct wrongdoing within a corporation, but fail to do so. Government officials are not required to prove that a corporate officer participated in or was conscious of any wrongdoing.

Penalties associated with RCO violations include fines, imprisonment, and debarment/exclusion from working with federal health care programs including Medicare and Medicaid.

Developed by Marsh's FINPRO Practice and Allied World, the "A" rated global insurer underwriting the policy, RCO Corporate Response reimburses companies for the costs associated with RCO prosecutions and administrative debarment/exclusion proceedings. Under the policy, corporate executives can also recover a portion of their annual compensation.

"The risk of an RCO-related investigation is a growing concern for life sciences, pharmaceutical, and health care companies as the number of prosecutions being pursued against corporate officers continues to rise," said Maureen Gorman, a senior vice president within Marsh's FINPRO practice.

"Not only is responding to such enforcement actions expensive and time consuming, executives who neither participated nor had knowledge of alleged wrongdoing are at increased risk of being criminally prosecuted, losing personal income  and facing a potentially career ending event. RCO Corporate Response is designed to protect these executives from the financial impact that can ensue from such enforcement actions."

"The new RCO Corporate Response product is another example of Allied World's focus on crafting innovative solutions to meet the continually evolving needs of our insureds," said Thomas Kennedy, Senior Vice President, Professional Lines. "This product specifically addresses the changing risks and exposures of the health care, medical device and pharmaceutical markets. Working with Marsh, we have created a product uniquely developed to address the ramifications of the increasing scrutiny of corporate officers." 

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 25,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 52,000 employees worldwide and annual revenue exceeding $10 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

About Allied World Assurance Company

Allied World Assurance Company Holdings, AG, through its subsidiaries, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions, offering superior client service through a global network of offices and branches. All of Allied World's rated insurance and reinsurance subsidiaries are rated A by A.M. Best Company, A by Standard & Poor's, and A2 by Moody's, and our Lloyd's Syndicate 2232 is rated A+ by Standard & Poor's and Fitch. Please visit www.awac.com for further information on Allied World.

SOURCE Allied World Assurance Company Holdings, AG