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Good Works Overcome OIG's Exclusion Presumption For Forest Labs' Ceo

Forest Laboratories, Inc. (NYSE: FRX)("Forest Labs") recently avoided a devastating sanction from the Health and Human Services Office of the Inspector General ("OIG"). The OIG announced August 5, 2011 that it would not take any action pursuant to its permissive exclusion authority against Howard Solomon, Forest Labs' CEO. If the OIG had imposed the sanction, Mr. Solomon and any company he worked for or owned would have been barred from participating in any federal health care program, including Medicare Part D. Forest Labs is a pharmaceutical company with a $9 billion market capitalization, and Mr. Solomon has been its CEO for the past 30 years. The OIG's announcement provides prescient guidance to help other companies from losing key executives.

The threat to Forest Labs highlights the peril that companies reliant upon participation in federal health care programs face when charged with crimes. Even misdemeanor pleas may result in corporate executives facing OIG's equivalent of the death penalty: exclusion from participation in federal health care programs. If an executive is excluded, a company may no longer employ that individual. This can have devastating consequences.

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