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February 2015


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Criminalizing Corporate Behavior

When a corporation causes harm, there is a natural instinct to apply criminal sanctions, society's most serious expression of moral disapproval. However, criminal liability has usually required criminal intent, a concept that applies well to humans, but applies oddly to a legal organizational construct, like a corporation. In addition, the collateral consequences of criminally prosecuting a corporation can be vast and hard to predict.

A new study from RAND examines the role of criminal liability in controlling corporate behavior – prosecutions both of corporations and of employees for actions taken on corporations' behalf – and how that role can be improved.

Researchers found that with the exception of prosecutions under the Sarbanes-Oxley Act and the Foreign Corrupt Practices Act, the number of corporations convicted in federal courts has declined over the last decade. However, deferred prosecution agreements and non-prosecution agreements (DPAs and NPAs, respectively) have sharply increased. These "out of court" agreements have led to a partial privatization of the criminal law, as DPAs and NPAs are typically negotiated and executed with little judicial oversight and rely upon private monitors hired by the corporation.

Based on the study, RAND researchers have several recommendations:

  • Policymakers should recognize that because criminal sanctions in this context are more instrumental tools (meant to ensure compliance) than moral judgments, the costs and benefits of criminal corporate liability should be weighed carefully. Criminal corporate liability can harm thousands of innocent stakeholders (such as employees or shareholders), and upon closer examination might not be the most effective way to change corporate behavior and ensure compliance.
  • Have judges review DPAs and NPAs, which would provide additional transparency and some assurance that the agreements are genuinely in the public interest.
  • Lawmakers should consider substituting the use of civil sanctions in certain scenarios, which, unlike DPAs and NPAs, would involve a finding of corporate culpability while avoiding the hard-to-predict collateral consequences associated with criminal sanctions.

The authors assert, "...if we are using criminal law principally to create corporate governance incentives, we should think carefully about whether the benefits outweigh the costs. The instinct to punish 'bad' corporations can prevent us from conducting [such an] analysis." The report offers suggestions that might maintain corporate compliance while sidestepping some of the challenges or unnecessary costs created by criminal corporate liability.

Read the report »


Identifying High-Priority Technology and Other Needs for the U.S. Corrections Sector

Corrections officer viewing prison monitors

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Corrections agencies that run detention facilities and supervision programs today face major challenges from declining budgets, more people in custody and under supervision, and problems of equity and fairness in administering justice. To better achieve its objectives and play its role within the criminal justice enterprise, the corrections sector needs innovation in its technology, policy, and practice.

But, in a time of constrained budgets, what options are there to innovate? A new report from the RAND Corporation identifies and prioritizes potential improvements in technology, policy, and practice in both community and institutional corrections.

Some of the needs identified by the panel and researchers include:

  • Translation technologies to help corrections officers to better communicate with and manage offenders who speak many languages.
  • Developing training for officers on best practices for managing offenders with mental health needs.
  • New visitation policies and technologies (for example, using video visitation) to reduce opportunities for visitors to bring contraband into jails and prisons.

Though there are many possible ways that innovation could improve the corrections sector, given the funding constraints it faces, there is a need to set priorities. The RAND report prioritized the needs in collaboration with a panel of corrections professionals, but also built an online tool that allows individual readers to prioritize the innovations for themselves.

Check out the interactive tool that allows users to leverage the research in Fostering Innovation in Community and Institutional Corrections: Identifying High-Priority Technology and Other Needs for the U.S. Corrections Sector and see how the ranking of the innovations would change, based on your own policy priorities.

Malpractice Reform May Not Yield Savings Via a Reduction in Defensive Medicine

Attorney and physician

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Malpractice reform has been advocated by some experts and lawmakers as a key to reining in health care costs by reducing "defensive medicine," but a new study suggests that even very strong legal defenses for health care providers might not have any effect on the way physicians practice.

The study looked at three states – Texas, Georgia, and South Carolina – that changed the legal malpractice standard for emergency room care to gross negligence. This means that for emergency physicians accused of malpractice in those states, plaintiffs must prove that doctors actually knew that they were taking actions likely to cause serious injury.

Authors of the study, which was published in the New England Journal of Medicine, examined nearly four million Medicare records and compared changes in practice over time between reform states and neighboring states. The authors concluded that the laws had no effect on the use of imaging (i.e. CT scans or MRIs), on hospital admission rates, or, in two of the three states, on average emergency department charges. They suggest that even if the threat of a lawsuit is greatly diminished, the "path of least resistance" still favors resource-intensive care.

View the publication | Read the news release

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