By: Christopher Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Care Provider Defense and Compliance Firm
In a landmark legal resolution, the U.S. Department of Justice announced a $650 million settlement with McKinsey & Company over its consulting work with Purdue Pharma regarding the marketing of OxyContin. This marks the first time a management consulting firm has been held criminally accountable for aiding and abetting a client’s illegal activity.
Key Allegations and Charges
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Criminal Charges:
- Felony Count: McKinsey was charged with knowingly destroying records to obstruct a federal investigation.
- Misdemeanor Count: The firm was charged with conspiring with Purdue to misbrand OxyContin by promoting medically unnecessary prescriptions.
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Civil Violations:
- False Claims Act Violations: McKinsey’s advice caused the submission of fraudulent claims to federal healthcare programs like Medicare and Medicaid.
- Conflict of Interest Allegations: McKinsey failed to disclose conflicts of interest while working simultaneously for Purdue and the FDA.
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Individual Accountability:
- Former McKinsey Senior Partner Martin E. Elling has been charged with obstruction of justice for allegedly deleting Purdue-related documents. He faces up to 20 years in prison.
Settlement Terms
$650 Million Payment:
- $231 Million Criminal Penalty
- $93 Million Forfeiture
- $323 Million Civil Settlement
Five-Year Deferred Prosecution Agreement (DPA):
- McKinsey must cease all opioid-related consulting.
- Annual compliance certifications by senior management are required.
- Significant upgrades to compliance programs, including risk assessment, quality control, and client engagement reviews.
Why This Matters
The settlement serves as a wake-up call for consulting firms and businesses in highly regulated industries. It establishes that even behind-the-scenes advisors can face criminal charges if their recommendations contribute to illegal activity.
Principal Deputy Assistant Attorney General Brian M. Boynton made it clear: “Consulting companies cannot advise clients to break the law and then skirt responsibility when their clients do so.”
Compliance Takeaways for Healthcare and Life Sciences Firms
- Strengthen Internal Oversight: Regularly audit contracts and engagements, especially those involving high-risk products like controlled substances.
- Implement Comprehensive Compliance Programs: Establish robust risk assessment frameworks to prevent unlawful advisory practices.
- Monitor Conflicts of Interest: Avoid engaging with clients on opposite sides of regulatory issues to maintain compliance and trust.
Facing Complex Compliance Challenges? We Can Help.
Parrella Health Law specializes in healthcare compliance, risk management, and corporate representation. If your organization needs legal guidance on navigating regulatory frameworks, establishing compliance programs, or mitigating liability, contact Parrella Health Law at 857.328.0382 or email Chris directly at cparrella@parrellahealthlaw.com.
Christopher A. Parrella, Esq., CPC, CHC, CPCO, is a leading healthcare defense and compliance attorney at Parrella Health Law in Boston. With extensive experience in healthcare law, he provides robust legal support in areas including regulatory compliance, audits, healthcare fraud defense, and reimbursement disputes. Christopher emphasizes client-centered advocacy, offering one-on-one consultations for personalized guidance. His proactive approach helps clients navigate complex healthcare regulations, ensuring compliant operations and defending against government investigations, audits, and overpayment demands.
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