On Corporate Criminal Liability

The purpose of this paper is to illustrate the application of corporate criminal liability in terms of negligence committed with in the health care setting. It will establish the distinction between corporate criminal liabilities versus vicarious liability by pointing out instances when a corporate can be held criminally liable. This will answer the question on whether the negligence of an employee can be attributed to the lack of superior clout of the organization employing the person who committed such act or whether such employee, be personally held criminally liable for such negligence.

In our health care industry today, when things go wrong causing death or disability, who should we sue for liability? Will it be the company who employed the negligent employee, or the employee himself? The distinction between corporate criminal liability and vicarious liability lies in the very nature with which restitution of the damages caused by the impact of a negligent act is given unto. Therefore, liability defines the difference between the two.

With corporate criminal liability, the corporation is deemed responsible to remedy any wrong done, for as long as the employee conducts such negligence with in the scope of his official function as an employee of the corporation. Such act must not in any way benefit the corporation, otherwise such could not be considered criminally liable. It must be established that the employee who committed such negligent act must be fully aware of the corporate policy of which he willfully violates.

The nature of such violation must reflect and attack the integrity of such corporation, causing failure of business conduct and success. Vicarious liability on the other hand is different from corporate liability in the sense that when an employee commits a negligent act, the superior is held liable for such violation notwithstanding the fact that the superior does not bear direct participation to the negligent act. Ever since the adoption of the Organizational Sentencing Guidelines (OSG) in 1991, the U. S.

legal system has transcended from vicarious liability into a duty-based corporate liability, with which the negligent act of the employee is dependent upon whether the company has exercised due care to avoid harm in question, rather than on traditional agency principles of respondeat superior otherwise commonly known as vicarious liability. Courts and agencies typically evaluate the level of care exercised by the company in ostensibly preventing harm by implementing a well design plan to detect and discourage such conduct that would lead to accidents (Krawiec.

2005). There are several requisites in holding the corporation criminally liable and one of the salient one is the intent of the person doing it, since it should not be due to the personal aberration of the employee but rather the will to commit fraud not withstanding his complete awareness of company policy. The corporate must show that there is a full proof measured instilled in order to somehow anticipate and prevent this kind of act by the personnel, other it can be criminally liable for the employees; mistake even if the nature of such negligence is willful.

When a nurse commits negligence through wanton disregard of protocols, whether such act is borne out of carelessness or the lack regard to professional obligation, the corporation/company is duty bound to respond to the ill effects of such negligence. The reason for the mistake could be because the hospital is understaffed which is why the level of focus and concentration of the nurse is so diminished causing the mistakes and negligence to occur.

It is not the nurses’ will to report for work tired and over stressed, but because her duty schedules required her to extend the number of hours she has been working (Shavell. 1997). This could have been anticipated, had the organization hired more staff to maintain optimum level of service at very minimal detriments. This is what the premise of corporate criminal liability is trying to safeguard, because if the employee wishes to earn, then he or she is duty bound to submit to the policies of the organization employing her/him.

Thus the over all clout lies upon that who assumes higher command. Unlike vicarious liability wherein the superior is responsible for the mistakes of the nurse, corporate criminal liability looks upon the hierarchy of the person/institution who can better remedy the effects of such negligence – the employer/corporation. For a corporation to be criminally liable, the negligence must be committed by the person legitimately and directly employed by the organization.

Such negligence, whether intentional or accidental, should be done by the employee with in his official capacity as an employee, which means that such negligence should be related to the official functions of the employee. This is why the current strategic move that most companies implement to prevent the headache of corporate criminal liability is by hiring independent contractors to transfer said liability to a third party.

Most contracted service would stipulate this in their contract so that whenever negligence is committed, the independent contractor is liable for said negligence, and not the corporation who hired him. This is somehow a move that would prevent the corporation from the enormous expense of litigation as well as the cost of remedying the ill effects of such negligence. For instance, the comparison between hiring a health worker through an agency (hereinafter labeled as A), between hiring a health worker directly employed by the same (B), where in if both committed an act of negligence causing the life of a patient.

The organization is criminally liable for the crime of B but neither for A, because A now falls under the category of third party liability, and while it may be argued that the contract between the organization and the agency providing A stipulates the protection of the employer/organization from any criminal liability, intent and due process must be very well established. This all depends on the manner of interpreting the law, according to Federal regulations implemented per state.


  • Center for corporate Policy (2004). Corporate Crime and Abuse: Tracking the Problem.Retrieved on Feb 09, 2007 from http://www. corporatepolicy. org/issues/crimedata. htm. Krawiec, K. (2005). Organizational Misconduct: Beyond the Principal-Agent Model.
  • Florida University State Law Review. Vol. 32: pp. 517 – 615. Mokhiber, R. (2005) Corporate Crime Reporter. Retrieved on Feb 10, 2007 from http://www. corporatecrimereporter. com/index. html Shavell, S. (1997).
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