Penalties for corporate misbehavior are absurdly small, particularly in cases of obvious malice or fraud.
Until executives and shareholders feel real pain, companies can simply make their decisions based on cost outcomes. In most cases, the financial incentive to cheat and flaunt the law is just too great compared to the risk of penalty.
Throw some execs in jail, starting with the CEO. If CEOs are so valuable that they can be paid 100x median employee wage, then they should have some real responsibility. And penalize the stock in some way so the investors feel the pain. Sure, it's not their fault necessarily; but if you make the investors angry enough, they will demand proper behavior from the companies they invest in.
I share your frustration but any smart CEO will have plausible deniability. Additionally, this is trying to fix it after the fact.
The thing that has stuck in my brain for a while now that the way to solve this issue is with better whistle blower programs. In general, people (usually more than one) in the middle know what they are being asked to do is illegal (or highly questionable, like not disclosing a piece of data about a drug side effect) but fear being fired. Having $10M+ payouts for whistle blowing has the potential to remove that risk. I am making an assumption here that the whistle blower's identity would remain secret, potentially similar to witness protection. So where would the money come from? I think the right answer is the ability of the government to freeze assets (not monthly payroll) and make it so that executives selling stock once the investigation starts would be guilty of insider trading. The details are all solved here but it is meant as a jumping off point.
The biggest challenge would be getting this to pass as most of the companies that are guilty of these things are major candidate backers and pay for tons of lobbying efforts.
Along with more obvious reasons like corruption, one reason prosecutors don’t like to go after shareholders or shut down the company is that there are a lot of people who work for these companies who aren’t responsible for bad acts, who have families to support and putting lots of people out of work for something out of their control is political suicide.
That argument is based on the premise that the best thing to do is be cowardly if it benefits you, even if it costs a lot of people who you have a duty towards substantial amounts. The long term prospect of repeatedly caving to corruption taking relatively small portions of the population hostage is eventual corruption of the entire system -- death of the system -- which costs the futures of the very people who would be angry at you.
This makes no sense, because CEOs are not irreplaceable (and, thus, should not be immune). Just replace a bad CEO with a good one and all "innocent" workers will not only not suffer, but will be in a better shape due to expected overall improvement of the company's culture and performance.
The 'just replace' kind of makes no sense. Replacing senior staff has all kinds of ripple effects throughout a corporation. I would propose that hardly any illegal or immoral act of big corp starts with the CEO. It's a cabal usually. Just cutting the head of won't work. I would like to read about clearly immoral companies coming clean, tips? In fear many only clear their act up in nominem.
I stand by my opinion, but you have to read it not literally. Firstly and obviously, the phrase "just replace" is somewhat a simplification, even though I believe that, in any decent organization, it should not have any ripple effects at all. Secondly, assuming you attempt to read between lines, my points do not specifically target CEOs per se, but upper management, who almost always is the mastermind, initiator, orchestrator and beneficiary of illegal and/or immoral acts in corporations ("cabal" in your parlance).
There is still the possibility that this would weigh in favor of an unusually large damage award against Sutter. In many antitrust cases, the judge is allowed to triple the amount of damages the jury awards, if he/she sees fit.
I don't know much about this particular case, but I know that Sutter Health is a reckless, ruthless, predatory company that is a not-for-profit in name only, and uses all the same tactics that PE companies use to take over and leverage hospitals to expand its network. They don't care about their patients, as evidenced by their dispute with Blue Shield a few years ago (previous story: https://www.npr.org/sections/health-shots/2016/04/07/4732535...) where many thousands of users were left with no insurance coverage and kicked out of their groups while Sutter engaged in brinkmanship while negotiating with Blue Shield.
I keep asking in the US when we are going to have had enough of this entire health-care fiasco.
Nobody is happy with it, the people who are victimized by companies like Sutter aren't happy and I guess most folks that work at the Sutters of the country aren't happy either. They are just going through the motions in quite desperation because house payments but it sucks and what they are doing sucks and they know it.
It's kind of like the Soviet Union right before the fall. People knew there were deep structural problems, the plebs, the party officials, they had to have known. But for the time being they just kept going through the motions until one day the the farce just got too onerous to pretend anymore.
That day is about here I think. Or rather hope. The entire setup between government, insurance and corps like Sutter is very truly nuts and isn't serving the needs it was designed for. I don't think that's a fringe belief either but a growing understanding.
Also, healthcare isn't the only industry with that type of problem.
That makes the issue more resonant, because the deep corruption of the legal system and routine criminality of corporations cuts across pretty much every facet of life.
Intentional criminality by corporations should be treated exactly like intentional criminality by gangs, with the leaders rounded up and served sentences according to the scale they operated on. Anything in excess of a billion dollars of criminal activity should be a life sentence.
I somehow think compliance would be much better if executives were held responsible for it. But... That's how corruption works -- they're not.
Sutter says "part of a routine destruction of old paper records"
If that's true, they can be required to show evidence of the rest of this routine and how it was possible for the mistake to happen. Apparently they havn't destroyed documents for at least 17 years so it doesn't sound very routine at all.
Because when we catch you, even if it were an “unfortunate mistake”, your company gets an automatic “unfortunate” finding for the plaintiff. Of course it doesn’t currently work that way. OTOH, the judge will probably be none too pleased. Perhaps not resulting in an automatic finding for the plaintiff, but I’d imagine defense has an uphill climb from there.
Few years ago found an article claiming that the threat of prison keeps middle class people in line. Actual prison is needed for poor people. However wealthy people just the loss of reputation and law suits are enough to keep them in line.
It was written of a chief appellate court justice.
> I’d imagine defense has an uphill climb from there.
So?
If the penalty for default loss+judicial penalty is less than the smoking gun/slam dunk case penalty, it's a win.
This kind of misconduct needs to result in jail time and a felony for the CEO. It doesn't need to be a lot of jail time as long as there is now a felony on his record.
Let some CEO's get a taste of trying to live in our society with a felony on your record and suddenly companies will comply with judicial orders to the letter.
I really don't understand what is not legal with charging what you can for drugs. I'm not a fan of capitalism, but what is not legal or even considered immoral about charging what the market will bare?
the market will bear a surprising amount of people dying because they are too poor to live, and make more profit that way than selling the drugs at low prices to poor people. I'm not a professor of ethics or anything, but I feel like that's probably not super moral. Speaking broadly, I'm not sure we can consider the market to be a moral entity, or at least not while we externalize the costs of im- and amoral behavior.
> In April 2014, a grocery workers’ health plan sued Sutter and alleged it was violating antitrust and unfair competition laws. The plaintiffs began requesting documents related to contracting practices, such as “gag clauses” that prevent patients from seeing negotiated rates and choosing a cheaper provider and “all-or-nothing” terms that require every facility in a health system to be included in insurance networks.
This is an antitrust case, not a “prices are high” case. The post title is misleading.
The actual issue of the case is that healthcare providers have been consolidating for a number of years, so much so that in the northeast is very rare to find independent providers. Small doctor practices are now usually part of a larger provider instead of being independent. The small practice gets to hand of administration of billing issues and gets much better rates from insurers. Hospitals get more referrals. In some areas, you end up with 1 or 2 providers so insurance companies have no choice but to pay high prices and pass those on to consumers.
15 million pieces of documents and 1400 witnesses to talk to. I made those numbers up but on HCA case apparently the Govt had 13,000 boxes of documents...500 FBI agents participated and HCA spent $300 mil in their defense
https://books.google.com/books?id=5SwZ0j9lf40C&pg=PA235&lpg=...
Until executives and shareholders feel real pain, companies can simply make their decisions based on cost outcomes. In most cases, the financial incentive to cheat and flaunt the law is just too great compared to the risk of penalty.
Throw some execs in jail, starting with the CEO. If CEOs are so valuable that they can be paid 100x median employee wage, then they should have some real responsibility. And penalize the stock in some way so the investors feel the pain. Sure, it's not their fault necessarily; but if you make the investors angry enough, they will demand proper behavior from the companies they invest in.