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A trend is emerging in the field of white-collar crime that is unrelated to recent, well-publicized financial scandals. Local and federal prosecutors nationwide are increasingly considering criminal charges against corporations and their managers in connection with workplace injuries and deaths. The trend is not confined to one state or region. In Montana, a mining company and several of its current and former executives were indicted on federal charges involving allegations that they knowingly put their workers and others in danger through exposure to asbestos in the mine. U.S. v. W.R. Grace, No. 05-CR-7 (D. Mont. filed Feb. 7, 2005). In Texas, Alabama and New Jersey, a pipe manufacturer was investigated for criminal charges regarding alleged worker safety violations, including the death of a maintenance worker. See David Barstow, “Foundry Pleads Guilty,” N.Y. Times, March 23, 2005, at A12. In New York, a construction contractor pleaded guilty to federal charges related to the death of a worker who fell while building a concrete balcony. See U.S. v. Lee, No. 1:05-cr-00278-FB-ALL (E.D.N.Y. filed April 7, 2005), Corp. Crime Rep., May 9, 2005, at 5-6. In Michigan, a corporation and its president were convicted of attempted involuntary manslaughter in connection with the death of an employee who was killed when an explosion occurred during a cutting operation on a storage tank. See Michigan v. Midland Environmental Services, nos. 99-6435FC and 99-6436FC (Gladwin Co., Mich., Cir. Ct. filed Nov. 22, 1999), Corp. Crime Rep., Nov. 6, 2000, at 3. Also in New York, a general contractor, its president and a subcontractor were charged with manslaughter and reckless endangerment when two workers drowned when digging a ditch for a water line. People v. Reagan, 723 N.E.2d 55 (N.Y. 1999). The potential exposure is significant: In 2003, the year for which the most recent statistics are available, there were approximately 5,575 workplace fatalities and 1,315,900 nonfatal workplace injuries. See U.S. Dept. of Labor, Bureau of Labor Statistics Web page at www.bls.gov/iif/home.htm. Reducing these numbers and enhancing worker safety has always been the primary concern of responsible corporate managers. The current environment, however, forces corporate managers to consider the potential for criminal, as well as tort, liability in the aftermath of accidents. Historically, liability for workplace injuries and deaths has been determined through no-fault workers’ compensation programs and civil tort cases. The risk of large verdicts and increased workers’ compensation insurance premiums provides an enhanced incentive to managers to create safe working environments. In addition, the Occupational Safety and Health Administration (OSHA) and its state counterparts have responsibility for workplace health and safety standards. Rigorous agency enforcement with the risk of large penalties for health and safety regulations violations further promotes safe workplaces. Criminal liability, on the other hand, has been reserved traditionally for conduct showing the most flagrant disregard for worker safety. Nonetheless, despite extensive regulation and civil tort remedies, the invocation of more severe state and federal criminal penalties has been on the upswing in recent years. STATE PROSECUTION Although local prosecutors have charged a variety of state criminal violations for workplace injuries and deaths (including manslaughter, negligent homicide, reckless endangerment and assault), the most commonly used statutes are reckless assault and reckless homicide. Several states have amended their reckless assault and homicide statutes to capture conduct more typically involved in a worker injury or death. Representative statutes provide that no person (defined to include corporations) shall recklessly cause the death or injury of another. These statutes provide that a person acts recklessly when, “with heedless indifference to the consequences, he perversely disregards a known risk that his conduct is likely to cause a certain result or is likely to be of a certain nature. A person is reckless with respect to circumstances when, with heedless indifference to the consequences, he perversely disregards a known risk that such circumstances are likely to exist.” See, e.g., Ohio Rev. Code �� 2901.22(C), 2903.041. In addition, a growing number of states are expanding their oversight in the area and strengthening their criminal statutes. For instance, some states now require safety inspectors to notify prosecutors of deaths deemed to be caused by safety violations. Similarly, several states have increased prison terms for criminal violations of the applicable statutes. FEDERAL EFFORTS In May of this year, the New York Times reported about a new initiative in the U.S. Department of Justice, in cooperation with OSHA and the Environmental Protection Agency, to identify and prosecute workplace safety violators. The Times reported that the initiative “seeks to marshal a spectrum of existing laws that carry considerably stiffer penalties than those governing workplace safety alone. They include environmental laws, criminal statutes more commonly used in racketeering and white-collar crime cases, and even some provisions of the Sarbanes-Oxley Act.” David Barstow and Lowell Bergman, “With Little Fanfare, a New Effort to Prosecute Employers That Flout Safety Laws,” N.Y. Times, May 2, 2005, at A17. The current criminal penalty under federal law for violation of OSHA’ s workplace safety rules is six months of incarceration. 29 U.S.C. 666(e). In June 2003, Senator Jon Corzine, D-N.J., introduced the Wrongful Death Accountability Act, which would increase the maximum penalty for criminal workplace safety regulations to 10 years of imprisonment. See S. 1272, 108th Cong. (2003). WHAT IS AT STAKE? Aside from worker safety itself, the greatest concern for those members of management potentially responsible for a workplace injury or death is the real risk of incarceration. Penalties range from several months to several years of incarceration for reckless homicide convictions, and fines can range from several thousand to millions of dollars. A criminal conviction under federal or local laws can also result in significant collateral consequences for the offending corporation. These consequences may include the cancellation of, or a dramatic increase in the cost of, insurance, increased likelihood of success of related civil cases, increased governmental monitoring and/or regulation and the potential debarment from government procurement programs. Thus, the liberty of executives, managers and, potentially, the ability of the company to continue operations, is subject to a determination-with hindsight-of what constitutes a “known risk” and whether it was disregarded. Most companies doing business in the United States are already enforcing workplace safety rules and encouraging practices that minimize the risk of occupational injury. There are, however, some additional steps that a corporation can take to discourage prosecution when an injury or death occurs. Establish compliance standards. A fundamental consideration for satisfying regulatory review is whether an effective program to detect and prevent violations of the law has been established. This requires the company to develop and document a code of conduct that fosters compliance with applicable regulations designed to minimize the risk of workplace injury. Communicate the safety message effectively. Management must make certain that the right safety message is being communicated throughout the company. Like other areas of compliance under current and intense scrutiny, such as financial reporting, the “tone at the top” is critical. Stay updated on industry standards. Industry standards should be monitored for advances and changes in compliance management, and management must effectively communicate these advances to the staff. Counsel must be prepared to establish for investigating authorities that the company’s processes and equipment were maintained and within appropriate standards. Take appropriate actions when an incident occurs. There is a greater likelihood of prosecution if the incident causing the injury or death occurred more than once, as it may be viewed as a “known risk.” Thus, the corporation must be able to establish that it took appropriate action to prevent a reoccurrence. Many violations require the corporation to self-report the offense to the appropriate authority. Additional actions, such as installing further reasonable preventative measures to avoid similar future occurrences, disciplining the responsible actor(s) for the offense and taking organizational responsibility for the offense committed, may also help avoid prosecution. Treat serious injuries or worker deaths as an event triggering a criminal investigation. A worker injury or death should be treated by corporate management and their counsel as other events likely to result in a multifaceted investigation that may have regulatory, civil and criminal consequences. Thus, consideration must be given promptly to disclosure obligations, the advisability of an independent investigation or evaluation, the need for separate counsel for those involved, Fifth Amendment protections and privilege issues, among others. Whether the increase in criminal prosecutions for workplace injuries provides additional incentive to managers to comply with health and safety regulations remains to be seen. Regardless, state and federal prosecutors are pursuing such cases, which present additional and significant issues for counsel representing an employer when such events occur. Stephen G. Sozio ([email protected]) is a partner in the corporate criminal investigations section of Jones Day’s Cleveland office. Earnest B. Gregory ([email protected]) is an associate in that office.

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