The Other Collusion

May 16th, 2019 by Phil Mattera

The Trump crowd may have escaped prosecution on charges of colluding with the Russians, but another case involving collusion is moving full steam ahead. Attorneys general from 43 states and Puerto Rico are pursuing a blockbuster lawsuit against the generic drug industry on charges of conspiring to artificially inflate and manipulate prices, reduce competition and unreasonably restrain trade for more than 100 different products.

Led by Connecticut Attorney General William Tong (photo), the coalition claims to have extensive evidence in the form of emails, text messages, telephone records, and statements from former company insiders documenting that 20 companies such as Teva, Sandoz and Mylan engaged in a “broad, coordinated and systematic campaign” to conspire with each other to generate prices increases that in some instances exceeded 1,000 percent.

The case, which could result in a multi-billion-dollar settlement, is a reminder that price-fixing, one of the oldest forms of corporate crime, remains a live issue. The main change is the method by which companies collude. Adam Smith’s discussion of the practice in The Wealth of Nations (1776) stated that “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Now the same results can be achieved electronically, without face-to-face encounters.

Price-fixing accounts for more of the federal criminal cases in Violation Tracker than any other offense type besides environmental matters. The 212 cases have resulted in $10 billion in penalties, including more than two dozen cases in which the defendants had to pay more than $100 million.

Many of those cases involve industries such as auto parts, electronic components and chemicals; in other words, business-to-business transactions. Federal antitrust prosecutors have focused much less on goods purchased by individual consumers.

That’s where the states come in. The current case against the generic drug companies is just the latest in a string of lawsuits in which state AGs have banded together to address anti-competitive practices that affect consumers.

We’re now in the process of collecting data on those cases to add to Violation Tracker. So far, we have identified more than 100 multistate lawsuits involving price-fixing and related matters. Quite a few of these involve drug and vitamin producers.

There have even been some brought against the same generic producers targeted in the new case. For example, in 2000 Mylan agreed to pay $108 million to settle multistate allegations that it conspired with other companies to control the market for generic anti-anxiety drugs.

The past and current allegations against companies such as Teva and Mylan are especially troubling because these generic producers were supposed to be the heroes of the drug industry. Instead of acting as a check on the avaricious impulses of the brand-name producers, it appears that they jumped on the profit-maximization bandwagon. This should serve as another indicator that market forces are not up to the task of eliminating price-gouging in the pharmaceutical industry. Strong government intervention is the only remedy.

Trump’s Wage Theft Vulnerability

May 2nd, 2019 by Phil Mattera

Donald Trump may have Bill Barr’s Justice Department in his pocket, but the president is on much shakier ground in his home state. And that’s not only because New York Attorney General Letitia James is seeking his tax returns and investigating his business deals.

Trump also has to contend with the fact that the New York AG’s office is one of the most aggressive prosecutors of wage and hour violations by employers in the state. One of those employers is the Trump Organization, whose Trump National Golf Club in Briarcliff Manor, New York is reported to be rife with wage theft.

The Washington Post has just published a detailed account of the ways in which employees at the golf club, especially undocumented immigrants, have been required to work off the clock at no pay. Workers are reported to have been explicitly told by managers to clock out but continue to perform tasks such as vacuuming carpets and polishing silverware.

The Post article states that nearly 30 former employees of Trump golf courses have met with state prosecutors and have provided them documentation such as W-2 forms and pay stubs. One of those workers, Jose Gabriel Juarez (photo), told the Post: “It was that way with all the managers: Many of them told us ‘Just clock out and then stay and do the side work.’”

This does not bode well for the Trump Organization. According to data contained in Violation Tracker, the New York AG’s office has brought more than 60 successful cases against companies for wage theft and has collected more than $38 million in penalties. The largest recovery was $4.8 million paid by the utility company National Grid in 2013.

Yet those are only the cases in which the defendants were corporations. The New York AG’s office is one of only a few law enforcement agencies that also bring cases against individual corporate executives and business owners for labor violations. In other words, it takes the phrase wage theft literally and has on numerous occasions filed criminal charges against those individuals. Here are some examples:

In May 2016 Lalo Drywall, Inc. and its owner Sergio Raymundo, were sentenced in Manhattan Supreme Court after a conviction related to wage theft for underpaying workers at a mixed-use, commercial, and low-income residential project in Harlem. Raymundo pled guilty to one count of Falsifying Business Records in the First Degree under New York State’s Penal Law, a class E felony, as well as to one count of Failure to Pay Wages under New York State’s Labor Law, an unclassified misdemeanor.

In September 2017 Arthur Anyah, owner of Mical Home Health Care Agency, Inc. in Peekskill, New York was sentenced to one year in jail for defrauding 67 employees out of over $135,000 in wages. Anyah had pled guilty to engaging in a scheme to induce health care workers to provide home health care services to the agency’s clients without pay, as well as falsifying business records, failing to pay wages, and defrauding the state unemployment insurance contribution system.

These and other wage theft cases, as well as many other kinds of prosecutions, can be found in the press release archive of the New York AG’s office. The Corporate Research Project is in the process of compiling these cases and similar ones from the other state AGs for an expansion of Violation Tracker that will be released later this year. By that time there may very well be a new entry for the Trump Organization to include.

Prosecuting Corporate Drug Dealers

April 25th, 2019 by Phil Mattera

It looked like another of the countless perp walks in which a newly arrested drug dealing suspect is paraded before the cameras by prosecutors. But this time the individual in handcuffs was a 75-year-old former chief executive of a major corporate pharmaceutical distributor.

The U.S. Attorney for the Southern District of New York charged Laurence F. Doud III with one count of conspiracy to distribute controlled substances – opioids – which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of conspiracy to defraud the United States, which carries a maximum prison term of five years.

It is rare enough for corporate executives (or in this case, a retired executive) to be individually prosecuted for anything in the United States. It was even more amazing in this case to see such a person facing the kind of charges normally brought against figures such as El Chapo.

U.S. Attorney Geoffrey Berman made it clear he was sending a message with the prosecution of Doud, who until 2017 ran the Rochester Drug Cooperative (RDC), which is among the top ten pharmaceutical distributors. Berman vowed that in combating the opioid epidemic his office would target not only street-level dealers but also “the executives who illegally distribute drugs from their boardrooms.”

In addition to Doud, Berman brought charges against William Pietruszewski, the company’s former chief compliance officer. Pietruszewski pled guilty to the charges and is said to be cooperating with prosecutors. Doud’s lawyer maintained his client’s innocence and claims Doud is being scapegoated by others at the company.

RDC itself was also targeted in the case, but the company was offered a non-prosecution agreement in exchange for a $20 million fine and an admission that it intentionally violated the federal narcotics laws by distributing dangerous, highly addictive opioids to pharmacy customers that it knew were being sold and used illicitly.

RDC’s deal is just the latest in a series of drug cases brought against companies. Violation Tracker lists about 90 instances in which corporations have been penalized under the Controlled Substances Act, but only six of these were criminal cases.

SDNY has opened an important new front in the battle against corporate involvement in the opioid crisis, complementing the wave of class action lawsuits brought against the likes of Purdue Pharma.

But for the offensive to be truly effective, it needs to target not just former executives like Doud but also those still in their posts. And it needs to go higher up the ladder from the likes of RDC to executives at the big three distributors: AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson Corporation.

These companies together generate more than half a trillion dollars in annual revenue and control more than 90 percent of the U.S. pharmaceutical wholesale market.

The opioid epidemic is the outcome of one of the most egregious cases of corporate irresponsibility in U.S. history. Both the companies themselves and those who ran them need to prosecuted to the full extent of the law.

Plenty of Blame to Go Around

April 11th, 2019 by Phil Mattera

Called to testify before a Congressional committee about the soaring price of insulin, producers of the life-saving medication tried to give the impression that they were part of the solution rather than the source of the problem. Eli Lilly, Novo Nordisk and Sanofi pointed to their patient assistance programs to argue that help was available to anyone who needed it.

The tactic of offering selective discounts is widely used in the pharmaceutical industry but it seems to be losing its effectiveness as a way of blunting criticism of unjustifiable price boosts. In the hearing before a House investigative subcommittee, the manufacturers had to resort to another maneuver: blaming others in the supply chain. They argued that the real culprits were the big pharmacy benefit managers (PBMs) and the rebates they demand from the producers.

Appearing at the same hearing were representatives of three big PBMs – Optum Rx, Express Scripts and CVS Health – who, not surprisingly, denied responsibility. “I have no idea why the prices are so high, none of it is the fault of rebates,” said Amy Bricker, a senior vice president for Express Scripts.

It remains to be seen whether this mutual finger-pointing will be successful. The truth is probably that both sets of parties deserve plenty of blame. You only have to look at their track records. Each of the companies has a history of breaking the rules.

Eli Lilly has been involved in drug safety controversies at least since the 1950s and marketing controversies for two decades. In 2009 it pleaded guilty to criminal and civil charges of promoting its drug Zyprexa for uses not approved by the Food and Drug Administration. It paid criminal fines and civil settlements totaling $1.4 billion and signed a corporate integrity agreement with the federal government covering its future conduct.

Novo Nordisk, based in Denmark, paid $25 million in 2011 to resolve its own off-label marketing case brought by the U.S. Justice Department. It, too, signed a corporate integrity agreement, yet in 2017 it had to pay more than $58 million to resolve a DOJ False Claims Act case involving one of its diabetes medications.

Sanofi, headquartered in France, and its subsidiaries have been involved in five False Claims Act cases in the United States, for which they have paid a total of more than $436 million. Last year it paid more than $25 million to resolve allegations of foreign bribery.

 The PBMs have had issues as well.

In 2012 Express Scripts, now owned by Cigna, had to pay $2.75 million to settle Drug Enforcement Administration allegations that its practices violated the Controlled Substances Act.

CVS Health, which merged with the PBM Caremark in 2007 and recently acquired Aetna, and its subsidiaries have been involved in a dozen Controlled Substances Act cases, paying more than $182 million in settlements. They have also had to pay more than half a billion in 15 False Claims Act cases.

Yet perhaps the most controversial of the PBMs is Optum Rx, which is owned by UnitedHealth Group. A decade ago, Optum, then known as Ingenix, was targeted by the New York Attorney General, among others, for creating a database that allegedly helped insurers shortchange customers on reimbursements for out-of-network claims. Ingenix settled with New York by agreeing to spend $50 million to create a fairer database and entered into a $350 million settlement to resolve a class action lawsuit brought over the issue. It was in the wake of all this bad publicity that Ingenix changed its name to Optum.

 Given the growing controversy over the price of insulin and other medications, drug companies may be wishing that they could resort to something like a name change to shield themselves. But the pressure is not going to disappear until there is systemic change in the country’s prescription drug system that puts an end to price gouging.

Suing Employers for Retirement Plan Abuses

April 3rd, 2019 by Phil Mattera

In late March the Swiss company ABB agreed to pay $55 million to resolve a lawsuit brought by its U.S. employees alleging that the company charged excessive fees to administer their 401(k) plan. This was just the latest in a long series of class actions brought under the Employee Retirement Income Security Act of 1974, or ERISA, which protects the rights of retirement plan participants.

As part of the latest expansion of Violation Tracker, the Corporate Research Project has identified 201 such cases in which the defendant was a corporation included in the Fortune 1000, the Fortune Global 500 or the Forbes list of America’s Largest Private Companies.

Our compilation finds that in these cases, which date back to the beginning of 2000, corporations had paid out a total of $6.2 billion in settlements and verdicts. The largest settlement, $480 million, was reached in 2014 in a retiree health benefits suit brought against Daimler AG on behalf of workers at the German company’s U.S. truck manufacturing plants.

The 201 lawsuits (details here) alleged various types of misconduct by employers, including:

  • Charging excessive fees or offering overly risky investment options in 401(k) plans;
  • Improper investment of pension plan assets in company stock, especially during times of instability;
  • Inadequate or misleading disclosure of financial information to plan participants; and
  • Mishandling conversions of pensions to cash-balance plans.

Some suits were brought against investment managers or plan trustees rather than the employer. For example, in 2015 Bank of New York Mellon agreed to a $335 million settlement to resolve allegations by multiple pension funds that it deceptively overcharged them on currency exchange rates relating to the purchase of foreign securities.

Apart from Daimler and Bank of New York Mellon, 13 other large corporations have had total ERISA payouts of $100 million or more.  Among them are IBM, Foot Locker, Xerox, Bank of America, AK Steel, AT&T and JPMorgan Chase. The industry with the most ERISA payouts is banking, with a total of more than $1.3 billion.

In addition to large for-profit corporations, some major nonprofits, especially healthcare systems, have had to pay out large sums. Most involve lawsuits alleging that religious institutions improperly claimed that their plans were exempt from ERISA. The biggest settlements have involved Providence St. Joseph Health ($351 million) and Bon Secours Mercy Health ($161 million from two suits).

In many cases the settlement costs are covered in part or wholly by an insurance policy, but Violation Tracker attributes the amount to the corporation or non-profit named in the lawsuit.

With the addition of the ERISA cases and the updating of other categories, Violation Tracker now contains more than 368,000 civil and criminal entries with total penalties of $464 billion. The new ERISA entries—like our earlier compilations of wage theft and employment discrimination lawsuits—include details on each case and links to key court documents.

The fastest way to get a list of the ERISA cases from Violation Tracker is to choose the Option 2 offense type “pension ERISA violation.” You’ll get the 201 large-company cases discussed above plus 51 more brought against non-profits and companies not on the Fortune and Forbes lists.

Regulation via Litigation

March 28th, 2019 by Phil Mattera

For all the talk of populism, the Trump Administration is preoccupied with easing federal oversight of big business. It’s done this through attempts to undo regulations and by weakening enforcement of the rules that remain. Sure, there are areas in which it is politically expedient to pretend to be tough on corporate misconduct. That’s what we see with drug prices or the current Boeing scandal, but for the most part companies are getting what they want.

It’s a different story in the courts. In recent days there has been a slew of major settlements and verdicts in which large corporations will be paying out substantial sums to resolve various allegations of wrongdoing.

Purdue Pharma and the Sackler Family agreed to pay $270 million to the state of Oklahoma to resolve a lawsuit relating to the company’s role in the opioid crisis that has taken the lives of more than 200,000 people in the United States. Many more such lawsuits involving other states are expected to follow.

Johnson & Johnson and Bayer agreed to pay $775 million to settle about 25,000 lawsuits involving the blood thinner Xarelto, which they jointly sell. The suits allege that the companies failed to warn patients that the drug could trigger potentially fatal massive bleeding.

A federal jury in California ordered Monsanto to pay $80 million to a man who alleged that he developed cancer as a result of using the company’s controversial weedkiller Roundup. The jury found that Monsanto was liable because it failed to include a warning label about the cancer risk. Monsanto’s parent, the German chemical company Bayer, said it will appeal the verdict. Also under appeal is another Roundup verdict from last year in which the plaintiff was awarded $289 million (lowered by the judge to $80 million).

Many more lawsuits are in the works, in some cases threatening the survival of companies. Pacific Gas & Electric had to file for bankruptcy protection in the face of tens of billions of dollars in potential liability in connection with California wildfires believed to have been caused by its aging transmission lines. A ruling by the Connecticut Supreme Court allowing wrongful marketing claims cases against gun makers may lead to billions in settlements by the industry.

Such litigation is nothing new, but the cases are taking on increasing importance in the fight against corporate misconduct at a time when federal regulation is faltering. The danger is that lawmakers and the courts themselves may curtail the ability to bring these lawsuits. There is not much they can do when the suits are brought by state attorneys general, but class actions may be more vulnerable.

This is already happening in the area of employment law. In 2011 the U.S. Supreme Court dismissed a nationwide gender discrimination suit against Walmart and made it more difficult to get such classes of plaintiffs certified. Last year, in the Epic Systems case, the high court made it easier for employers to use arbitration agreements to block lawsuits over issues such as wage theft.

If litigation goes the way of regulation and there are no effective controls on corporate behavior, we will be in big trouble.

Regulatory Charade

March 21st, 2019 by Phil Mattera

It always seems to take a tragedy to reveal the truth about the regulatory system in the United States. After an explosion at an oil refinery, a massive oil spill, a major outbreak of food poisoning, a coal mine collapse or a train derailment, it comes to light that regulators, rather than being the overbearing bureaucrats depicted by corporate apologists, are often unequipped to exercise adequate oversight of the operations of big business.

That scenario is playing out once again in the wake of two deadly crashes of Boeing’s newest passenger jet. Day after day we are learning more details of how an under-resourced Federal Aviation Administration cut corners in its review of the company’s 737 Max.  The agency, pursuing a new approach that has been in the works for years, delegated key portions of the approval process to Boeing itself, including the assessment of a new software system that has been implicated in the crashes.

Critics have long complained that regulators have frequently been captured by the corporations they are supposed to oversee, meaning that those companies exercise undue influence over the agencies. What’s been going on at the FAA is even more pernicious. Boeing is not just swaying the FAA; it is supplanting it. Rather than regulatory capture, this is regulatory eradication.

The idea that corporations should be allowed to oversee themselves is unwise in general but particularly wrong-headed when it comes to a company like Boeing. The aircraft producer has a long record of safety lapses. This goes back decades. For example, after a Japan Air Lines 747 crashed during a domestic flight in 1985, killing 520 people, Boeing admitted that it had performed faulty repairs on the plane’s rear safety bulkhead.

In 1989 the FAA proposed a then-record fine of $200,000 against Boeing for failing to promptly report the discovery that fire extinguishers on two 757s were faulty.

In 1994 the Seattle Times, after reviewing 20 years of reports submitted to the FAA, concluded that more than 2,700 Boeing 737s then in service were flying with a defective part that could cause the plane’s rudder to move unpredictably, possibly turning the aircraft in the opposite direction being steered by the pilot.

These kinds of problems continued. In January 2013, after several incidents in which lithium-ion batteries in 787s caught fire, the FAA ordered the grounding of all U.S.-based Dreamliners. The head of the National Transportation Safety Board accused the company of having submitted flawed safety test results on the batteries.

This history apparently did not factor into the FAA’s decision to rely heavily on Boeing during the 737 Max approval process and it did not prevent the agency from resisting calls to ground the jet until pretty much all of the rest of the world took that common-sense step following the crash in Ethiopia.

Shamed into action, the FAA is now behaving more like a real regulator again. Yet this too is part of the typical scenario: when outrage about a deadly incident escalates, an agency acts tough. But this rarely lasts. Once the uproar dies down, the regulators return to their comfortable relationship with the regulated, and the public is once again put at risk.

Shattering Myths About Business and Society

March 14th, 2019 by Phil Mattera

Those who believe that corporate executives are virtuous, government regulators are overreaching, and that we live in a meritocracy have been cringing every time they listened to a newscast in recent days. That’s because two major stories have been shattering myths about the way things work in the U.S. business world and the broader society.

The controversy over whether Boeing’s 737 Max aircraft should be grounded in the wake of a deadly crash in Ethiopia revealed the true nature of business regulation in the United States. Contrary to the image, depicted ad nauseum by corporate apologists, of bureaucrats crippling companies with unnecessary and arbitrary rules, we saw in the Federal Aviation Administration an agency that is essentially held captive by airlines and aircraft manufacturers.

It was only after the rest of the world ignored assurances from Boeing and took the common-sense step of grounding the planes that the FAA finally acted. The agency, its parent Department of Transportation and the Trump Administration had to be shamed into fulfilling their responsibility of protecting the public.

It remains to be seen whether the Trump Administration will temper its anti-regulatory rhetoric after this incident in which it was clear that the country needed more rather than less oversight. Unfortunately, the problem goes beyond rhetoric.

Since taking office, Trump has made it a crusade to dismantle much of the deregulatory system. Left to his own devices, Trump would continue on this path. His new budget proposes massive cuts in the budgets of regulatory agencies, including 31 percent at the EPA.

That budget was dead on arrival in the Democratic-controlled House, but the administration is undermining agencies by rolling back enforcement activity. Public Citizen has been documenting this ploy in a series of reports drawing on data from Violation Tracker. Its latest study shows a 37 percent drop in enforcement actions by the Consumer Financial Protection Bureau, the Federal Trade Commission and the Consumer Product Safety Commission during Trump’s first two years, compared to the final two years of the Obama era.

The other big myth-busting story is the admissions scandal at elite universities. The revelation that wealthy parents have been paying large sums to a fixer who bribed coaches and used other fraudulent means to get their kids into the Ivy League should cause all critics of affirmative action to hang their heads in shame.

It speaks volumes that one of the parents arrested in the case is William McGlashan, founder of The Rise Fund, an ethical investing vehicle managed by the private equity firm TPG Capital. Working with the likes of Bono and philanthropist Pierre Omidyar, the fund says it is “committed to achieving social and environmental impact alongside competitive financial returns.”

Defenders of the fund will attempt to separate its mission from McGlashan’s personal issues. Yet the scandal helps puncture the image of moral superiority projected by those who claim they can do good and get richer at the same time. It gives more ammunition to those who suspect that ethical investing may be little more than a way to ease the conscience of the wealthy with more than their share of misdeeds.

Undoubtedly, protectors of the conventional wisdom are seeking ways to restore support for the notions that regulation is bad and that the rich are good people who earned everything they have. Yet for now, let’s enjoy these moments of clarity.

Resisting the Trump Organization Business Model

March 7th, 2019 by Phil Mattera

A recent 60 Minutes episode provided further evidence of how the pharmaceutical industry successfully pressured federal regulators to allow excessive prescribing of powerful opioids, paving the way for the ongoing epidemic of fatal overdoses. In recent days there have been reports that Purdue Pharma, the company at the center of the crisis, is planning a bankruptcy filing to reduce the risk from the 1,600 lawsuits that have been brought against the company.

These developments illustrate how the main structures that are supposed to deter corporate misconduct – government regulation and the civil justice system – are not up to the task. Despite the endless complaints from the business world about rules and lawsuits, there are in fact few meaningful limits on corporate behavior.

Despite years of evidence showing that many industries dominate and neutralize the government agencies that are supposed to oversee them, the proponents of deregulation all too often carry the day. The current presidential administration has embraced that ideology whole-heartedly and has even tried to promote the idea that relaxed regulation benefits not only corporations but workers and consumers.

Yet there’s growing evidence that what interests Trump most is using regulatory powers to punish his political enemies and reward his friends. That’s the message of new reporting by Jane Mayer in The New Yorker that Trump personally urged the Justice Department to try to block AT&T’s acquisition of Time Warner, apparently thinking that by sinking the deal he would harm Time Warner’s CNN unit and boost its rival, the exceedingly Trump-friendly Fox News.

There were earlier reports that Trump’s criticism of Amazon’s contract with the U.S. Postal Service was an indirect assault on the Washington Post, owned by Amazon CEO Jeff Bezos.

Aside from being an obvious abuse of presidential power, this approach is no better than a “principled” deregulatory stance. While Trump may occasionally direct his ire against companies that deserve to be punished, the vast majority of miscreants will end up being let off the hook.

Many of the same business apologists who criticize regulation also fulminate against lawsuits. These tort reformers don’t explain how else we are supposed to deal with rogue corporations. Nor do they acknowledge that such companies can greatly limit their exposure with the help of the bankruptcy court.

Purdue Pharma would be far from the first corporation to use Chapter 11 in this way. The filing would not shield the company entirely, but it would greatly reduce its financial liability and make it easier to survive the process.

Moreover, the Wall Street Journal pointed out that “Purdue’s assets may not be enough to resolve the company’s potential liability, in part because most of its profits had been regularly transferred to members of the company’s controlling family, the Sacklers.” In other words, much of the corporation’s ill-gotten gains are already out of the reach of the plaintiffs.

When restraints are weak or non-existent, it is more likely that companies will adopt the business model of the Trump Organization, which appears to be that of breaking every rule and cheating everyone it can. Our challenge is to find new ways to fight back.

A Reputation for Purity is Now in Tatters

February 21st, 2019 by Phil Mattera

For the tens of millions of baby boomers in the United States, the first large corporation whose products they encountered was probably Johnson & Johnson. That’s because the vast majority of parents in the postwar period used the company’s baby shampoo, oil and powder on their precious bundles of joy. Carefully cultivating an image of purity, J&J established itself as an indispensable part of infant care.

That image is now in tatters. The company just disclosed that it is being investigated by the Justice Department, the Securities and Exchange Commission and Congress in connection with possible asbestos contamination of its baby powder and other talc-based products. These probes were prompted by investigative reporting in outlets such as the New York Times alleging that J&J executives raised internal concerns about the asbestos issue decades ago but the company never acknowledged these publicly.

These revelations gave more credence to thousands of lawsuits filed against J&J in recent years by women, including many who used the company’s baby powder on themselves as well as their infants, charging that the products caused them to develop ovarian cancer. J&J has been losing a lot of these cases, including one in which a jury awarded $4.7 billion in damages to a group of 22 women.

Rarely has a product’s reputation fallen so far, and rarely has a company once held in such high esteem come to be regarded as morally equivalent to cigarette manufacturers. Yet a closer look at J&J’s track record shows that its immaculate reputation has been deteriorating for quite some time.

Over the past decade the company has been involved in a series of scandals and has been forced it to pay out large sums in civil settlements and criminal fines.

The most serious of those cases involved allegations that several of its subsidiaries marketed prescription drugs for purposes not approved as safe by the Food and Drug Administration, thus creating potentially life-threatening risks for patients.

For example, in 2013 the Justice Department announced that J&J and several of its subsidiaries would pay more than $2.2 billion in criminal fines and civil settlements to resolve allegations that the company had marketed it anti-psychotic medication Risperdal and other drugs for unapproved uses as well as allegations that they had paid kickbacks to physicians and pharmacists to encourage off-label usage. The amount included $485 million in criminal fines and forfeiture and $1.72 billion in civil settlements with both the federal government and 45 states that had also sued the company.

Other J&J problems resulted from faulty production practices. During 2009 and 2010 the company had to announce around a dozen recalls of medications, contact lenses and hip implants. The most serious of these was the massive recall of liquid Tylenol and Motrin for infants and children after batches of the medication were found to be contaminated with metal particles.

The company’s handling of the matter was so poor that its subsidiary McNeil-PPC became the subject of a criminal investigation and later entered a guilty plea and paid a criminal fine of $20 million and forfeited $5 million.

J&J also faced criminal charges in an investigation of questionable foreign transactions. In 2011 it agreed to pay a $21.4 million criminal penalty as part of a deferred prosecution agreement with the Justice Department resolving allegations of improper payments by J&J subsidiaries to government officials in Greece, Poland and Romania in violation of the Foreign Corrupt Practices Act. The settlement also covered kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.

All of this has been a humiliating comedown for a company that was once regarded as a model of corporate social responsibility and which set the standard for crisis management in its handling of the 1980s episode in which a madman laced packages of Tylenol with cyanide. While the company was then being victimized, in the subsequent crises it mainly has itself to blame. Off-label marketing, faulty production practices and foreign bribery are bad, but the current scandal over asbestos contamination and the alleged cover-up pose a threat to the survival of the company.