In an alarming and inconceivable move this week, the US Department of Health and Human Services (DHHS) is attempting to remove a CEO from office. The latest move builds on Eliot Spitzer’s persecution of Hank Greenberg at AIG, the administration’s revolving door atop GM, and salary setting for TARP banks. It now seems that the federal government believes it can use sanctions to exclude people and organizations it doesn’t like.
The campaign to remove Forest Laboratories Inc Chairman, President and CEO Howard Solomon began after a little known administrative policy under the Social Security Act that allows officials to bar corporate leaders from the health industry was utilized by the Obama administration. Without the CEO even being accused of any wrongdoing the federal government has excluded him from doing business with them. In turn, this obstructs Forest Labs from selling its pharmaceuticals to Medicaid, Medicare, and the VA, costing the company significant revenue or a long-time leader.
DHHS demonstrated in late 2010 that it would readily use its exclusion abilities to target individuals (and therefore companies) even if there was no proof of wrongdoing on the individual’s part. This dangerous precedent sets the stage for creating an organizational atmosphere that is biased, partisan, and “inconsistent with the spirit of innovation that is critical to the industry”, as Allan Waxman of Kaye Scholer LLP phrased it. Furthermore, it clearly demonstrates the Obama administration’s willingness to interfere and transform entire corporations and industries as it sees fit.
Solomon and Forest Laboratories have released a statement that they will challenge his exclusion from the Federal Health Care Programs.