Corporate criminal liability and optimal firm behavior: internal monitoring versus managerial incentives

Legislation addressing corporate criminal liability has been the subject of worldwide debate ever since the financial scandals of the early 2000s. Under current regimes, firms must observe such compliance requirements as internal monitoring mechanisms, the purpose of which is inducing firms to detect the wrongful conduct of their agents. We develop an analytical framework for identifying when, and to what extent, firms may find it beneficial to adopt these regulatory devices. We conclude that more productive firms, those operating in sectors with more market power, and firms whose managers have more opportunities for criminal activity are more likely to prevent wrongful conduct—either through monitoring or the payment of efficiency wages. When the potential returns to illegal activities are high or the firm is large, internal monitoring is probably the optimal strategy of crime prevention; in contrast, smaller firms typically proceed by paying efficiency wages (or ignoring crime). This paper also analyzes the role of the State’s legal capacity as well as the effects of interactions between the structure of reputational losses and the firm’s market power.     

Reallocating liability to medical staff review committee members: a response to the hospital corporate liability doctrine

Under the doctrine of hospital corporate liability, the hospital governing board bears the responsibility for detecting the incompetence of its staff physicians. Since hospital governing boards are generally composed of lay community members, they lack the expertise to evaluate the clinical competence of their staff. Therefore, they must delegate their screening responsibilities to medical staff review committees. After analyzing the development of hospital corporate liability doctrine, this Note examines the respective policing capabilities of review committees and the governing board. The Note contends that the board should not be held liable for aspects of the policing process which it is incapable of controlling. The Note concludes that, given their superior ability to evaluate clinical competency, staff review committees should shoulder the responsibility for the clinical aspects of staff evaluation, leaving remaining aspects to the hospital governing board. The Note proposes that courts should recognize a cause of action for negligence against medical staff review committee members in order to upgrade the effective policing of the medical profession.     

EMTALA: reaching beyond the emergency room to expand hospital liability

The Office of the Inspector General and private plaintiffs are vigorously pursuing EMTALA violations. These efforts are particularly troubling to hospitals, who face difficult statutory interpretation and application questions, especially in light of managed care reimbursement requirements. Two recent cases, one of them from the United States Supreme Court, expand hospital liability under EMTALA. This Article reviews current EMTALA standards and regulations, and analyzes how the recent decisions, in the absence of congressional action, are likely to impose substantial burdens upon hospitals.     

The cost of delegated control: vicarious liability, secondary liability and mandatory insurance

Vicarious liability, secondary liability and mandatory insurance are three systems for attaining judgment-proof or disappearing injurers’ precaution through the direct control of a second party (the vicariously liable principal, the secondary liable party, or the insurer). In this way, the legal system delegates control over some injurers to private entities. Such mechanisms generate monitoring costs. In this paper, we consider who bears the cost of such monitoring, and the effect thereof on the equilibrium level of precautions under different liability rules. We use these findings to explain some of the patterns in the coupling of substantive standards of liability and legal regimes of delegated control.     

Treatment manuals: The good,the bad and the useful

Abstract

This paper offers a commentary on the debate between Marshall and Mann on the desirability and merits of treatment manuals in the treatment of sexual offenders. Marshall offers a view of manuals as restrictive to clinical practice and as stifling to clinical innovation. Mann takes the position that manuals are a vital component in effective correctional practice. The commentary suggests that these contrary views are understandable: Marshall takes a clinical perspective and advocates best practice; Mann speaks from a realist forensic perspective in which manuals offer a practical means to deliver treatment on a large scale within prisons and probation. Of course, both positions have their merits and it is suggested that the two are perhaps not irreconcilable if the skills of the practitioner and model of treatment delivery are taken into account.     

Scope of liability: the vanishing distinction between negligence and strict liability

The duty-of-care requirement cannot be used anymore as the touchstone to differentiate negligence from strict liability because it can be found in many forms of the latter. Duty of care is smuggled into strict liability hidden under the scope of liability requirement (traditionally called “proximate causation”). As far as the scope of liability requirement is common to negligence and to many forms of strict liability, there is a fairly large common ground to both liability rules, and consequently the marginal Hand formula is applied to both rules. Indeed, under a negligence rule, the marginal Hand formula is applied twice: first to assess whether or not the defendant did breach his or her duty of care, and, second, to delimit whether or not the defendant’s behavior was a proximate cause of the harm suffered by the victim. However, under a strict liability rule, the Hand formula is applied only once when the proximate causation question is raised. Traditional law and economics analysis has almost always taken the normative question raised by the causation requirement as given, which is a potential major problem due to the importance of scope of liability or proximate causation in legal practice. Defining the scope of liability, that is to say, the boundaries of the pool of potential defendants, is the basic legal policy decision for each and every liability rule. In the normative model presented in this paper, the government first chooses efficient scope of liability, and given the scope of liability, the government then decides the liability rule and damages that guarantee efficient precaution. In the article, most known scope of liability rationales developed by both common law and civil law systems are discussed in order to show the substantial common ground between negligence and strict liability.     

School liability for student injury from school violence: comparison between South Korea and the USA

This paper examines school liability for school violence-related student injury in South Korea and the US. The study found that the US courts considered only violence-related behaviors of the perpetrator when judging whether violence can be foreseen; thus drug abuse or verbal abuse by the perpetrator were not considered as a part of his/her violent history. On the other hand, the Korean courts considered perpetrators’ nonviolent behavior, such as low academic achievement or negative attitudes toward academic work, as indicators of violent history. Regarding the extent of school liability, while in Korea, schools were not held responsible for injuries to non-school-related persons caused by their students’ violent acts in public, in the US, the court required schools to take legal responsibility for such cases happening during field trips. These findings help to reconsider school liability for school violence and generate suggestions for more reasonable and universal legal standards.