A high-stakes scam was uncovered in Texas, with medical device company Avanos Medical Inc. agreeing to pay $22,228,000 to resolve a criminal charge for introducing misbranded surgical gowns into interstate commerce.
A criminal information filed in the U.S. District Court for the Northern District of Texas charges Avanos with one count of introducing misbranded surgical gowns into interstate commerce with the intent to defraud and mislead. According to court filings, Avanos falsely labeled the gowns as providing the highest level of protection against fluid and virus penetration.
Under the terms of a deferred prosecution agreement filed with the criminal information, Avanos will pay $22,228,000, composed of a victim compensation payment of $8,939,000, a criminal monetary penalty in the amount of $12,600,000, and a disgorgement payment of $689,000.
The deferred prosecution agreement resolves a criminal investigation into Avanos’s misbranding of its MicroCool surgical gowns under the Federal Food, Drug, and Cosmetic Act (FDCA) and the company’s obstruction of a 2016 for-cause inspection conducted by the U.S. Food and Drug Administration (FDA) into Avanos’s surgical gown business.
“The last thing health care workers should have to worry about is whether their personal protective equipment lives up to manufacturers’ claims,” said Acting U.S. Attorney Prerak Shah for the Northern District of Texas. “Misbranded PPE can pose serious risks to medical professionals and patients alike. All companies that do business in Texas, health care or otherwise, will be held accountable for the promises they make about their products.”
“Companies that sell medical products put their customers at risk when they misrepresent the quality of those products,” said Acting Assistant Attorney General Brian M. Boynton of the Civil Division. “The Justice Department will work with its law enforcement partners to prosecute companies that put profits over safety, especially when they provide products meant to protect medical professionals in potentially high-risk situations involving infectious diseases.”
Avanos admitted that between late 2014 and early 2015, it sold hundreds of thousands of MicroCool surgical gowns that were labeled as AAMI Level 4 under the 2012 ANSI/AAMI PB70 standard but did not actually meet that standard.
A spokesperson for Avanos Medical Inc. was unavailable for comment.
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Key Facts
- State: Texas
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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