The U.S. Department of Justice announced on July 8, 2021 that Avanos Medical Inc. (“Avanos”), a U.S.-based multinational medical device corporation, has agreed to pay more than $22 million to resolve a criminal charge relating to the company’s fraudulent misbranding of its MicroCool surgical gowns.
The government charged 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 government’s 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.
Surgical gowns sold in the United States are subject to regulation by the FDA, which recognizes a system of classification set forth by the American National Standards Institute (ANSI) and the Association for the Advancement of Medical Instrumentation (AAMI) — known as the ANSI/AAMI PB70 standard. The ANSI/AAMI PB70 standard was first established in 2003 and revised to be more rigorous in 2012. Under the standard, the highest protection level for surgical gowns — AAMI Level 4 — is reserved for gowns intended to be used in surgeries and other high-risk medical procedures on patients suspected of having infectious diseases.
As part of the deferred prosecution agreement, 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. In addition, Avanos made direct misrepresentations to customers about the MicroCool gowns’ compliance with the 2012 ANSI/AAMI PB70 standard. For example, in November 2014, Avanos sent letters to certain hospitals and other potential purchasers that falsely claimed that the MicroCool gowns met the revised and more rigorous 2012 ANSI/AAMI PB70 standard for classification as AAMI Level 4 — a standard that Avanos’s employees knew the gowns had never met. At least one of these letters was sent in response to a request for assurances made by a health care provider seeking to obtain surgical gowns for use in responding to the 2014 Ebola outbreak. In total, Avanos sold approximately $8,939,000 worth of misbranded MicroCool gowns to customers in the United States and abroad.
In addition, according to court documents, an employee and an agent of Avanos obstructed a July 2016 FDA for-cause inspection of the company’s surgical gown business by making numerous false entries in four documents requested by FDA investigators.
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