Jury Returns Massive Verdict in Hospital Gown Fraud Lawsuit
On Friday, April 8, 2017, a federal jury in California sent shockwaves throughout the healthcare and legal community when it returned a $454 million verdict against Kimberly-Clark Corp. and its affiliate Halyard Health Inc. (together, “Kimberly-Clark”) in a case involving the sale of Kimberly-Clark’s MicroCool Breathable High Performance surgical gowns. The verdict is believed to be one of the largest in U.S. history in the medical device space.
The class-action lawsuit, Bahamas Surgery Center, LLC vs. Kimberly-Clark et al, filed in October 2014 by hundreds of California hospitals and other health facilities, alleged that Kimberly-Clark had misled buyers about the impermeability of its MicroCool Breathable High Performance surgical gowns. Kimberly-Clark introduced that particular brand of gowns in 2012, and at the time it marketed the gowns as meeting the highest level of liquid barrier protection standards— “Level 4 protection”— as designated by the Association for the Advancement of Medical Instrumentation (AAMI). Nevertheless, according to internal company communications and documents, while the gowns were being marketed and sold, concerns were also being raised amongst Kimberly-Clark executives and insiders about the quality, effectiveness, and compliance of the gowns, including issues with the gowns’ sleeve seams staying intact.
Such internal communications about the effectiveness of the gowns undoubtedly helped lead the 8-person jury to conclude unanimously that Kimberly-Clark committed fraud in the marketing and sale of the MicroCool Breathable High Performance surgical gowns. One somewhat surprising aspect of the case, however, especially in light of the size of the jury verdict, is that no physical injuries resulting from a failure of the gowns in question to protect the wearer from pathogens have been reported to date. In that respect, this jury verdict should at the very least put those in the medical device space on notice that large jury verdicts can indeed be returned even in the absence of physical injuries.
Representatives for Kimberly-Clark have indicated that the corporation intends to appeal the verdict.