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Punitive Damages Slashed for Medical Supplies Manufacturer

Punitive Damages Slashed for Medical Supplies Manufacturer

Sell at any cost. This seems to be the motto of Kimberly-Clark Corporation and Halyard Health Inc., as they pushed their defective MICROCOOL* Surgical Gowns to the medical community. A quick glance at their website will reveal that the gowns are designed to be fluid, microbial, flame, lint and abrasion resistant, but a Los Angeles jury did not agree. The jury delivered a whopping $454 million fraud verdict against the defendants in early 2017, however this was reduced by a substantial amount this spring.

The original suit, Bahamas Surgery Center, LLC v. Kimberly-Clark Corp et al, No. CV-14-8390-DMG, was filed in October 2014. This original suit alleged that defendants had misrepresented to the FDA and health care professionals that their Microcool gowns were impermeable and would protect against dangerous infectious diseases, such as HIV and Ebola. However, defendants had known that the gowns were defective and not up to industry standards since 2012. Internal employee communications revealed that defendants knew the manufacturing process in Honduras was sub-standard and yet they continued to promote and sell the surgical gowns. The jury awarded high punitive damages because defendants placed healthcare professionals and patients at risk for infection, serious bodily harm and death.

In April 2018, the defendants were able to reduce their punitive damages by significant amounts. Halyard was able to reduce its punitive damages from approximately $100 million to $1.3 million and Kimberly-Clark from approximately $350 million to $19.5 million (the SEC filing can be seen HERE). Currently, Halyard is suing Kimberly-Clark, its former parent company, to clear itself from having to indemnify Kimberly-Clark.

Punitive damages seek to punish the offending party for particularly outrageous behavior and deter future bad acts. Punitive damages are controversial as the opposing party gains a greater benefit than they would have otherwise. However, one of the reasons for punitive damages is to set an example for the rest of society. The example here is for companies to refrain from misrepresenting their products, especially when it could seriously endanger the lives of others.

For companies facing litigation due to alleged misrepresentation, the experienced product liability attorneys at Parker Straus, LLP, can help. Contact our office to schedule your free consultation today.

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