Jury sides with hospitals, returns $454M verdict in case over false gown protection claims

A Los Angeles jury returned a $454 million verdict Friday in a class-action lawsuit filed against New York City-based Kimberly-Clark Corp. and its medical technology spinoff Halyard Health.

The unanimous verdict was issued in a case brought by more than 400 hospitals and health centers in California. In their complaint, filed in 2014, the healthcare organizations claimed Kimberly-Clark and Halyard Health committed fraud in the marketing of certain medical gowns.

In particular, the lawsuit alleged the defendants made false representations to healthcare workers, the general public and the Food and Drug Administration regarding its MicroCool Breathable High Performance Gowns. The hospitals and health centers alleged the defendants marketed the gowns as providing protection against diseases, including HIV and Ebola, when they knew the gowns did not meet relevant standards and were defective.

The defendants marketed the gowns as meeting Association for the Advancement of Medical Instrumentation Level 4 standards. Gowns meeting these standards provide the highest level of protection available from the transfer of bodily fluids, bacteria and infection between patients and healthcare professionals, according to the CDC. Plaintiffs alleged the defendants knew since as early as 2012 that the gowns did not meet Level 4 standards but continued marketing them as providing that level of protection.

The hospitals and health centers further alleged the defendants purposely concealed material information about the gowns, including test results from an independent laboratory that showed the gowns did not meet AAMI Level 4 standards.

On Friday, the jury found the defendants acted with malice, oppression and/or fraud when they allegedly concealed the information about the level of protection the gowns provided. 

Kimberly-Clark said the verdict is contrary to the evidence presented. "Nearly 70 million MicroCool gowns have been sold without a single complaint of an injury," said Kimberly-Clark in a statement issued Monday. The company intends to challenge the jury's verdict in post-judgment motions and then possibly file an appeal in the case.

Kimberly-Clark said Halyard Health is required to cover Kimberly-Clark's losses and expenses related to this litigation under an indemnification agreement between the two companies. 

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