The medical device company Avanos Medical agreed to pay $22 million to resolve criminal charges relating to fraudulent misbranding of its surgical gowns. The company was charged under the Food, Drug, and Cosmetic Act (FDCA), for the mislabeling of its MicroCool surgical gowns. It also faced charges for obstruction of a Food and Drug Administration inspection in 2016.
The company falsely advertised the MicroCool surgical gowns as providing the highest level of protection against fluid and virus penetration. Under the ANSI/AAMI PB70 standard, enforced by the FDA, the highest protection level for surgical gowns, Level 4, is assigned to gowns intended for use in surgeries and other high-risk medical procedures where patients are suspected to have an infectious disease.
As part of a deferred prosecution agreement, Avanos admitted that between 2014 and 2015, it knowingly sold hundreds of thousands of MicroCool surgical gowns falsely labeled as AAMI Level 4, despite not actually meeting that standard. Avanos sent out letters to hospitals and potential purchasers making such false claims, netting the company approximately $8.9 million in sales of misbranded MicroCool gowns to customers.
Avanos has engaged in numerous compliance and operations remedial measures, according to the Department of Justice, including:
- Changing the manufacturing process for the surgical gowns to improve the quality of their sleeve seams
- Reorganizing its quality departments so they report directly to the CEO
- Increasing its budget and size of its compliance department
- Creating a stand-alone compliance committee on the board of directors
- Enhancing the independence and authority of its compliance department and appointing a chief ethics and compliance officer who reports directly to the CEO and as well as reporting to the compliance committee at least five time each year
- Enhancing compliance training for its employees
- Revising procedures for review and approval of all marketing materials
The DoJ said it did not choose to impose an independent compliance monitor due to these improvements to its compliance program, as well as a willingness shown by Avanos to improve. Avanos further agreed to submit annual reports on improvements to its compliance program. 