Kimberly-Clark to Pay $40.4M Over Defective Surgical Gowns
DOJ settlement resolves criminal charge related to the sale of millions of adulterated MicroCool gowns marketed with false safety claims.
Kimberly-Clark Corp., the multinational personal care giant, has agreed to pay up to $40.4 million to resolve a criminal charge from the U.S. Department of Justice for selling faulty surgical gowns to hospitals. The settlement addresses the company's admission of marketing millions of its MicroCool surgical gowns with fraudulent safety claims between late 2013 and 2014.
The deferred prosecution agreement, filed in the Northern District of Texas, stems from what federal prosecutors called a 'serious breach of public trust.' According to the Justice Department, Kimberly-Clark knowingly marketed the gowns as offering AAMI Level 4 protection—the highest standard for fluid and viral resistance in high-risk procedures—despite the products failing to meet critical safety benchmarks. The company's stock saw a modest decline of 1.14% on the news, trading on lower-than-average volume.
The investigation revealed that after making design changes to the gowns, a former employee faked test results to bypass a required premarket submission to the U.S. Food and Drug Administration (FDA). This allowed the company to sell approximately $49 million worth of the adulterated gowns, endangering both healthcare workers and patients.
'The company’s decision to defraud the FDA and the healthcare system for profit' was a key factor in the multi-year probe, officials stated. The settlement includes a $24.5 million criminal fine, the forfeiture of $3.9 million in profits, and the allocation of up to $12 million for a victim compensation fund. As part of the agreement, Kimberly-Clark is also required to enhance its compliance program and provide ongoing reports to the government. While the company did not initially self-report the violations, it was credited for its later cooperation with the investigation.