Halyard Health, Inc. (NYSE:HYH) Files An 8-K Regulation FD Disclosure
Item 7.01 Regulation FD Disclosures.
Summary
In late 2014, Bahamas Surgery Center, LLC (Bahamas) brought a
class action lawsuit in California against Kimberly-Clark
Corporation (Kimberly-Clark) and Halyard Health, Inc. (Halyard
Health), alleging the companies had concealed information
regarding MICROCOOL* Surgical Gowns.
class action lawsuit in California against Kimberly-Clark
Corporation (Kimberly-Clark) and Halyard Health, Inc. (Halyard
Health), alleging the companies had concealed information
regarding MICROCOOL* Surgical Gowns.
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Among other allegations, Bahamas claims purchasers of
MICROCOOL* gowns would have paid less for the gowns if the allegedly concealed information had been known to them. |
|
The jury found against Kimberly-Clark and Halyard and
awarded both compensatory and punitive damages. We expect the court to reduce the award of punitive damages to align with constitutional limits. |
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Halyard Health continues to stand by MICROCOOL* gowns,
which Halyard Health believes have always been, and remain today, safe and effective for their intended use. |
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We do not believe the verdict is supported by the facts or
the law, and we intend to file post-trial motions and, if necessary, appeal. |
|
We believe that the ultimate resolution of this lawsuit
will not materially impact Halyard Healths liquidity, its access to capital markets, or its ability to conduct its daily operations. We look forward to continuing to serve our customers needs with products that are safe and effective. |
Case Details
In late 2014, Bahamas brought a class action lawsuit in the U.S.
District Court for the Central District of California alleging
that from February 12, 2012 through January 11, 2015 (Class
Period), Defendants Kimberly-Clark and Halyard Health concealed
certain information regarding MICROCOOL* Breathable High
Performance Surgical Gowns purchased by a class of private
California end-purchasers during the Class Period. Among other
allegations, Plaintiff claims that purchasers of the MICROCOOL*
gowns would have paid less for the gowns if the allegedly
concealed information had been known to them.
District Court for the Central District of California alleging
that from February 12, 2012 through January 11, 2015 (Class
Period), Defendants Kimberly-Clark and Halyard Health concealed
certain information regarding MICROCOOL* Breathable High
Performance Surgical Gowns purchased by a class of private
California end-purchasers during the Class Period. Among other
allegations, Plaintiff claims that purchasers of the MICROCOOL*
gowns would have paid less for the gowns if the allegedly
concealed information had been known to them.
Defendants deny Plaintiffs contentions, maintain that the
MICROCOOL* gowns are safe and effective and have always complied
with the 2003 AAMI PB70 standard under which the gowns were
cleared by the U.S. Food and Drug Administration (FDA) in
December 2010. The Defendants also deny that they concealed
material information from purchasers. Defendants therefore deny
liability and deny that Plaintiff or the class members are
entitled to any of the relief they seek.
MICROCOOL* gowns are safe and effective and have always complied
with the 2003 AAMI PB70 standard under which the gowns were
cleared by the U.S. Food and Drug Administration (FDA) in
December 2010. The Defendants also deny that they concealed
material information from purchasers. Defendants therefore deny
liability and deny that Plaintiff or the class members are
entitled to any of the relief they seek.
On April 7, 2017, after a two-week trial, a jury returned a
verdict for Plaintiff, finding that Kimberly-Clark was liable for
$3,889,327 in compensatory damages (not including prejudgment
interest) and $350,000,000 in punitive damages, and that Halyard
was liable for $261,445 in compensatory damages (not including
prejudgment interest) and $100,000,000 in punitive damages.
verdict for Plaintiff, finding that Kimberly-Clark was liable for
$3,889,327 in compensatory damages (not including prejudgment
interest) and $350,000,000 in punitive damages, and that Halyard
was liable for $261,445 in compensatory damages (not including
prejudgment interest) and $100,000,000 in punitive damages.
Halyard Intends to File Motions to Challenge the Verdict and, if
Necessary, to Appeal
Necessary, to Appeal
Halyard Health is disappointed with the jurys verdict. We
recognize, though, that it is just the first step of a multi-step
legal process. We believe the verdict is not supported by the
facts or the law, and we intend to challenge it through
post-trial motions and, if necessary, on appeal to a higher
court.
recognize, though, that it is just the first step of a multi-step
legal process. We believe the verdict is not supported by the
facts or the law, and we intend to challenge it through
post-trial motions and, if necessary, on appeal to a higher
court.
For instance, in the coming weeks Halyard Health intends to file
a motion for judgment notwithstanding the verdict, which will
argue that the Court should reverse the jurys verdict in whole or
in part because it was based on insufficient facts and/or did not
correctly apply the law. As an alternative, Halyard Health may
seek a new trial. Additionally, Halyard Health intends to
challenge the jurys punitive damages award. The U.S. Supreme
Court has stated that the constitutional outer limit for the
ratio between punitive damages and compensatory damages in cases
such as ours is 9 to 1 or lower, and in our case we believe the
ratio should be lower. Halyard Health intends to rely on this and
other legal authority in seeking to reduce the jurys punitive
award, which totaled more than 100 times the compensatory damages
assessed against Defendants (including a ratio of approximately
382 to 1 as to Halyard Health).
a motion for judgment notwithstanding the verdict, which will
argue that the Court should reverse the jurys verdict in whole or
in part because it was based on insufficient facts and/or did not
correctly apply the law. As an alternative, Halyard Health may
seek a new trial. Additionally, Halyard Health intends to
challenge the jurys punitive damages award. The U.S. Supreme
Court has stated that the constitutional outer limit for the
ratio between punitive damages and compensatory damages in cases
such as ours is 9 to 1 or lower, and in our case we believe the
ratio should be lower. Halyard Health intends to rely on this and
other legal authority in seeking to reduce the jurys punitive
award, which totaled more than 100 times the compensatory damages
assessed against Defendants (including a ratio of approximately
382 to 1 as to Halyard Health).
The jurys finding of liability is limited to a one-count
fraud-by-omission claim under Californias common law. To find in
favor of the Plaintiff, the jury was required to find that
Defendants intended to deceive Plaintiff from February 2012
through January 2015 by failing to disclose certain material
facts regarding MICROCOOL* gowns purchased by Plaintiff, and that
Defendants concealment was a substantial factor in causing
Plaintiffs economic harm. Because the Court used a general
verdict form, the form does not identify the material facts the
jury believed were concealed.
fraud-by-omission claim under Californias common law. To find in
favor of the Plaintiff, the jury was required to find that
Defendants intended to deceive Plaintiff from February 2012
through January 2015 by failing to disclose certain material
facts regarding MICROCOOL* gowns purchased by Plaintiff, and that
Defendants concealment was a substantial factor in causing
Plaintiffs economic harm. Because the Court used a general
verdict form, the form does not identify the material facts the
jury believed were concealed.
MICROCOOL* Gowns are Safe and Effective
The Plaintiffs case was about alleged economic harm (money), not
personal injury. The jurys verdict does not mean that MICROCOOL*
gowns fail to comply with the standard under which they were
cleared. Halyard Health continues to stand by
personal injury. The jurys verdict does not mean that MICROCOOL*
gowns fail to comply with the standard under which they were
cleared. Halyard Health continues to stand by
MICROCOOL* gowns, which Halyard Health believes have always been,
and remain today, safe and effective for their intended use.
External, highly credentialed experts who have reviewed relevant
facts in our case agree. One of those experts is a former FDA
reviewer and another is an expert on infectious diseases. Also,
the real-world experience of our customers has confirmed the
experts conclusions. Complaints of strikethrough-i.e., the
passage of blood or other bodily fluids through the MICROCOOL*
gowns barrier protection technology-have always been exceedingly
low. At all times, the rates of strikethrough complaints received
by Halyard Health have remained less than 1 complaint for every
million gowns sold. To date we have sold nearly 70 million
MICROCOOL* gowns, and there have been zero complaints of injury
due to barrier protection.
and remain today, safe and effective for their intended use.
External, highly credentialed experts who have reviewed relevant
facts in our case agree. One of those experts is a former FDA
reviewer and another is an expert on infectious diseases. Also,
the real-world experience of our customers has confirmed the
experts conclusions. Complaints of strikethrough-i.e., the
passage of blood or other bodily fluids through the MICROCOOL*
gowns barrier protection technology-have always been exceedingly
low. At all times, the rates of strikethrough complaints received
by Halyard Health have remained less than 1 complaint for every
million gowns sold. To date we have sold nearly 70 million
MICROCOOL* gowns, and there have been zero complaints of injury
due to barrier protection.
Halyard has Robust Manufacturing Processes and Quality Systems
Halyard Health is proud of its robust manufacturing processes and
quality systems. As a manufacturer of medical devices, Halyard is
regulated by the FDA, and Halyards quality systems are subject to
periodic inspection by FDA investigators. We believe that we have
done an exemplary job of putting in place quality systems and
processes that meet the needs of our customers, and we have
always responded proactively to any issues identified by FDA.
quality systems. As a manufacturer of medical devices, Halyard is
regulated by the FDA, and Halyards quality systems are subject to
periodic inspection by FDA investigators. We believe that we have
done an exemplary job of putting in place quality systems and
processes that meet the needs of our customers, and we have
always responded proactively to any issues identified by FDA.
The Ultimate Resolution of this Lawsuit Is Not Expected to
Materially Impact Halyard
Materially Impact Halyard
We believe that the ultimate resolution of this lawsuit will not
materially impact Halyard Healths liquidity, its access to the
capital markets, or its ability to conduct its daily operations.
We look forward to continuing to serve our customers needs with
products that are safe and effective.
materially impact Halyard Healths liquidity, its access to the
capital markets, or its ability to conduct its daily operations.
We look forward to continuing to serve our customers needs with
products that are safe and effective.
We appreciate the trust that our customers have in us and our
products, and we will continue to fulfill our mission of
advancing health and healthcare by preventing infection,
eliminating pain and speeding recovery.
products, and we will continue to fulfill our mission of
advancing health and healthcare by preventing infection,
eliminating pain and speeding recovery.
About Halyard Health, Inc. (NYSE:HYH)
Halyard Health, Inc. seeks to advance health and healthcare by preventing infection, eliminating pain and speeding recovery. The Company operates through two segments: Surgical and Infection Prevention (S&IP) and Medical Devices. Its S&IP business provides healthcare supplies and solutions that target the prevention of healthcare associated infections. The Medical Devices segment provides a portfolio of product offerings focused on pain management and respiratory and digestive health. The S&IP segment’s product portfolio includes sterilization wrap, surgical drapes and gowns, facial protection, protective apparel and medical exam gloves. The S&IP segment is also a provider of education to prevent healthcare-associated infections. The Medical Devices segment provides a portfolio of product offerings focused on pain management and respiratory and digestive health. Its products include QUICK CHECK, SMART-FOLD, POWERGUARD, MICROCOOL and FLUIDSHIELD. Halyard Health, Inc. (NYSE:HYH) Recent Trading Information
Halyard Health, Inc. (NYSE:HYH) closed its last trading session up +0.33 at 39.18 with 371,526 shares trading hands.