Kimberly-Clark To Pay Around $40 Million Over Surgical Gown Designs

Kimberly-Clark Corporation (NASDAQ:KMB) will pay $40.4 million to settle a criminal charge related to selling adulterated MicroCool surgical gowns.

The Justice Department said the company admitted to fraudulent testing and mislabeling, claiming the gowns met the highest AAMI Level 4 protection standards.

A criminal information filed in the Northern District of Texas charged Kimberly-Clark with introducing adulterated medical devices into interstate commerce with intent to defraud. Investigators found that an employee manipulated tests to avoid filing a required FDA premarket notification after a design change.

Under a deferred prosecution agreement, Kimberly-Clark will pay a $24.5 million penalty, forfeit $3.9 million in profits, and provide up to $12 million in victim compensation. The probe covers 2013–2014 sales, totaling roughly $49 million in mislabeled gowns sold domestically and abroad.

Also Read: Kimberly-Clark Tops Q2 EPS Estimates, Stock Jumps Over 5%

Authorities noted the gowns failed tests for bloodborne pathogen and fluid resistance, especially in sleeves, but no patient harm occurred. Kimberly-Clark ceased surgical gown production in 2014 after spinning off its healthcare division into Halyard Health, which is now Avanos Medical (NASDAQ:AVNS).

In a related update, Avanos sold its Hyaluronic Acid product line to Channel-Markers Medical in July; terms were not disclosed.

Price Action: KMB stock is up 0.64% at $129.55 at the last check on Friday.

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