The California Court of Appeal has revived a whistleblower lawsuit against Hewlett-Packard Co. and a spin-off entity, Agilent Technologies, for knowingly selling defective, life threatening medical devices used by many California hospitals.
Brought by a former Hewlett-Packard employee named Robert Hindin on behalf of the State of California and himself, the complaint cites the company's "scheme to defraud its customers by knowingly selling defective and potentially dangerous medical devices" in violation of the California False Claims Act.
Robert Hindin worked for Hewlett-Packard as production manager and manufacturing engineer for eight years before being wrongfully terminated in 1997. Hindin first uncovered HP's improper practices and repeated life-threatening failures of HP products in 1996 and attempted to persuade HP management to respond to the problems, even going so far as to write to HP's president. After being met with "nothing but hostility and threats," Hindin reported HP's conduct to the Food and Drug Administration, after which he was fired by the company.
Hindin initially filed a federal lawsuit in 1997 on behalf of himself and the U.S. government under the Federal False Claims Act, charging HP fraudulently induced the federal government (including the Department of Defense and Veterans Administration) to buy its defective products through both misstatements and material omissions.
These products were manufactured and distributed by HP prior to November 1999, when it spun off these and other divisions to create Agilent Technologies Inc. Agilent's Healthcare Solutions group alone reported revenues the following year of $1.4 billion. That group was acquired by Royal Philips Electronics NV in 2001 and was subsequently integrated into Philips Medical Systems North America.
On July 13, 2007, the California Court of Appeal, First Appellate District, unanimously reversed an earlier San Francisco Superior Court decision that found the legal action was barred by a three-year statute of limitations. In its decision, the appellate court held that the three-year deadline for filing did not apply to a private individual but rather to public officials whose knowledge was the trigger for the running of the three-year filing period.
The lawsuit alleges that HP falsely certified to the government that it had complied with FDA requirements regarding the products, including reporting each product failure, investigating these failures, and addressing the problems. The medical devices cited in the suit include Cardiac Defibrillators; Anesthesia Gas Monitors, which are utilized in surgery to deliver anesthetic agents and to monitor anesthesia and respiratory gases; Pulse Oximeters, which are used in operating rooms, intensive care units, and patients' bedsides to measure and monitor an individual's arterial oxygen saturation level; and Ultrasound Imaging Transducers used to produce images of structures, organs and blood flow inside the body.
Hindin's fraud charges were validated by a settlement in July 2002, in which HP/Agilent agreed to pay $7 million to the federal government which had taken over prosecution of Hindin's Federal False Claims Act suit. The company also settled Hindin's wrongful termination claim. Announcing the settlement, the U.S. Attorney in Boston, Michael J. Sullivan, stated publicly: "These medical products were critical to the care of the hospital patients, including armed services personnel and veterans, and failed to perform at an acceptable level. The fact that the defective nature of these products was not disclosed is unconscionable."