Halyard denies mismarketing claims while law firm raises the stakes

Following allegations aired on CBS' 60 Minutes Sunday that Halyard Health ($HYH) deliberately marketed substandard healthcare equipment for years, the medical device and equipment company struck back on Monday with a denial.

The company's Microcool gowns, used daily in the U.S. during surgeries and recommended "aggressively" by Halyard during the Ebola epidemic, leaked under pressure testing, former Halyard global strategic marketing director Bernard Vezeau told 60 Minutes. Vezeau said he was fired because he was vocal about the problems.

The suits allowed blood onto arms during procedures and in some cases the sleeves fell off, Vezeau said on the program.

In its response, Halyard told The Wall Street Journal it has received less than one complaint for every million gowns sold and that it never received a report of a healthcare provider getting an infection from a gown.

Halyard's Microcool gown

Eagan Avenatti, a law firm suing the company and former parent company Kimberly-Clark over the episode, maintains that the two companies didn't notify the public, the FDA or physicians about the alleged faulty products and kept selling them "to the tune of millions of dollars a month," lawyer Michael Avenatti told 60 Minutes. In the piece, Avenatti pointed to a "disastrous" report that Halyard competitor Cardinal Health had commissioned showing that the products failed 77% of the time.

That test was an "outlier," though, Halyard and its representatives told the WSJ. Company COO Chris Lowery added to 60 Minutes' Anderson Cooper that "frankly I think the allegations aren't based in the facts."

Following the airing on Sunday, Eagan Avenatti raised its estimate for damages to $900 million and demanded that the companies publicly release all documents relating to the lawsuit "so the American public and healthcare professionals can know the truth about the companies' testing and product failures." It estimated that the "financial fallout" from the case could reach $2 billion, "far in excess" of what Halyard could pay.

Halyard's stock fell about 11% after a preview of the report went live on Friday and traded at about $27.50 mid-Tuesday morning.

- here's the 60 Minutes story
- and Eagan Avenatti's statement
- plus the WSJ piece

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