Mask company pays $70k to state in settlement alleging price gouging
DENVER, Colo. (KRDO) — The Denver-based company Nationwide Medical Supply Inc. has agreed to pay $70,000 to the state of Colorado along with other stipulations, according to Attorney General Phil Weiser.
Weiser alleged Nationwide excessively marked up KN95 masks at the start of the pandemic and marketed misinformation, including falsely claiming the masks were respirators and FDA-approved.
“PPE was in short supply and we want to make sure that people who engage in irresponsible, wrongful conduct are held accountable and change their ways,” Weiser said.
An attorney for Nationwide Medical Supply, Alan Schindler, said the attorney general is blowing the company’s mistakes out of proportion.
“We categorically deny that anything was done intentionally,” Schindler said. “The AG’s office did not and cannot prove any actual harm here. They are simply finding small errors and making them seem much bigger than they are.”
Schindler said Nationwide was in its first month of business at the time of the allegations. However, the state’s top attorney contends that intent doesn’t matter in this instance.
“The idea that you had to knowingly deceive someone is a misstatement of the law,” said Weiser. “Under our law, if you engage in what I would call reckless behavior, which means you willfully disregard what the facts are…that behavior is wrong.”
According to a settlement document, the state tested the filtration of two masks that Nationwide sold.
“While one mask performed at the advertised 95% removal filtration, a second mask did not meet the advertised 95% removal filtration, testing at approximately 70% removal filtration,” the document said.
It also said that in some cases, Nationwide marked up its masks as much as 261%. A Colorado law passed in July 2020 prohibits price gouging during public emergencies.
“For example, in or around April and May 2020, Nationwide sold a KN95 mask that it obtained for approximately $2.75 per mask for a price that ranged from $6 to $9.95 per mask,” the settlement document said. “The $9.95 price was a markup of 261.82% above Nationwide’s cost.”
However, Schindler defends Nationwide’s sales prices.
“The regulations currently in place and in place back in April are incredibly vague,” said Schindler. “It makes it almost impossible for a company, especially a new company like Nationwide, to navigate what constitutes as gouging and non-gouging.”
Weiser said he wants the lawsuit to set the stage for other companies selling similar products.
“That’s exactly what this lawsuit is about,” Weiser said. “Showing people that price gouging and taking advantage of buyers who need PPE is not okay.”
The state said the $70,000 will be used for attorney fees, restitution, and future anti-fraud enforcement. As part of the settlement, Nationwide has agreed to "stop making false or misleading representations" about its products and "stop charging excessive and unreasonable prices during the pandemic."
