Judge slaps lawyers with $1.4m in fines over $645m KCI trade theft case

A federal judge this week slapped lawyers representing Healthcare Essentials in a trade theft lawsuit brought by Acelity subsidiary Kinetic Concepts Inc. with some $1.4 million in fines for their part in the case.

Earlier this month KCI was awarded $645 million in damages after winning the suit. KCI accused Healthcare Essentials  of stealing its VAC negative pressure wound therapy, rebranding and selling it as its own. In that decision, Judge Benita Pearson, of the U.S. District Court for Northern Ohio, found that defendants engaged in “flagrant discovery abuses,” including filing false affidavits, refusing to produce relevant communications and documents, fabricating invoices and inventory spreadsheets, destroying digital and physical evidence and intimidating “at least two witnesses.”

This week Pearson issued another ruling on legal costs and sanctions, ordering Health Essentials, the Cavitch law firm and three of its attorneys to pay a collective $2.5 million to KCI, plus post-judgment interest of 2.56% compounded annually on the $645 million damages award.

“The court recognizes the magnitude of defendants’ own litigation misconduct and the degree to which their misconduct was intertwined with that of Cavitch and its attorneys. The court finds that each group (defendants on one hand, Cavitch and its attorneys on the other) should bear responsibility for one-half of the expenses resulting from their concerted misconduct,” Pearson wrote in the Sept. 19 ruling. “The court has concluded that defendants’ and Cavitch and its attorneys’ concerted litigation misconduct resulted in $705,193.63 in fees and costs incurred by KCI. Because the court apportions financial responsibility for that incurrence one-half to defendants and one-half to Cavitch and its attorneys, the latter are responsible to pay a total amount of $365,200.67.”

Pearson also sanctioned three Cavitch attorneys, ordering Komlavi Atsou and Michael Rasor to each pay $365,200 and Eric Weiss to pay $290,488 to KCI in attorney fees and legal costs. The judge also awarded post-judgment interest on the sanctions starting the 19th at the 2.56% annually compounded rate.

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