On October 8, 2020, New York City (“NYC”) filed a lawsuit against several South Florida entities and individuals (“South Florida defendants”) and a Chinese company for allegedly failing to procure ventilators which were promised during the peak of the city’s battle with COVID-19. In its complaint, NYC argues, among other things, that it is entitled to relief under New York False Claims Act (“NYFCA”), which is New York State’s corollary to the federal False Claims Act. (1)

The events leading to the suit began in late March of 2020, when New York City was the epicenter of the COVID-19 crisis in the United States. At the time, the city was seeing a skyrocketing number of patients who were unable to breath on their own as a result of the coronavirus. An adequate supply of ventilators was critical to save these patients’ lives, but, as the state’s governor repeatedly explained during his daily press conferences, the city was in danger of running out of the devices and officials were in a desperate struggle to obtain an adequate supply. 

Seeking to capitalize on this unprecedent demand, the South Florida defendants agreed to sell NYC 130 ventilators imported from China for the price of more than $8.25 million. The South Florida defendants then allegedly agreed to pay their Chinese supplier more than $7.5 million for the ventilators.  

On March 30, 2020, NYC paid the South Florida defendants the purchase price in full and the South Florida defendants paid their Chinese supplier a few days later. Unfortunately, the ventilators never materialized.  

NYC alleges that, on April 10th, it was notified that the South Florida defendants had requested a refund from their Chinese supplier. The city then immediately demanded that the South Florida defendants refund the full purchase price to NYC. Two months later, NYC received approximately $4 million dollars from the South Florida defendants, but the remaining funds were never returned. 

NYC bases its NYFCA claims on several allegedly false statements made to induce its payment of $8.25 million to the South Florida defendants. According to the complaint, the South Florida defendants failed to inform NYC that they were not authorized to import goods, such as ventilators, regulated by the U.S. Food and Drug Administration. NYC also alleges that one of the defendants falsely stated that they had ventilators “on hand,” and that the ventilators would be “ready to ship Tuesday.” The South Florida defendants also allegedly claimed to have a direct relationship with the manufacturer of the ventilator and referred to “our factory in China,” when no such relationship existed. According to the complaint, these false statements constitute a false claim for payment, in violation of the NYFCA. Accordingly, NYC is seeking more than $4.2 million in damages, $12.8 million in treble damages under the NYFCA, as well as plus punitive damages.

The case is captioned City of New York v. Global Medical Supply Group, LLC, et al., No. 9:2020cv81880, U.S. District Court for the District of Southern Florida.

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with investigations and litigation initiated pursuant to the False Claims Act and similar statute and local statutes.  If you need assistance with such a matter, please contact us today.

1. The suit was filed in the U.S. District Court for the Southern District of Florida, which NYC alleges has diversity jurisdiction under 28 U.S.C. §1332. In addition to the NYFCA claims, NYC’s complaint includes several common law causes of action.