Invacare 2013 Annual Report Download - page 39

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the authority to inspect these facilities at any time. If the FDA is satisfied with the Company's compliance, the FDA will provide
written notification that the Company is permitted to resume full operations at the impacted facilities.
After resumption of full operations, the Company must undergo five years of audits by a third-party expert auditor to determine
whether the facilities are in continuous compliance with FDA regulations and the consent decree. The auditor will inspect the
corporate and Taylor Street facilities’ activities every six months in the first year following the resumption of full operations and
then once every 12 months for the next four years.
Under the consent decree, the FDA has the authority to inspect the corporate and Taylor Street facilities at any time. The
FDA also has the authority to order the Company to take a wide variety of actions if the FDA finds that the Company is not in
compliance with the consent decree or FDA regulations, including requiring the Company to shut down all operations relating to
Taylor Street products. The FDA can also order the Company to undertake a partial shutdown or a recall, issue a safety alert,
public health advisory, or press release, or to take any other corrective action the FDA deems necessary with respect to Taylor
Street products.
The FDA also has authority under the consent decree to assess liquidated damages of $15,000 per violation per day for any
violations of the consent decree, FDA regulations or the federal Food, Drug, and Cosmetic Act. The FDA may also assess liquidated
damages for shipments of adulterated or misbranded devices, except as permitted by the consent decree, in the amount of twice
the sale price of any such adulterated or misbranded device. The liquidated damages are capped at $7,000,000 for each calendar
year. The liquidated damages are in addition to any other remedies otherwise available to the FDA, including civil money penalties.
For additional information regarding the consent decree, please see the following sections of this Annual Report on Form
10-K: Item 1. Business - Government Regulation; Item 1A. Risk Factors; and Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Outlook and - Liquidity and Capital Resources.
As previously disclosed, in December 2010, the Company received a warning letter from the FDA related to quality system
processes and procedures at the Company's Sanford, Florida facility. At the time of filing of this Annual Report on Form 10-K,
this matter remains pending. See Item 1A. Risk Factors in this Annual Report on Form 10-K.
On November 15, 2013, an amended complaint, in a lawsuit originally instituted on May 24, 2013, was filed against Invacare
Corporation, Gerald B. Blouch and A. Malachi Mixon III in the U.S. District Court for the Northern District of Ohio, alleging that
the defendants violated federal securities laws by failing to properly disclose the issues that the Company has faced with the FDA.
The lawsuit seeks class certification and unspecified damages and attorneys' fees for purchasers of the Company's common shares
between July 22, 2010 and December 7, 2011. This lawsuit has been referred to the Company's insurance carriers. The Company
intends to vigorously defend this lawsuit.
On February 14, 2014, an amended complaint, in a lawsuit originally instituted on August 26, 2013, was filed against Invacare
Corporation, Gerald B. Blouch, A. Malachi Mixon III and Patricia Stumpp, as well as outside directors Dale C. LaPorte, Michael
F. Delaney and Charles S. Robb, in the U.S. District Court for the Northern District of Ohio, alleging that the defendants breached
their fiduciary duties and violated the Employment Retirement Security Act (ERISA) in the administration and maintenance of
the Company stock fund in the Company’s Retirement Savings Plan (401(k) Plan). The lawsuit seeks class certification and
unspecified damages and attorneys' fees for participants in the Company's stock fund of the 401(k) Plan between July 22, 2010
and the present. This lawsuit has been referred to the Company's insurance carriers. The Company intends to vigorously defend
this lawsuit.
The Company received a subpoena in 2006 from the U.S. Department of Justice (“DOJ”) seeking documents relating to
three longstanding and well-known promotional and rebate programs maintained by the Company. The Company believes that
the programs described in the subpoena are in compliance with all applicable laws and the Company has cooperated fully with
the government investigation. At the time of filing of this Annual Report on Form 10-K, the subpoena remains pending; although
the last communication with the DOJ was in 2007.
Additional information regarding our commitments and contingencies is included in Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations and in Contingencies in the Notes to the Condensed Consolidated
Financial Statements included in this Annual Report on Form 10-K.
Item 4. Mine Safety Disclosures.
None.