Invacare 2013 Annual Report Download - page 19

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• Second, the third-party expert reviewed the Company’s design control systems at the corporate and Taylor Street facilities.
The second certification audit also was successfully completed during 2013. The FDA notified the Company on July 16,
2013 that it had accepted the second certification report, after which the Company was permitted to resume design
activities at the corporate and Taylor Street facilities.
• The third and final third-party expert audit involves a comprehensive review of the Company’s compliance with the
FDA’s quality system regulations at the corporate and Taylor Street facilities. During the final certification audit, the
third-party expert indicated that some additional work was required, primarily in the Company’s updated complaint and
risk review processes, before the final certification report could be completed and provided to the FDA. The Company
has been executing its action plan relating to the expert’s comments, and the third-party expert auditor returned at the
end of February 2014 to recommence the final certification audit.
After completion of the third expert certification report, the Company then must submit its own report related to its compliance
status and its responses to any observations by the third-party expert or by the FDA from prior inspections. The Company will not
be able to resume full operations at the corporate and Taylor Street facilities until the FDA issues written notice that it has found
the facilities to be in compliance. Within 30 days of receiving the Company’s report, the FDA will begin a comprehensive inspection
of the corporate and Taylor Street facilities. The Company cannot predict the timing of the completion or the outcome of the
FDA’s inspection. If, after its inspection, the FDA determines that the facilities are satisfactorily compliant, it will issue written
notification to the Company, after which full operations may resume at both the corporate and Taylor Street facilities.
After resumption of full operations, the Company must undergo five years of audits by a third-party expert auditor to determine
whether the Company's operations are operated and administered in continuous compliance with the consent decree and FDA
regulations. 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
wheelchairs manufactured at the Taylor Street facility. 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 wheelchairs manufactured at the Taylor Street facility.
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.
See Item 1A. Risk Factors and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations for further discussion of these matters.
Other FDA Matters.
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. The Company has developed and is executing a comprehensive quality systems
remediation plan to address the matters in the warning letter. See Item 1A. Risk Factors.
In January 2014, the FDA conducted inspections at the Company’s manufacturing facility in Suzhou, China and at the
Company’s electronic components subsidiary in Christchurch, New Zealand, covering quality systems and current Good
Manufacturing Practice regulations. The FDA issued its inspectional observations on Form 483 to the Company after these
inspections, and the Company submitted its responses to the agency in a timely manner.
From time to time, the Company may undertake voluntary recalls or field corrective actions of the Company’s products to
correct product issues that may arise. These actions help to maintain ongoing customer relationships and enhance the Company’s
reputation for adhering to high standards of quality and safety. The Company continues to strengthen its programs to better ensure
compliance with applicable regulations and actively keeps abreast of proposed regulations, particularly those which could have
a material adverse effect on the Company.