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Home » Whistleblower wants Smith & Nephew to cough up sales docs

Whistleblower wants Smith & Nephew to cough up sales docs

August 11, 2011 By MassDevice staff

Smith & Nephew

A former Smith & Nephew (NYSE:SNN) executive wants a Tennessee federal court to force the company to cough up documents detailing its sales to the U.S. government as part of his whistleblower lawsuit accusing the firm of breaking the Trade Agreements Act.

Samuel Adam Cox III, formerly the Information Technology Global Director of Enterprise Resource Planning for Smith & Nephew’s Tennessee operations, filed the lawsuit last year. It alleges that SNN sold products in the U.S. it falsely claimed were made here, in violation of the TAA, according to court documents.

Cox worked for SNN from mid-December 2007 to September 2008, when the company allegedly fired him "in retaliation for his repeated attempts to bring Smith & Nephew’s illegal activities to the attention of his superiors," according to the documents. The TAA requires goods sold to the U.S. government, as they were under an SNN contract with the Veterans Administration, to be manufactured in designated nations; Malaysia is not on that list.

A number of Smith & Nephew executives, including CIO Sal Chiovari, were allegedly aware of the violations, according to the documents. One executive allegedly joked that selling the Malaysian products was "go to jail activity," according to the lawsuit, and others allegedly told Cox that they knew the company could get in hot water if the sales were ever disclosed. Global Vice President of IT Jon Schauber allegedly warned Cox not to rock the boat, saying Cox had better "get on the ‘bus,’ meaning that he better ‘shut-up and go-along,’" according to the documents.

Another SNN executive, vice president of quality Steve Kahn, "was so concerned about Smith & Nephew’s illegal conduct that he had raised the issue with the presidents of the orthopedics division, Mark Augusti and Joe Devivio," according to the lawsuit.

"Kahn even started holding internal meetings with several Smith & Nephew departments, in hopes of raising internal awareness of the violations that were occurring on a daily basis at the company. Kahn’s meetings were attended by some of Smith & Nephew’s senior management, but Kahn’s concerns were never given any priority among the company’s business objectives," according to the complaint. "When Plaintiff-Relator Cox refused to aid Smith & Nephew in its illegal practices, he was berated and cursed by CIO Chiovari. In addition, Jon Schauber threatened Plaintiff-Relator Cox, saying that he would give Mr. Cox a very poor grade on his performance review."

After reporting the allegedly "fraudulent practices and retaliatory actions" to Smith & Nephew’s whistleblower hotline, Cox was fired in September 2008, allegedly "for refusing to participate in defendant’s illegal practices and for attempting to end those practices by bringing them to the attention of his supervisors."

Cox now wants SNN to produce documents detailing sales of about 107 products to the U.S. government, according to his motion to compel supplemental discovery responses:

  • “An Excel or Access spreadsheet detailing all sales by all S&N divisions to the federal government from December 2002 through the present. For each sale, the data should include: (a) the S&N product number, (b) number of units sold, (c) extended price, (d) purchasing agency, (e) agency procurement number, and (f) transaction date."
  • "An Excel or Access spreadsheet listing all of the country or countries of origin of all products that S&N offered for sale to the federal government from December 2002 through the present, including the dates of any changes in countries of origin."
  • "An Excel or Access spreadsheet, and all related documents or records, identifying and supporting all of S&N’s grounds for contending that any particular sales to the government from December 2002 to the present were not subject to the country-of-origin regulations implementing the Trade Agreements Act."
  • "And any spreadsheets that S&N provided contemporaneously to the federal government from December 2002 to the present, listing the countries of origin of S&N’s products."

Filed Under: Legal News Tagged With: Smith & Nephew

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