Goldbelt Inc. is seeking dismissal of a lawsuit by a medical company asking for at least $30 million due to losses resulting from a contract to supply hundreds of millions of needles during the COVID-19 pandemic, with Goldbelt arguing the accusations are largely based on alleged oral agreements that cannot meet legal proof standards.
A 25-page memo supporting the motion to dismiss was filed Tuesday by the Juneau-based Alaska Native Regional Corporation in U.S. District Court for the Eastern District of Virginia. The memo states the lawsuit filed April 26 by Florida-based iRemedy Healthcare Inc., which asserts Goldbelt committed a breach of contract by not providing proper specifications for the needles to be provided, fails to substantiate the four legal claims that are the basis for the damages sought.
Goldbelt Security LLC, a Virginia-based subsidiary of the Native corporation, received $125 million in federal government contracts in August of 2020 to procure 530 million needles and syringes to administer COVID-19 vaccines once they became available. The focus of the lawsuit involves “conventional” needles versus “safety” needles designed to protect users from accidental sticks.
iRemedy asserts the initial contract with Goldbelt allowed it to provide either type of needle, but the Native corporation failed to disclose the government soon afterward declared it would only accept safety needles for use in administering COVID-19 vaccines. Furthermore, iRemedy claims when the company learned of the change Goldbelt officials said they would purchase at least $1.5 million of the conventional needles and help find a buyer for additional surplus if necessary.
Goldbelt, in its motion to dismiss, asserts no such agreement exists. Also, the motion claims iRemedy was told about the updated needle requirements in October of 2020, then signed updated contracts to purchase conventional needles from a supplier in December of that year.
“iRemedy does not allege that the amended Subcontracts obligated Security to buy any of iRemedy’s conventional needles or to find a buyer for them,” Goldbelt’s response notes. However, iRemedy “alleges that it did so at Defendants’ ‘urging’ because it was ‘expecting’ Defendants to find a buyer for the conventional needles, notwithstanding that the amended Subcontracts contained no such obligation.”
In addition, Virginia law states for fraud claims involving “transactions of goods” exceeding $500 “a written agreement is required and an oral agreement is unenforceable,” according to the motion to dismiss.
Goldbelt is requesting a hearing Nov. 7 for its motion to dismiss. Attempts Friday to reach attorneys representing iRemedy were not immediately successful.
iRemedy’s lawsuit states it fulfilled its obligations contractual obligations, while also unsuccessfully seeking to modify the contract terms and/or obtain additional safety needles.
“With global production capacity for syringes and needles completely tapped, iRemedy was faced with a Hobson’s choice,” the lawsuit states. “It could cancel the subcontracts because of Goldbelt’s breach, lose its deposits, ruin its reputation, and never get another government contract again. Or it could accept being saddled with more conventional needles than the number of adults in the United States (without any known buyers).”
iRemedy claims it is “on the brink of insolvency” due to purchasing more than $18.5 million of conventional needles it cannot find buyers for, losing more than $8.2 million in deposits, and paying $1.8 million to date in storage fees that are accumulating at $90,000 a month. The lawsuit by the medical company is also seeking attorneys fees and costs.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
