A civil lawsuit seeking at least $30 million from Goldbelt Inc. has been filed by a medical supply company that claims the Juneau-based Alaska Native Regional Corporation failed to provide proper specifications for the purchase of hundreds of millions of needles during the COVID-19 pandemic, putting the medical company’s existence at risk due to a mass purchase that failed to meet federal government standards.
The central issue involves “conventional” needles versus “safety” needles designed to protect users from accidental sticks. The medical company, Florida-based iRemedy Healthcare Inc., 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.
As a result, iRemedy purchased a massive quantity of conventional needles it was stuck with, according to the lawsuit filed April 26 in U.S. District Court for the Eastern District of Virginia.
“iRemedy tried everything it could think of to sell the surplus needles,” the lawsuit states. “It approached all kinds of potential buyers, from massive hospital groups to foreign countries, but the global demand for needles had by then faded. iRemedy was unable even to find a charitable group that would take such a large number of needles as a donation. This has caused massive liquidity issues for iRemedy, which has since teetered on the brink of insolvency.”
“Goldbelt, on the other hand, has used the completion of its Prime Contracts to secure other lucrative government contracts. Over the past three years, the company has enjoyed record profits, and its parent company, GBI, has made record large shareholder distributions.”
Goldbelt President and CEO McHugh Pierre on Thursday declined to discuss specifics of the case since the matter is pending, but said the company expects to file its formal response by the end of the month.
“I think it is a frivolous, baseless lawsuit and I’m very disappointed that it was brought forward,” he said.
Goldbelt President and CEO McHugh Pierre speaks to the Greater Juneau Chamber of Commerce on Thursday. (Mark Sabbatini / Juneau Empire)
Attempts to reach attorneys for iRemedy were unsuccessful.
Goldbelt Security LLC, a Virginia-based subsidiary of the Native corporation, received $125 million in contracts in August of 2020 to procure 530 million needles and syringes to administer COVID-19 vaccines once they became available, according to an announcement at the time by the Department of Defense.
The lawsuit by iRemedy states “within four months after the first intramuscular vaccine’s release in December 2020, a shot was available to every American who wanted one.”
“Without the connections or ability to procure that volume of goods itself, Goldbelt relied on iRemedy’s expertise to identify, vet, and source qualified factories in order to place what became the largest order of needles and syringes ever seen before or since,” the lawsuit states.
The original government specifications in the contract allowed for conventional or safety needles, according to iRemedy. But the lawsuit alleges the government soon afterward told Goldbelt only safety needles would be accepted.
“Goldbelt was obligated to provide iRemedy with these new product specifications, at which point it could choose to unilaterally modify the subcontracts,” the lawsuit states. “Goldbelt knew, however, that conventional needles were cheaper and more readily available…Goldbelt’s entire focus was on getting as many needles as possible out of China as fast as possible. Thus, Goldbelt allowed iRemedy to proceed under the Government’s original specifications and procure both safety and conventional needles.”
iRemedy was “shocked” to subsequently learn conventional needles would not be accepted, and efforts to modify the contract terms and/or obtain additional safety needles instead of conventional ones from suppliers were unsuccessful, according to the lawsuit.
“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).”
Despite the logistical and financial struggles the dispute caused iRemedy, the company fulfilled its obligations amidst other problems occurring during the pandemic, according to the lawsuit.
“iRemedy also dealt with a seemingly endless flow of issues outside its control,” the filing states. “Agents in China representing various brokers tried to horn in on factory allocations that iRemedy had jealously fought for. The Chinese government threatened to — and in some cases did — seize vast amounts of needles that were previously allocated to the Subcontracts. And transportation options frequently evaporated in the face of the world trying to procure goods from China. iRemedy took each of these issues in stride, working closely with both Goldbelt and the Government to solve every new challenge.”
Goldbelt officials, including Pierre, agreed during the fall of 2021 to make an initial $1.5 million purchase of iRemedy’s conventional needles, but later claimed no such agreement was made, the lawsuit claims.
As a result, iRemedy claims it “lost over $8.2 million in deposits “(along with millions in debt service to finance the deposits) and had to deal with more than $18.5 million of conventional needles, no potential buyers despite extensive efforts, and approximately $90,000 per month in storage fees.” The lawsuit is seeking “not less than $30 million” in damages.
• Contact Mark Sabbatini at mark.sabbatini@juneauempire.com or (907) 957-2306.
