Dayton, OH-based Kettering Health Network has sued a franchisee of Top 40 promotional products distributor Fully Promoted (asi/384000), alleging the business sold the healthcare system nearly $1.2 million in counterfeit N95 masks and then refused to refund the money after it was revealed the masks were fake.

Kettering filed the suit in the U.S. District Court for the Southern District of Ohio against Loveland, CO-based Jade Designs, which does business as Fully Promoted, and Jennifer Snyder, a Loveland woman who court papers identify as the managing partner of the Jade Designs Fully Promoted franchise.

The lawsuit alleges that the Loveland Fully Promoted franchise failed to deliver authentic N95 masks in three separate orders that Kettering placed with the business. Kettering’s complaint also alleges that the franchise lied throughout interactions, making false statements about the authenticity of the masks, saying they were NIOSH-certified when they were not, and representing that the promo business was working closely with N95-maker 3M to get genuine masks when in fact it was not.

“Fully Promoted [of Loveland] knew these statements were false at the time Fully Promoted made them, and/or Fully Promoted made the statements with utter disregard and recklessness regarding their truth or falsity,” the lawsuit alleges.

United Franchise Group, Fully Promoted’s parent company, released the following statement to ASI Media in response to the allegations:  "The location noted in the court filings is independently owned and operated. We are not able to comment on behalf of the location or the owner. However, as an organization, Fully Promoted holds itself to the highest standards when it comes to sourcing materials in where and how we obtain products. This is an isolated incident that we are still learning more about from the location, and we will take proper actions as needed. Our roots run deep in the communities we serve and we are committed to supporting our customers with top quality branded products."

Snyder told ASI Media that she would like to comment on the allegations, but can’t do so because the litigation is pending.

Kettering Health officials describe the network as a faith-based family of medical centers, emergency centers and outpatient facilities that provide community care to patients throughout western Ohio.

When the COVID-19 outbreak rapidly intensified in the United States in March 2020, Kettering was desperate, like healthcare providers everywhere, to secure personal protective equipment for its front-line workers – PPE that included N95 masks. The respirator masks, made by 3M, parent company of Top 40 promo supplier 3M/Promotional Markets (asi/91240), have been in high demand during the pandemic for their ability to help prevent the spread of COVID.

N95 masks have experienced high demand during the pandemic.

In its search for masks, Kettering connected with Jade Designs/Fully Promoted. The interaction led Kettering to place two orders for $1.16 million with the Fully Promoted franchise for it to provide some 330,000 NIOSH-certified N95 masks. However, Kettering asserts, Snyder’s Fully Promoted never delivered the masks.

“Instead, Fully Promoted [of Loveland] engaged in a months-long campaign of stall and delay tactics,” Kettering’s lawsuit states. The Fully Promoted franchise “repeatedly and falsely represented that it and Fully Promoted’s corporate office were working closely with 3M to secure verified NIOSH-certified N95 masks,” the suit further charges.

By later summer of 2020, with the order still not fulfilled, the Loveland, CO, Fully Promoted franchise refunded most of the $1.16 million. Still, $86,700 was initially withheld and “nearly a year from the original March 2020 order, and eight months after (Kettering’s) demand for a refund, Fully Promoted has still failed and refused to return $46,700 of that purchase.”

The alleged problems didn’t end there, though.

Despite the March 2020 orders going unfulfilled, Kettering again turned to the Fully Promoted franchise in December 2020 as another wave of COVID-19 ravaged the U.S. Again, Kettering wanted 300,000 3M NIOSH-certified N95 masks, and the Fully Promoted franchise said it could deliver.

This time, Snyder’s business provided masks at a charge of about $1.18 million. After the masks arrived, Kettering incurred $20,000 in costs related to fit-testing employees. It was during that fit-testing that the masks came under suspicion, one reason for which was an allergic reaction that an employee had to a mask.

Kettering did some digging and consulted with 3M. In late January 2021, 3M sent Kettering a message that the batch of masks “is counterfeit and we recommend you DO NOT use product from this seller.”

When Kettering provided 3M’s confirmation that the masks were counterfeit, the Fully Promoted franchise “admitted for the first time it did not use ‘normal distribution channels’ to secure the masks,” the lawsuit alleges. “This admission stands in direct contradiction to Fully Promoted’s prior representations made to (Kettering) over the course of several months that it was working with 3M to secure the masks, including ‘daily communications’ with 3M, providing 3M with ‘huge amounts of documentation,’ and allowing 3M to ‘vet [Fully Promoted].’”

Ultimately, the 300,000 masks provided through the December order were useless to Kettering because the health network is required to use legitimate NIOSH-certified N95 masks. Kettering demanded a refund, but the Fully Promoted franchise refused. As of the May 3 filing of the lawsuit, Kettering had not been reimbursed the $1.18 million it paid for the masks, the lawsuit says.

“Fully Promoted [of Loveland] continues to insist that the masks could somehow still be legitimate and refuses to refund (Kettering) until Fully Promoted has the opportunity to re-sell these counterfeit masks to unsuspecting third-parties,” the lawsuit says.

Kettering is seeking more than $1.2 million in damages.

With reported 2019 North American promotional product revenue of $105.6 million, Fully Promoted ranks 20^th on Counselor’s most recent list of the largest distributors in the industry. The new list is due out in July 2021.

Law enforcement authorities say that PPE fraud has been widespread throughout the coronavirus pandemic. ASI Media has consistently reported on allegations of such fraud because PPE became a multibillion-dollar category for the industry amid COVID-19.