A lawsuit from a healthcare system alleging PPE fraud against a Loveland, CO-based promotional products distributor will be heard in federal court in Ohio, a judge has ruled.

Jade Designs, which was doing business as a franchisee of Top 40 distributor Fully Promoted (asi/384000) when it allegedly sold counterfeit personal protective equipment to the hospital network, filed a motion to have the case moved to the U.S. District Court for the District of Colorado.

The promo firm asserted that the U.S. District Court for the Southern District of Ohio, where Dayton, OH-based Kettering Health Network (KHN) filed its complaint, did not have jurisdiction over the case and that it should be moved to Colorado.

A federal judge in Ohio disagreed, effectively saying in a Monday, Oct. 18 ruling that since the alleged fraud was directed against and impacted the Buckeye State-based health system, the Ohio court has jurisdiction.

“The balance of interests, the location of witnesses and evidence, and the interest of justice all weigh in favor of Ohio,” wrote U.S. District Judge Thomas M. Rose in his ruling.

“The counterfeit masks were delivered to Ohio and appear to remain in Ohio,” Rose continued. “Moreover, a number of witnesses reside in Ohio, such as the employees of KHN who allegedly ordered, received, tested and were injured by the masks. … Defendants have offered no reason as to why Colorado would be a more convenient forum, other than the fact defendants reside there. This argument is insufficient.”

KHN sued both Jade Designs and Jennifer Snyder, who court papers identify as managing partner of the company.

The lawsuit alleges that Snyder’s Loveland-based Fully Promoted franchisee failed to deliver authentic N95 masks in three separate orders that Kettering placed with the business. The orders occurred in 2020 during the COVID-19 pandemic, when KHN and other healthcare providers were desperate for PPE.  

KHN’s complaint also alleges that the company 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.

KHN is seeking $1.2 million in damages. 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.

KHN’s allegations include that Jade Designs provided the health network with about 300,000 counterfeit masks that were supposed to be authentic N95s in December 2020.

3M, parent company of Top 40 promo supplier 3M/Promotional Markets (asi/91240), makes authentic N95 masks. The masks have experienced high demand during the pandemic.

After that batch of masks arrived, Kettering incurred $20,000 in costs related to fit-testing employees, the suit asserts. 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.

KHN 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 KHN shared 3M’s confirmation that the masks were counterfeit with Jade Designs, the Fully Promoted franchise “admitted for the first time it did not use ‘normal distribution channels’ to secure the masks,” the lawsuit alleges.

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, which are proven to help protect against the spread of COVID-19. Kettering demanded a refund, but the Fully Promoted franchise allegedly refused.

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

United Franchise Group, Fully Promoted’s parent company, released a statement to ASI Media in response to the allegations when the lawsuit was filed in May 2021.  

“The location noted in the court filings is independently owned and operated,” the statement read. “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.”