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From Products Liability Law Daily, August 17, 2015

Johnson Health Tech to pay $3 million civil penalty for not reporting defective training equipment

By John Dumoulin

In a civil penalty agreement with the Consumer Product Safety Commission (CPSC), Johnson Health Tech Co. Ltd., of Taiwan, and Johnson Health Tech North America Inc., of Cottage Grove, Wisconsin, have agreed to pay a $3 million civil penalty to settle CPSC charges that Johnson Health Tech knowingly failed to report to CPSC immediately, as required by federal law, regarding a defect and an unreasonable risk of serious injury with Matrix Fitness Ascent Trainers and Elliptical Trainers, according to a CPSC release. The agreement has been accepted provisionally by CPSC, and while Johnson Health Tech has agreed to the settlement, it does not admit to CPSC’s charges (CPSC Notice, 80 FR 49991, August 18, 2015).

Background. According to CPSC, between March 2012 and October 2013, Johnson Health Tech received multiple reports of smoking, sparking, or melted power components, as well as reports of fires, involving the trainers. Despite these reports and two design changes to fix the problem, Johnson Health Tech failed to report the defect, the consumer incidents, or the design changes to CPSC immediately (within 24 hours). There were no injuries or property damage reported. CPSC said that the fitness trainers’ defect involved a build-up of moisture in the power sockets of the units from perspiration or cleaning liquids, which caused the machines to short circuit. The Matrix Fitness Ascent Trainers and Elliptical Trainers were recalled in January 2014 [see Products Liability Law Daily’s January 23, 2014, analysis]. According to CPSC’s release, Johnson Health Tech had manufactured, imported, and sold more than 3,000 of the trainers in the United States from September 2011 through December 2012 for between $6,000 and $11,000 each.

Settlement. In the settlement agreement with CPSC, Johnson Health Tech North America agreed to pay the civil penalty and also agreed that the company has, and will maintain, a compliance program to ensure compliance with the Consumer Product Safety Act, as well as a related system of internal controls and procedures. The compliance program must contain written standards and policies, as well as written procedures to ensure that all information regarding the company’s compliance with the CPSA, including reports and complaints involving consumer products, is conveyed to the firm’s responsible employees, whether an injury is referenced or not. The program must also contain a mechanism for confidential employee reporting of compliance-related questions or concerns to a compliance officer or another senior manager, and it must provide for effective communication to employees of company compliance-related policies and procedures, including training. In addition, under the program, senior management of the company will be responsible for CPSA compliance, with board oversight. Finally, the company must retain all CPSA compliance-related records for at least five years and must make the records available to CPSC staff upon reasonable request.

Companies: Johnson Health Tech Co. Ltd.; Johnson Health Tech North America Inc.

MainStory: TopStory SportsandRecEquipmentNews

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