Fake COVID-19 Test Kits Made in China Re-labeled as US-Made, Kaohsiung Health Bureau Awarded NT$38.66 Million in Compensation

(Central News Agency, reporter Hong Xueguang, Kaohsiung, July 7) The Kaohsiung City Health Bureau procured 1 million doses of COVID-19 rapid test kits in 2022. However, a company used inferior test kits made in China, re-labeled them as US-made "Flowflex" rapid test kits. The Kaohsiung District Court ruled that the company's responsible person, surnamed Zhu, and others used fraud and ordered them to pay over NT$38.66 million in compensation.

The Kaohsiung District Court's ruling stated that the former CEO surnamed Huang, the responsible person surnamed Li of a technology company, and the responsible person surnamed Zhu of an information company, all three individuals, were aware that the Rapid Test kits produced by China's A Kang company were not products approved by the Ministry of Health and Welfare's special project, and were not authorized for emergency use by the US FDA. However, the three conspired in May 2022 to repackage the Chinese-made kits, affix "Made in USA" labels, and falsely present them as legally approved US-made "Flowflex" rapid test kits for import into Taiwan.

The ruling indicated that the involved information company subsequently signed a contract with the Kaohsiung City Health Bureau. The Health Bureau purchased 1 million doses at NT$95 per dose, received 405,600 doses in installments, and remitted NT$38,532,000. They only realized they had been deceived when the Investigation Bureau uncovered the fake rapid test kit case.

To prevent harm to public health, the Health Bureau urgently took charge of recalling the test kits and filed a lawsuit demanding that the information company and related individuals jointly compensate for the procurement costs and the labor costs of the recall.

During the trial at the Kaohsiung District Court, the involved individuals argued that the test kits were effective for testing and not counterfeit, or claimed that damage during transportation due to rain had led to inaccurate rapid test results. However, the judge found that the contract clearly stipulated that the subject matter could not be produced in mainland China. The defendants, knowing that the origin and approval did not match, still used fraudulent labeling to deceive the Health Bureau into paying the price. Furthermore, the reliability of testing with unapproved kits was questionable, failing to achieve epidemic prevention objectives, and the act of infringement was clear.

In addition, regarding the labor costs incurred by the Health Bureau in urgently dispatching personnel from the Pharmaceutical Affairs Division to carry out the recall operation, the judge determined that the company was legally obligated to carry out the recall. The Health Bureau's execution on their behalf resulted in the company benefiting from the waived costs, constituting unjust enrichment.

The Kaohsiung District Court concluded its trial and, based on provisions such as joint tort, ruled that the company and related individuals should jointly pay the Kaohsiung City Health Bureau NT$38,532,000 for the cost of purchasing the test kits. Additionally, the company must pay the Health Bureau NT$128,981 for overtime labor costs incurred in the recall due to unjust enrichment, totaling NT$38,660,981 in compensation. The case is subject to appeal. (Editor: Long Baian) 1150707

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