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The Vermont Attorney General’s Office is taking a Williston man and his company to court, alleging he orchestrated a price-gouging scheme to sell masks to Central Vermont Medical Center in Berlin for extreme markups.
And the legal action alleges that he “falsely represented” the product were the coveted “N95” respirators when they were not.
Meanwhile, Shelley Palmer, the man being taken to court, said Tuesday evening he is being persecuted by a bunch of “Bernie Bros,” in the Attorney General’s Office, including one assistant attorney general he repeatedly called “The Dragon Lady.”
He contended that he has never represented the mask as being “N95.”
“A mask is not a respirator,” Palmer said. “The medical professionals know that and the state’s lying through through their teeth about people not knowing what the fuck I’m talking about, that I’m trying to misrepresent things, that’s nonsense.”
The civil lawsuit and motion for preliminary injunction was brought Tuesday in Chittenden County Superior Court in Burlington against Palmer, operator of Big Brother Security Programs, a non-emergency medical transportation company.
A hearing in the matter is set for 1 p.m. on Wednesday, April 22.
Vermont Attorney General TJ Donovan said Tuesday the lawsuit is the first price-gouging case brought by his office during the coronavirus pandemic.
“As our complaint and our preliminary injunction clearly outline they were certainly represented as N95 masks,” Donovan said Tuesday afternoon. “At some point in time it was clear to the hospital they were not N95 masks and were just surgical masks.”
He said he didn’t fault the hospital, adding that a facility operating during a crisis will do what it takes to get equipment for its doctors and nurses.
“The fact of the matter is, that doesn’t mean they should be considered easy pickings to go out and raise the price on something at worst 2,500 percent, at best 500 percent, from the cost,” Donovan said.
Elliott Bent, director of communication and engagement at Central Vermont Medical Center, said in a statement that the hospital was buying the items from Palmer as surgical masks, and not as N95 respirators.
“CVMC was specifically seeking to purchase surgical masks in this instance,” according to the statement.
“As with all PPE we acquire, the quality and integrity of these surgical masks was fully tested by our materials management team,” the statement added. “Before purchasing the product, samples of the masks were obtained and reviewed by our infection prevention team to validate that they met standards.”
The lawsuit alleges that Palmer and the company imported surgical masks that cost 20 cents each, and then sold them to the hospital in Berlin for $2.50 each, a figure the Attorney General’s Office termed “unconscionable.”
The filing alleges violation of the Vermont Consumer Protection Act based on price gouging.
“The complaint alleges that Mr. Palmer took advantage of disruptions to normal supply chains to unfairly raise prices for masks to an unconscionable amount,” the Attorney General’s Office said in a statement announcing the legal action.
“In mid-February, as the COVID-19 crisis unfolded, Central Vermont Medical Center could purchase masks for 6 cents each,” the statement added. “In mid-March, Mr. Palmer sold the masks for $2.50 each.”
The lawsuit is seeking restitution for the medical center.
Specifically, according to the lawsuit, Palmer and his company obtained 5,000 surgical masks from a supplier in Shanghai, China, for 10 cents each, at a total cost of $500.
Then, the filing stated, Palmer and the company “represented that they have purchased additional surgical masks and other PPE from their supplier and either currently have or expect additional shipments of PPE.”
Palmer sought to sell the masks to health care providers, and during those transactions, the filing stated, “falsely represented” the masks to be the higher-grade “N95” masks to at least two Vermont health care providers.
According to the filing, Palmer sold 9,500 masks to CVMC for $2.50 each on March 18, with the invoice describing them as “Disposable Paper Non Woven Surgical Ma[s]k N95 2.5m.”
On March 20, the filing stated, Palmer sold 15,000 masks to CVMC for $2.50 each, for a total of $37,500, and on March 24 sold the medical center 18,000 more at $2.50 each, for a total of $45,000.
“While each invoice described above indicates that the masks in question are ‘N95’ masks,” the lawsuit stated, “none are.”
All together, the lawsuit stated, Palmer sold CVMC 42,500 generic surgical masks for $2.50 each, for a total of $106,250.
“Meanwhile,” the lawsuit stated, “Defendants’ cost for the masks was $0.10 each, at a total cost of $4,250. This is a mark-up of 2,500%.”
Also, according to the lawsuit, Palmer went to the Champlain Medical Urgent Care in South Burlington, offering to sell them masks for $2.50 each. However, two staff members there questioned the mask, telling him they were not N95 masks, but surgical masks.
“Mr. Palmer represented that the presence of a metal nose piece on the masks indicated that they were N95 masks,” the lawsuit stated. “This is not the case. The presence or absence of a metal nose piece has no bearing on a respirator’s N95 certification.”
Palmer claimed, according to the lawsuit, that he had a certification for the masks, but the workers there declined his offer before he presented it.
Palme denied Tuesday that his markup is as high as being portrayed by the Attorney General’s Office.
“This 10 cents a mask is just an outright, boldfaced lie,” he said.
Palmer said brokers sending items to the United States from China often “low-ball” prices for their goods. “By low-balling it they avoid tariffs,” he said.
An assistant attorney general in Vermont he referred to only as “The Dragon Lady” came across paperwork, he said, that said the masks were priced at 10 cents each.
In reality, he said, he was paying a Chinese manufacturer between 55 and 65 cents a mask.
“Central Vermont set the price,” he said. “I said how much can you pay? They said, ‘We can do $2.50.’ If they’re willingly accepting my product and paying the price, how is the public being damaged here?”
Asked why the Attorney General’s Office would be targeting him, Palmer replied, “I’m a small businessman who makes money. They are a bunch of Bernie Bros down there. They think that amongst itself is unconscionable.”
He then added, “We’ve already moved our operations out of Vermont.”
Palmer declined to say where he intends to sell masks now. He did say that he is getting between 20,000 to 40,000 masks a day from China.
Asked where he is getting the masks in China, Palmer replied that he has friends in China who have friends.
He said he has only sold masks to one entity in Vermont, CVMC. Palmer said he talked to officials there and told them he could supply them surgical masks.
“They about shit their pants,” Palmer said when he told them how many masks he could secure. “They said, ‘Sell us all you got.’”
He added, “I moved heaven and earth, borrowed every penny I could, bought as many as I could and been selling shit tons of them until Dragon Lady.”
