Stockpiling Medical Supplies? It May Be a Felony

The health care law attorneys at Chapman Law Group discuss compliance and regulatory matters health care practitioners should know in the wake of the Coronavirus.

On March 24, 2020, President Trump signed into law an executive order designed to prevent hoarding and price gouging of essential medical supplies in the wake of the Coronavirus (COVID-19) outbreak.

This executive order will greatly impact how businesses and individuals store medical supplies — including masks, ventilators, personal protective equipment and gloves — in the wake of COVID-19.

The Defense Production Act of 1950 (50 U.S.C. 4501) is a rarely used law authorizing the government to require private entities to produce goods for the federal government in responding to a national emergency. The law also prevents stockpiling of supplies designated by the president.

The Threat of a Low Supply of ‘Scarce Materials’ During Pandemic

By signing the executive order, the president gave the secretary of Health and Human Services the ability to designate materials as “scarce materials” — meaning the supply of which would be threatened by such accumulation.

The defense production act makes it a felony to:

  • accumulate supplies in excess of reasonable demands of business, personal, or home consumption; or
  • do so for the purpose of resale at prices in excess of prevailing market prices.

A Crime to Possess More Than Necessary

The impact of this law is sweeping. In the coming days, the HHS secretary will create a list of “scarce materials,” and that list will likely change over time. Once that list has been created, it will be a felony for any business, person, or group of persons to possess more than that necessary for “reasonable use.”

The issue with this law is that the government will be able to criminalize the possession of resources it deems necessary in the amount it deems unreasonable. While the law will be applied to items that are currently in high demand — such as N-95 Masks, medical gloves and ventilators — it may also be applied to vaccines, other medications, and medical supplies the secretary deems “scarce materials.”

If you or your health care facility currently possess items that may be deemed “scarce” during the Coronavirus pandemic, contact the criminal law attorneys at Chapman Law Group. Our lawyers specialize in government investigations, and we can conduct a legal review to determine whether your stockpile is in violation of the Defense Production Act.

Contact us today for our professional counseling.

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Ronald W. Chapman II LL.M.
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Chairperson of White Collar Defense & Government Investigations

Michigan Office
1441 West Long Lake Rd., Ste. 310
Troy, MI 48098
Phone: (248) 644-6326

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Miami, FL 33131

Phone: (305) 712-7177

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