EDEN PRAIRIE, MINNESOTA — In a story first reported by Law 360, a former employee of the Starkey Hearing Foundation, Maria Vanessa Boys Smith, sued the company in California state court on December 18, claiming that she was fired after reporting the foundation inflated the number of devices it donated.{{1}}[[1]]The case is Maria Vanessa Boys Smith v. Starkey Laboratories Inc. et al, case number BC604443, in the Superior Court of the state of California for the County of Los Angeles.[[1]]
Ms. Boys Smith, who served in various roles for Starkey and Starkey Laboratories Inc., between November, 2012, and March, 2015, said that she was fired after reporting that the company fraudulently exaggerated the number of hearing aids it handed out in disclosures to the Internal Revenue Service (IRS), the Clinton Global Initiative and other various donors. The suit claims whistleblower retaliation and wrongful termination.
According to the suit, the number of hearing aids reported was about 175,000, but Boys Smith said that the company “would be lucky” to have handed out 100,000 devices. Boys Smith also said that Starkey Foundation “regularly crosses the line in blurring the operations of the corporation and the foundation.” For example, the corporation provides most of the donated hearing aids, and it then receives a benefit in the form of increased traffic to its stores, the complaint states.
Richard Brown, Foundation President & Board Chairman
The Law 360 report goes on to state that “Boys Smith reported her concerns to Mark Hancock, the tax and compliance counsel. She also told Hancock that she had concerns about medical care being provided by unlicensed providers, which Hancock was concerned about too, the suit claims.” Boys Smith then brought the claim to the Foundation’s co-founder Tani Austin, telling her “a doctor of audiology is licensed to practice clinically whereas hearing aid specialists, such as they were using to train workers, had less training. Austin dismissed the concerns, Boys Smith said.”
Further, per the Law 360 account, Boys Smith “then told Hancock that in some countries Starkey retailers were selling their patients newer hearing aids or other products through the Starkey facilities and referring the customers to their own clinics, the complaint states.
The suit alleges that a March 2015 meeting with Richard Brown, the foundation’s president and board chairman, commenting about the discrepancy in the number of hearing aids that eventually led to Boys Smith’s firing.
“Brown was critical of Ms. Boys Smith for ‘stepping out of line’ and asking others about the discrepancy in the numbers, but asked for a full report on this and other issues. And when Boys Smith met with Brown again, he fired her, saying it wasn’t for performance reasons and that he would provide a good reference,” according to the complaint.
Company Responds to Suit Claims
In a response to request for comment from HHTM, Starkey’s attorney provided the following statement:
“Starkey Hearing Foundation denies Ms. Boys Smith’s allegations. Starkey Hearing Foundation uses hearing as a vehicle to reflect caring and improve the lives of individuals, families and communities around the world. Disabling hearing loss affects more than 360 million people, including 32 million children, worldwide, yet many do not have access to the hearing devices that can help them. Through our global missions, we provide the gift of hearing to people in need. Starkey Hearing Foundation will vigorously defend against the lawsuit.”
–Elena R. Baca, partner, Paul Hastings LLP
Starkey On Track for Record Year, Despite Turmoil
Lisa Richards
In an unrelated story, a December 19 Minneapolis Star Tribune article reports that Starkey Hearing Technologies is not under investigation by federal officials for criminal wrongdoing, but is instead a victim of a possible crime, and is cooperating with federal law enforcement officials on the matters.
Lisa Richards, Vice President of Sales and Customer Relations for Starkey was quoted in the story, saying, “the investigation and other legal proceedings have had no negative impact on how the company functions, as Q4 is on track to be a record quarter and will contribute to fiscal 2015 as one of most successful years in Starkey’s history.”
According to a December 20 Hearing Review report, an internal company email from Senior VP of Sales Brandon Sawalich alerted staff members on Friday to Saturday’s upcoming Star-Tribune news article. The email, which was shared by an employee with the Hearing Review, restated that the company is not being investigated and that, as a possible crime victim, Starkey will continue to cooperate with authorities. Sawalich also noted that, in the 3 months since the September firings, the company continues to grow, as it has added more than 80 employees.
The email from Sawalich to Starkey employees also stated that Starkey has reason to believe that the media has been getting misleading and inaccurate information from people outside the company who may have their own agendas, therefore Starkey decided to engage with a Star Tribune journalist.
*title image courtesy fiscaltimes
Typical corporate spin. They’ve hired 80 people because they fired more than 40 and at least that many have left under new leadership. Sawalich continues to promote undeserving individuals (new promotions announced today). Sawalich is sure to be announced as new president at the Starkey Expo next week. Not sure what sales reports Richards is looking at because what I’m seeing doesn’t reflect her comments. Starkey’s VA market share just took another hit and is now lower than Resound. Starkey is losing site of its hearing aid focus with partnerships and focus on consumer electronics like the Bragi Dash. It feels like the beginning of the end.