Goodman Co. Agrees to Pay $5.55 Million for Delay and Misrepresentation in Reporting Fire Hazard Involving Air Conditioners/Heaters

WASHINGTON, D.C. – The U.S. Consumer Product Safety Commission (CPSC) announced that Goodman Company, L.P., of Houston, Texas, has agreed to pay a $5.55 million civil penalty and has agreed to other terms of a consent decree (which is subject to judicial approval) for delay and misrepresentation in reporting a fire hazard associated with air conditioners and heaters.

The penalty resolves allegations in a complaint filed by the U.S. Department of Justice in the U.S. District Court for the Southern District of Texas that the firm knowingly failed to inform CPSC immediately, as required by federal law, that its packaged terminal air conditioners/heaters (PTACs) contained a hazardous defect and posed an unreasonable risk of serious injury or death to consumers. The complaint also alleges that when Goodman ultimately reported the fire risk to CPSC, it misrepresented the number of fires that had occurred.

After receiving numerous reports about the PTACs catching fire, smoking and overheating, including three reports of hotel fires, Goodman delayed reporting the fire hazard to CPSC for about two years. When it ultimately reported, Goodman identified only three reports of overheating, even though it had received additional reports of overheating and fires.

After reporting to CPSC, Goodman learned of additional fires involving the PTACs, but the firm failed to timely report. The firm withheld notifying the government of six additional incidents.

“Goodman’s conduct was illegal, dangerous and unacceptable,” said Chairman Elliot F. Kaye. “Goodman’s decision to hide information about serious fires for years, while continuing to profit from sales, slowed down the announcement of a recall and put the safety of many families at real risk. CPSC will continue to work closely with the Department of Justice to enforce the law and hold violators accountable.”

“Goodman knew of a fire risk but waited roughly two years to inform the CPSC,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “Companies must report these safety issues immediately, as the law requires, to protect the public from an unnecessary risk of injury. The Department of Justice will continue to take enforcement action against companies that do not meet their consumer product safety obligations.”

In addition to paying a $5.55 million civil penalty, Goodman has agreed to comply with and maintain a compliance program that is designed to ensure compliance with the Consumer Product Safety Act (CPSA). The firm has also agreed to comply with and maintain a system of internal controls and procedures.

The firm recalled 233,500 of the air conditioning and heating units in August 2014. The units were sold at Goodman and heating and cooling equipment dealers nationwide from January 2007 through June 2008 for between $700 and $1,000.