By Jennifer Doherty

Law360 (July 6, 2020, 8:52 PM EDT) -- Michigan's senators are taking two federal agencies to task after the state received 322,000 faulty COVID-19 test kits produced by upstart government contractor Fillakit, which received more than $10.5 million in federal contracts in May, just weeks after it was incorporated.

Democratic Senators Debbie Stabenow and Gary C. Peters wrote to the heads of the Department of Health and Human Services and the Federal Emergency Management Agency Thursday, pressing HHS Secretary Alex Azar and FEMA Administrator Peter T. Gaynor for details on the government's relationship with Fillakit and how it intended to make states that received the faulty tests whole.

In their letter, the senators said that Michigan had been instructed to set aside more than a quarter-million "tubes of transport media," the small vials in which COVID-19 test swabs are packaged with a liquid that preserves the virus for the trip from the testing site to a laboratory for analysis, after the government learned that Fillakit's products were dysfunctional.

Besides the fact that Fillakit's tubes were "not the appropriate size for use in existing laboratory equipment," according to the senators, "these tubes are in fact repurposed soda bottle preforms that have not been manufactured or packaged in sterile conditions."

In their letter, Stabenow and Peters pointed to media reports that came out in June after at least four other states reported issues with COVID-19 test kits provided by Fillakit, including COVID-19 hot zones New York, New Jersey and Texas.

The senators cited investigative reporting that described the small cylinders, which are meant to be heat expanded into two-liter beverage bottles, being produced in open-air conditions and then shoveled into bins by employees who were not required to wear masks.

"Even if the tubes themselves were not unsuitable for testing purposes, the contamination risks inherent in such careless handling would cause serious concerns about the reliability of any tests conducted using these materials," the senators wrote.

Stabenow and Peters ended their missive with a list of nine questions for the government. They included requests for copies of each of the three contracts Fillakit received in May and asked whether HHS considers Fillakit in breach of contract and how the government plans to disseminate replacement tests to impacted states, including theirs.

"We are aware of the issues raised by some states that received Fillakit products, a FEMA spokesperson told Law360 Monday, adding that the agencies "are currently analyzing the quality of the media in question. Out of an abundance of caution, we recommend this media not be used at this time."

"To correct the issue, the federal government has backfilled recent shipments in order to continue to support states' testing needs," a Health and Human Services spokesperson told Law360.

Fillakit LLC was dissolved on June 26, less than two month after its creation, according to records on file with Florida's Division of Corporations. Kira Doyle, a Florida lawyer listed as the firm's "manager," did not immediately respond to a request for comment Monday afternoon.

The company's warehouse was located on Hanna Road in Conroe, Texas, in a space that houses multiple other corporations created by Florida businessman Paul Wexler.

In their letter, the senators pointed to a 2013 case in which Wexler was fined $2.7 million for operating a "telemarketing scam targeting individuals in financial distress."

"Despite these concerns, FEMA awarded Fillakit the no-bid contract for testing supplies with only boilerplate assurances that the company could deliver," Stabenow and Peters wrote.

The senators gave FEMA and HHS until July 16 to respond to their questions, writing that "for states to have confidence in their ability to prevent the further spread of the virus, they must have confidence in their ability to test for the virus."

--Editing by Jack Karp.

For a reprint of this article, please contact reprints@law360.com.