Becton Dickinson hid $59M in pump-recall costs and overstated profit by 82%

Becton Dickinson's Alaris infusion pumps — the devices hospitals use to deliver IV medications — had a known defect that would require a recall and remediation. Under GAAP, the estimated cost should have been recorded as a loss contingency when it became probable and estimable. In the fourth quarter of fiscal 2019, BD did not record roughly $50 million in probable recall costs, overstating that quarter's operating income by 82 percent.

In its FY2019 annual report, BD failed to record or disclose approximately $59 million in estimated recall and remediation costs, overstating annual income before taxes by more than 5 percent. The SEC found violations of the books-and-records, internal-controls, disclosure-controls and antifraud provisions of the securities laws.

In December 2024 BD agreed to pay a $175 million civil penalty and retain an independent compliance consultant to review its recall accounting and disclosure controls. It was the largest SEC penalty for a recall-accounting failure.