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A multimillion-dollar legal battle has reignited as FS Medical Supplies LLC escalates claims that Tanner Pharma Group secretly cut it out of a $1.25 billion deal with the U.K. government for COVID-19 test kits.

FS Medical filed a fresh complaint Tuesday in North Carolina federal court, reinforcing allegations already made in an ongoing lawsuit in the same district. At stake: $387 million in lost profits that FS Medical says Tanner Pharma wrongfully kept by covertly securing an exclusive contract.

Jurisdiction Battle Could Upend Litigation

The new filing comes as Tanner Pharma and its executives—founder Banks Bourne and shareholder Molly Bourne—seek to dismiss the initial lawsuit. Their argument? A recently discovered legal technicality.

Tanner Pharma claims that one of FS Medical’s owners was a Chinese citizen, which, under federal diversity laws, could void the court’s jurisdiction. FS Medical says it only learned of this issue last week and has since transferred ownership to a U.S. citizen—but not before Tanner Pharma attempted to get the case thrown out.

Anticipating that the original lawsuit could be dismissed on procedural grounds, FS Medical launched the new complaint to keep its claims alive.

"The defendants will vigorously oppose that attempt," said Robert W. Fuller of Robinson Bradshaw & Hinson PA, counsel for the Bournes, vowing to hold FS Medical responsible for the alleged misstep.

A scheduled hearing before a North Carolina magistrate judge was abruptly canceled, pending resolution of the jurisdiction dispute.

A Pandemic-Era Partnership Turned Sour

According to the complaint, FS Medical was formed in 2020 to help source personal protective equipment during the peak of the COVID-19 pandemic. The company partnered with Tanner Pharma, a North Carolina-based medical distributor, and its U.K. subsidiary, Tanner Pharma UK.

Two key contracts were at the heart of their partnership:

1. A non-circumvention agreement—Tanner Pharma pledged it would not bypass FS Medical when dealing with suppliers FS Medical had secured.
2. A revenue-sharing agreement—FS Medical would source products, and Tanner Pharma would pay FS Medical half of all profits earned from sales.

But instead of honoring those agreements, FS Medical claims, Tanner Pharma orchestrated a secretive, multimillion-dollar scheme.

Allegations of Deception and a Stolen Deal

FS Medical says it introduced Tanner Pharma to Zhejiang Orient Gene Biotech Co. Ltd., a Chinese manufacturer of antigen test kits. The plan was simple: FS Medical would source the tests, Tanner Pharma would distribute them, and both would split the profits.