Two weeks after heart device maker Guidant is sentenced, DOJ joins in qui tam suit against company

by Ben Vernia | January 27th, 2011

On January 27, the Department of Justice announced that it was intervening in a whistleblower’s lawsuit against companies associated with defibrillator maker Guidant and its parent, Boston Scientific Corp.

Just two weeks ago, Minnesota District Judge Donovan Frank sentenced a Guidant subsidiary according to the terms of a plea agreement the company worked out with federal prosecutors for violating the Food, Drug and Cosmetic Act for failing to report short-circuit defects with three models of its defibrillators.

According to DOJ’s press release announcing its intervention in the civil case:

The United States has filed a complaint against Boston Scientific Corp. and related Guidant entities under the False Claims Act for conduct relating to certain of its cardiac devices, the Justice Department announced today. The United States alleges that Guidant sold cardiac devices, the Ventak Prizm 2 and the Renewal 1 and 2, even though Guidant knew the devices were defective. Despite Guidant’s fixing the defect in these lines of devices, the company continued to sell their remaining stock of defective devices anyway.

The devices at issue are implantable cardioverter defibrillators, which are designed to deliver therapy to prevent sudden cardiac death. The devices are surgically implanted into patients’ chests. When they detect an irregular heartbeat, the devices send an electrical pulse to the heart to “shock” it back to normal rhythm.

The government’s complaint alleges that Guidant hid the problems with their defibrillators from patients, doctors and the Food and Drug Administration (FDA). In February 2010, Guidant pleaded guilty to misleading the FDA about the problems in the devices. A district court in Minnesota accepted the company’s plea on Jan. 12, 2011. Guidant was acquired by Boston Scientific in 2006.

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The United States alleges that Guidant knew as early as April 2002 that an implantable cardiac device it manufactured and sold, known as the Prizm 2, contained a potentially life-threatening defect. The government’s complaint also alleges that Guidant knew as early as November 2003 that another implantable device it manufactured and sold, the Renewal 1 and 2, contained a similar, potentially life-threatening defect. Yet, the United States alleges that, even after Guidant took corrective action to fix the defects, the company continued to sell its stock of the old, defective versions of the devices. Moreover, as information about the cause and nature of the defect grew within the top ranks of the company, the United States contends that Guidant took steps to hide the problem from patients, doctors and the FDA. According to the government’s complaint, instead of disclosing the problem, Guidant issued a misleading communication to doctors that misinformed them about the nature of the defect.

The United States alleges that Guidant did not fully disclose the problem in the devices to doctors and the FDA until May 2005, after first being contacted by a reporter. The company subsequently recalled the devices shortly after a front-page article about the defects appeared in The New York Times.

In April, 2010, Judge Frank rejected the plea agreement criticizing it for failing to provide for probation, and for lacking guidance to victims to seek remittance of the amount forfeited to the government. He sentenced the company only after the government provided information on the procedure to seek remittance – he also sentenced the company to probation, although in accordance with the plea agreement, the government took no position on that aspect.

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