Boston Scientific finally settles False Claims Act allegations for implantable Guidant defibrillators

by Ben Vernia | October 17th, 2013

On October 17, the Department of Justice announced that Boston Scientific Corp., the successor to Guidant LLC, had agreed to pay $30 million to settle allegations initially brought by a whistleblower that Guidant had been reimbursed by federal health care programs for defective implantable defibrillators. According to DOJ’s press release:

Boston Scientific Corp. and its subsidiaries, Guidant LLC, Guidant Sales LLC and Cardiac Pacemakers Inc. (Guidant), have agreed to pay $30 million to settle allegations that, between 2002 and 2005, Guidant knowingly sold defective heart devices to health care facilities that in turn implanted the devices into Medicare patients, the Justice Department announced today. Boston Scientific acquired Guidant, a medical device manufacturer, in 2006.

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The Guidant devices at issue are implantable defibrillators, used in patients at risk of cardiac arrest due to an irregular heartbeat. The devices are surgically implanted into patients’ chests, and when the devices detect an irregular heartbeat, they send an electrical pulse to the heart to “shock” it back to its normal rhythm. The government’s complaint alleged that two lines of implantable cardiac devices manufactured and sold by Guidant, known as the Prizm 2 and the Renewal 1 and 2, contained a defect that resulted in “arcing.” Arcing occurs when the device detects the irregular heartbeat and delivers a shock, but instead of the current traveling to the heart, the current “arcs” back to the device itself. This causes the device to short circuit, rendering the device ineffective.

The government alleged that Guidant learned as early as April 2002 that the Prizm was defective, and as early as November 2003 that the Renewal 1 and 2 were similarly defective. Nevertheless, although Guidant took corrective action to fix the defects, the company continued to sell its remaining stock of the old, defective versions of the devices. The government alleged further that, as Guidant learned about the cause of the defect, it took steps to hide the problem from patients, doctors and the Food and Drug Administration (FDA). Instead of disclosing the problem, Guidant issued a misleading communication to doctors regarding the nature of the defect and did not fully disclose the problem with the devices to doctors and the FDA until May 2005, after first being contacted by a New York Times reporter. Subsequently, the company recalled the devices after a front-page article about the defects appeared in The New York Times.

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In February 2010, Guidant pleaded guilty to criminal charges of misleading the FDA and failing to submit a labeling change to the FDA relating to the defective devices. …

DOJ announced that the relator will receive $2.25 million (a 7.5% relator’s share).

Disclosure: I represented a member of Guidant’s Independent Panel as a third-party witness in product liability litigation.

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