- From LexisNexis® Mealey’s™ Daily Legal News.
Boston Scientific Corp. and its Guidant subsidiaries have agreed to pay $ 30 million to settle a whistle-blower lawsuit alleging that between 2002 and 2005 the defendants caused the submission of false claims to Medicare for implantable cardioverter defibrillators (ICDs) that they knew were defective, the U.S. Justice Department said in an Oct. 17 press release (United States of America, ex rel.
The government alleges that Guidant learned as early as April 2002 that its Prizim 2 ICD contained a defect that caused an electrical arc that short-circuited the device and failed to deliver therapeutic shocks to the hearts of patients with heart arrhythmias. As early as November 2003, Guidant knew that there was an arcing problem in its Renewal 1 and 2 ICDs, the government says.
The government alleges that Guidant took corrective action but continued to sell defective devices that were in stock. It says that when the defendants learned about the cause of the defect, it “took steps to hide the problems from patients, doctors and the Food and Drug Administration (FDA).”
News Article Forced Recall
“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 device to doctors and the FDA until May 2005, after first being contacted by a New York Times reporter,” the government says. “Subsequently, the company recalled the devices after a front-page article about the defects appeared in The New York Times.”
Under the settlement, parent company Boston Scientific and subsidiaries Guidant LLC and Guidant Sales LLC and Cardiac Pacemakers Inc. will settle allegations that their actions resulted in Medicare patients getting implanted with ICDs for which the government paid.
Boston Scientific bought Guidant in 2006.
$ 2.25M Relator Share
In 2011, James Allen filed a False Claims Act suit in the U.S. District Court for the District of Minnesota on behalf of the United States. The federal government elected to intervene, and after motion practice, a trial was scheduled for November.
Allen will get $ 2.25 million as his statutory share for bringing the claim.
In May, Judge Donovan W. Frank stayed the case. The docket indicates that settlement discussions have been taking place since at least May.
$ 536M Prior Payouts
Boston Scientific and Guidant have already paid $ 536 million to settle federal criminal and civil claims and product liability claims involving defective heart devices. In 2011, Guidant LLC pleaded guilty to a misdemeanor for failing to tell the FDA about product defects.
Guidant paid $ 296 million in criminal fines and forfeiture and was placed on three years’ probation.
Previously, Guidant paid $ 240 million to 8,550 personal injury plaintiffs to settle civil liability claims.
The United States is represented by Chad A. Blumenfield, Pamela Marentette and D. Gerald Wilhelm of the U.S. Attorney’s Office in Minneapolis and Jonathan H. Gold and Jamie Ann Yavelberg of the U.S. Justice Department in Washington, D.C.
Boston Scientific and Guidant are represented by Gabriel Egli and Michael L. Koon of Shook, Hardy & Bacon in Kansas City, Mo., Rachel A. Simek of Shook Hardy in Washington and Leif T. Simonson and James L. Volling of Faegre & Benson in Minneapolis
Allen is represented by Daniel C. Adams of Larson King in St. Paul, Minn., Jonathan H. Bard and Dennis R. McCoy of Hiscock & Barclay in Buffalo, N.Y., and James I. Myer of Myers, Quinn & Schwartz in Williamsville, N.Y.