Guidant Defibrillator Problems Result in $30M Settlement with DOJ

Boston Scientific has agreed to pay $30 million to settle government claims that its Guidant subsidiary knowingly sold defective heart implants to patients.  

The settlement was announced last week in a press release issued by the U.S. Department of Justice.

Guidant sold defective implantable defibrillators to hospitals between 2002 and 2005, and received Medicare payments from the federal government for the faulty heart implants, which is considered Medicare fraud, according to charges brought by the Justice Department.

Boston Scientific did not acquire Guidant until 2006, so while Boston Scientific itself had no part in the allegedly illegal activities, it assumed responsibility for the prior actions of the subsidiary when it purchased the company.

The implants in question were the Prizm 2 and the Renewal 1 and 2. According to the Justice Department, Guidant knew as early as 2002 that the devices were defective due to a problem known as arcing, where the electrical shock sent to the heart to maintain its rhythm comes back into the device, causing it to short circuit and rendering it inoperable. However, the company continued selling the devices for three years after it learned of the problem, federal investigators claim.

“Medicare patients who depend on cardiac defibrillators should not have to worry about whether their devices will work when they are needed,” Stuart F. Delery, Assistant Attorney General for the Justice Department’s Civil Division, said in the press release. “This settlement, along with the prior criminal prosecution of Guidant, demonstrates that there will be significant consequences when companies engage in conduct that threatens health and safety and violates the law.”

The Guidant heart device Medicare fraud lawsuit was filed by the Justice Department in January 2011. The complaint came after a federal judge accepted a guilty plea and a $296 million settlement from Guidant regarding claims that it tried to keep the FDA from knowing about the defibrillator problems, which are believed to have caused severe injuries and deaths.

This latest lawsuit started as whistleblower lawsuit brought by James Allen, a recipient of one of the defective implants. Under the qui tam provisions of the False Claims Act, Allen will receive $2.25 million of the settlement money.