A federal judge has approved a plea agreement last month that called for Boston Scientific Corp.’s Guidant unit to pay $296 million for failing to properly disclose changes made to some implantable heart devices. But, as a part of his approval, the judge added three years of probation to the agreement. U.S. District Judge Donovan Frank had rejected the plea deal last spring as insufficient. His acceptance came only after Guidant filed papers giving him more information about its compliance policies and community service programs. Guidant was given ten days to pay the fines and forfeiture fees. The $296 million in fines and forfeiture fees is the largest criminal penalty ever against a medical device company. As part of the probation, the court will annually review Boston Scientific and Guidant’s compliance efforts to make sure it can verify that Boston Scientific keeps its commitments.
Then the U.S. Justice Department filed a civil lawsuit last month against Boston Scientific Corp. and its Guidant subsidiary, alleging the Medicare program wrongly paid for heart devices that Guidant knew were faulty. The suit, filed in a Minnesota federal court, seeks to recover some of those federal health-care expenditures. The Department alleged that Guidant sold certain implantable defibrillators, used to detect and treat abnormal heart rhythms, even though it knew of serious safety concerns with the devices. The government says Guidant knowingly caused approximately 2,000 false or fraudulent claims to be submitted to Medicare.
Guidant withheld information from the U.S. Food and Drug Administration regarding catastrophic failures in some of its defibrillators. The company discovered problems with one of the products in 2002 and became aware of problems with two others in 2003 and 2004. Flaws with the devices have been responsible for at least 13 known deaths, though the total figure is likely higher, according to the government. Guidant issued a recall on the devices in June 2005. The device maker’s troubles created an opening for Boston Scientific to buy the company in 2006.
Source: Wall Street Journal and Law.com
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