The U.S. Department of Justice announced last month that Boston Scientific Corp. has agreed to a $30 million settlement under the False Claims Act (FCA) in a case alleging the company’s Guidant LLC division fraudulently billed Medicare for defective implantable heart defibrillators. The FCA lawsuit accused Guidant of knowingly submitting thousands of fraudulent claims for Medicare reimbursement between 2002 and 2005.
The qui tam lawsuit was brought by whistleblower James Allen, who had been implanted with a Prizm device, which malfunctioned twice before he had it replaced. Allen accused the company of knowingly defrauding Medicaid by selling devices it knew were defective, and then filing for reimbursement from the federal program. U.S. District Judge Donovan W. Frank ruled that the lawsuit was properly filed under the False Claims Act because Judge Frank’s reasoning was that since Allen was a user of the device, his personal experience provided an original source for the allegation.
Folks who file qui tam complaints under the False Claims Act are entitled to a portion of any money the government recovers as a result of their whistleblowing, often as much as 20 to 30 percent. The Justice Department says Allen will receive $2.5 million for his role in the settlement. Guidant has already pleaded guilty to criminal charges related to its marketing of the Prizm and Renewal implantable cardioverter defibrillators. Justice Department officials say Guidant knew about defects in the Prizm defibrillator as early as April 2002, and about the Renewal as early as November 2003, but continued to market the defective devices for use in Medicare patients, and then billed Medicare for reimbursement when the devices were implanted.
Implantable cardioverter defibrillators are designed to be used in patients who are at risk for irregular heartbeat. The devices are intended to deliver a mild shock in small pulses to return the heart to a normal rhythm when they detect an irregularity. However, the Prizm and Renewal defibrillators were malfunctioning, delivering an “arcing” shock that caused the implant to short-circuit and stop working, and which also could cause a significant shock to patients in whom the devices were implanted. Allen says his implant shocked him twice, once causing unconsciousness and another time knocking him down some stairs. Guidant eventually recalled the devices in 2005. It was reported that three deaths were linked to the faulty devices.
In addition to the criminal charges, for which Guidant paid $296 million in fines and received a three-year probation in 2010, Boston Scientific paid $240 million in 2007 to settle product liability multidistrict litigation related to the defective defibrillators. If you need additional information relating to whistleblowers litigation under the FCA, contact Archie Grubb, Larry Golston and Andrew Brashier, lawyers in our firm’s Consumer Fraud Section, at 800-898-2034 or by email at ArchieGrubb@beasleyallen.com, Larry.Golston@beasleyallen.com and Andrew.Brashier@beasleyallen.
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