Kusserow’s Corner: Boston Scientific and Guidant to Pay $30 Million for Sale of Defective Heart Devices

On October 17, 2013, the Department of Justice (DOJ) announced a $30 million settlement with Boston Scientific Corp. and its subsidiaries, Guidant LLC, Guidant Sales LLC and Cardiac Pacemakers Inc. (Guidant) to settle allegations that Guidant knowingly sold defective heart devices to health care facilities that in turn implanted the devices into Medicare patients. Boston Scientific acquired Guidant, a medical device manufacturer, in 2006, subsequent to the period of the matter in question. The DOJ joined a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by an individual who received one of the defective devices. The “relator” will receive $2.25 million (United States ex rel. Allen v. Guidant LLC et al., No. 11-CV-22 (D. Minn.)).

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 DOJ 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.

Guidant upon discovering the problem took corrective action to fix the defects, but continued to sell its remaining stock of the old, defective versions of the devices and took steps to hide the problem from patients, doctors and the Food and Drug Administration (FDA). Guidant previously pleaded guilty to criminal charges of misleading the FDA and failing to submit a labeling change to the FDA relating to the defective devices.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2013 Strategic Management Services, LLC. Published with permission.