The U.S. Department of Justice joined litigation filed by a patient, James Allen, who allegedly received one of the defective devices. Under the whistleblower or qui tam provisions of the False Claims Act, a private citizen can sue on behalf of the U.S. and share in any recovery.
In a statement, Justice officials allege that Guidant sold the Ventak Prizm 2 and the Renewal 1 and 2, even though Guidant knew the devices were defective. Despite Guidant's fixing the defect in these lines of devices, the company continued to sell their remaining stock of defective devices anyway, the government charges.
In mid-January, Guidant was fined $296 million for failing to notify the U.S. Food and Drug Administration about short-circuiting failures in three models of its implantable cardioverter defibrillators. They include the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155).
In the latest case, federal officials charge that Guidant "hid the problems with their defibrillators form patients, doctors and the FDA." In February, 2010, Guidant pleaded guilty to misleading the FDA about the problems in the devices. A district court in Minnesota accepted the company's plea on Jan. 12, 2011.
"Patients with serious heart conditions who depend on these devices should not have to second-guess whether they are safe and effective," said Tony West, Assistant Attorney General for the Justice Department's Civil Division. "When a medical device manufacturer conceals problems with its products, as is alleged here, not only is taxpayer money wasted, but lives are put at risk."
Added John R. Marti, First Assistant U.S. Attorney for the District of Minnesota: "When companies like Guidant request and receive federal dollars for products they know to be defective, the U.S. is committed to aggressively seeking the recovery of those payments.
"That is especially true when the defective products endanger human lives. In today's environment, it is essential that Medicare and other public healthcare programs be made whole to ensure their continued vitality for future generations."
In a statement posted on its website, Boston Scientific said "The Guidant conduct at issue took place from 2002 to 2005, well before Boston Scientific acquired Guidant in 2006."
Boston Scientific's statement added "The Company is disappointed that the Federal Government, after reaching a criminal resolution with Guidant LLC, has chosen to seek additional money in a civil lawsuit. However, the Company believes that the ultimate resolution of this matter should not have a significant financial impact."
The U.S. lawsuit claims Guidant knew as early as in April, 2002 that the Prizm 2 contained a potentially life-threatening defect, and that it knew that the Renewal 1 and 2 contained a similar defect.
Yet, "even after Guidant took corrective action to fix the defects, the company continued to sell its stock of the old, defective versions of the devices" according to the DoJ statement.
"Moreover, as information about the cause and nature of the defect grew within the top ranks of the company, the U.S. contends that Guidant took steps to hide the problem from patients, doctors and the FDA."
In the court decision earlier this month, Guidant was ordered to forfeit $42 million and pay a criminal fine of $253 million and was sentenced to three years of probation, submit quarterly reports to the U.S. Probation Office, and allow regular, unannounced inspections of its records. The court also required Guidant to notify its employees and shareholders of its criminal conviction.
In a written statement, Guidant said, "The DOJ's investigation began prior to Boston Scientific's 2006 acquisition of Guidant, as did the alleged conduct and product sales. The Company no longer sells the products involved in the investigation."