October 21 ,2013 | By Anabela Farrica
Boston Scientific agreed to pay $30 million to settle a lawsuit accusing the company’s Guidant unit of knowingly selling defective heart devices between 2002 and 2005. Bought in 2006 for $27.5 billion, Guidant not only tanked the American medical devices giant’s profits, but it also left it with a number of product-liability lawsuits. In fact, Fortune magazine has dubbed this acquisition as one of the worst deals of all time!
Prompted by the Government, the abovementioned charges refer to Guidant’s Prizm and Renewal, two lines of implantable cardiac defibrillators that allegedly contained a defect that caused “arcing”. Arcing is a phenomenon that occurs when the electric current delivered by the device returns back to it, instead of travelling to the heart. Thus, the defibrillator became ineffective at correcting heartbeat rhythms in a number of patients.
According to Government allegations, Guidant learned that Prizm was defective in April 2002 and that the same problem was registered with Renewal in November 2003. Although the company took action to fix the defects, it maintained the old, defective versions of the defibrillators, on the market. The allegations go as far as claiming that Guidant purposely hid the situation from patients, doctors and the FDA. In February 2010, Guidant pleaded guilty to charges of misleading the FDA and failing inform the authorities about the defective devices. The following year, the Government filed a lawsuit under the initiative of James Allen, a patient who had received one of the defective devices and that will now receive $2.25 million as a result of being the “whistleblower” for the whole situation.
Peter Lucht, a spokesperson for Boston Scientific, stated that “While the company continues to deny the allegations made in the complaint, it felt it was in the best interests of all parties to settle this matter and avoid further protracted litigation”.
This settlement brings to $972 million the total amount that heart-defibrillator makers Boston Scientific and Medtronic have paid to settle lawsuits related to an alleged total of 13 deaths caused by defective heart devices.