Boston Scientific Agrees to Settle Qui Tam Suit for $30 Million

Boston Scientific Corp. and its subsidiaries, Guidant LLC, Guidant Sales LLC, and Cardiac Pacemakers, Inc., (collectively “Guidant”) have agreed to settle a federal qui tam lawsuit for $30 million. The lawsuit was initially brought by whistleblower James Allen in Minnesota, and later joined by the United States in 2011.

The whistleblower’s suit, filed under the qui tam provisions of the False Claims Act, alleged that from 2002 to 2005, Guidant knowingly sold defective heart defibrillators to medical facilities that were implanted in Medicare patients. Implantable heart defibrillators are surgically implanted in a cardiac patient’s chest. When the device detects an irregular heartbeat, it sends an electrical pulse to shock the heart back to a normal rhythm. The cardiac devices at issue, Prizm 2 and the Renewal 1 and 2, were prone to short circuiting which rendered the device ineffective.

The government alleged that Guidant discovered the defects as early as 2002, but continued to sell the knowingly defective devices and took steps to hide the defects from patients, physicians, and the Food and Drug Administration. According to the government, Guidant did not disclose the problems with the devices until 2005. Subsequently, the devices were recalled when a front-page article about the defects appeared in The New York Times.

Guidant has agreed to settle the whistleblower’s lawsuit for $30 million. The whistleblower, James Allen – a patient who had received one of the defective devices, will receive approximately $2.25 million as his reward under the qui tam provision of the False Claims Act.