UPDATE 2-US sues Boston Scientific over heart devices

Thu Jan 27, 2011 7:49pm EST

* Lawsuit alleges Guidant knew devices were defective

* Guidant unit last year pleaded guilty

* Boston Scientific shares down in after-hours trading (Adds Boston Scientific comment, paragraphs 7, 8)

WASHINGTON, Jan 27 (Reuters) - The U.S. Justice Department said on Thursday that it sued Boston Scientific Corp (BSX.N) and Guidant, which it acquired in 2006, for selling defective heart devices implanted in Medicare patients.

The Justice Department's lawsuit alleged that Guidant sold the devices even though it knew they were defective and hid the problems with their defibrillators from patients, doctors and the U.S. Food and Drug Administration (FDA).

The department said it alleged that Guidant knew as early as April 2002 that an implantable cardiac device it manufactured and sold contained a potentially life-threatening defect and it knew as early as November 2003 that another device contained a similar defect.

The lawsuit alleged that Guidant did not fully disclose the problem to doctors and the FDA until May 2005, after first being contacted by a reporter.

Guidant was acquired in April 2006 by Boston Scientific, a $27 billion deal that has caused the medical device maker numerous headaches. It has since struggled with product recalls, regulatory issues, lawsuits and a heavy debt load.

The Guidant unit last year pleaded guilty to two misdemeanor charges of withholding information from the FDA related to the heart devices and agreed to pay $296 million in fines in a settlement with the Justice Department.

"We have been aware of the government's interest in this civil matter, and we have previously disclosed it in our regulatory filings," Boston Scientific spokesman Paul Donovan said.

"Guidant plans to respond to the government's allegations and claim for damages in the appropriate fashion," Donovan added.

In the latest case, the Justice Department said it joined a whistleblower lawsuit filed in federal court in Minnesota.

Boston Scientific shares were down 12 cents in after-hours trading to $7.04. They had closed 1 cent higher at $7.16 in regular trading on the New York Stock Exchange. (Reporting by James Vicini and Jeremy Pelofsky; additional reporting by Bill Berkrot in New York; Editing by Steve Orlofsky, Gary Hill)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.