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