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Defective Guidant Defibrillators Maker Boston Scientific Agrees to Pay $195 mill

Jul 16, 2007 | Parker Waichman LLP Boston Scientific, the maker of Defective Implantable Guidant Heart Defibrillators, will pay $195 million to settle thousands of lawsuits filed by patients who said they were never informed about potential flaws in the defibrillators.  The settlement includes around 4,000 claims brought by patients around the country that had been consolidated for trail at the US District Court in Minneapolis.  The trial was scheduled to begin on July 27.

The lawsuits involved in the settlement are unusual, because the patients filing them were never actually injured by defibrillators.  Rather, these were patients who either had their units removed after hearing of the defibrillators’ problems, or claimed to have suffered emotional injuries as a result of the worry their devices caused.  The judge assigned to the case allowed the suits to go forward because the trail could have set important precedents regarding a manufacturer’s responsibility for informing patient about potential product defects.

Guidant Corporation, which was acquired by Boston Scientific in 2006, first knew of problems with the Guidant Defibrillators in 2002, but did not publicly acknowledge those flaws until 2005.  An implantable defibrillator uses electricity to regulate heart rhythm.  Unfortunately the Guidant defibrillators failed to work due to faulty insulation.    At least seven patients died as a result of the defect.

Even after Guidant corrected the problem with the defibrillators, the company continued to ship the older versions of the device.  In the end, thousands of additional patients were exposed to serious danger.   In 2004, sales of Guidant defibrillators totaled $1.8 million, leading many to conclude the company was motivated more by profit than concerns for patient safety.  The actions of Guidant have attracted the scrutiny of the Justice Department, where it is the subject of an ongoing investigation.

Guidant issued an initial recall for its defibrillators on June 16, 2005. At the time, the recall covered 50,000 devices and six models:  Prizm 2 DR, Model 1861; Contak Renewal, Model H135; Contak Renewal 2, Model H155; Prizm AVT Vitality; Renewal 3 AVT; and the Renewal 4 AV.   A year later, Guidant expanded the recall to several other models, including the Ventak Prizm 2, Vitality and Vitality 2 Implantable Cardioverter Defibrillators. In total, 109,000 devices were included in the recalls. Implantable defibrillators have been prone to defects, with Medtronic and St. Jude Medical, two other major manufactures of the devices, issuing recalls in the past.

Boston Scientific, which has seen its stock plunge ever since it acquired Guidant for more than $27 billion, has hopes that news of the settlement will help its sagging fortunes.  The $195 million settlement is far less than the $732 million Guidant had in reserve for lawsuits related to the defibrillator defects.  Boston Scientific’s profits have taken a hit due to sagging sales of implantable defibrillators, a well another of its major products, coronary stents.  As a result of all the defibrillator recalls, worldwide sales for those devices fell from $6 billion to less than $5.6 billion.

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