Guidant LLC, a division of Massachusetts’ company Boston Scientific, has plead guilty to two misdemeanor counts alleging the medical device maker failed to disclose product changes involving over 20,000 implantable heart monitor devices.
The medical device manufacturer plead guilty Monday, April 5 and will learn over the next few weeks whether U.S. District Judge Donovan Frank will accept a proposed $296 million plea deal – the largest criminal assessment ever proposed against a medical device company.
The Department of Justice accuses Guidant of changing the design of its implantable cardioverter defribrillators, or ICDs, and failing to notify the Food and Drug Administration (FDA) of subsequent problems that lead to a Class 1 medical recall – the most serious category which indicate a defective product has the potential to cause serious personal injury or wrongful death.
Guidant’s implantable cardioverter defribrillators, Ventak Prizm 2 DR and Contak Renewal 1 and 2, were designed to monitor patients for abnormal heart rhythms and deliver electric shocks to keep the heart beating properly. But Department of Justice officials say Guidant discovered as early as 2002 that Ventak had the potential to suffer an electric arc, which could short-circuit the device. Although problems continued with the defribrillator, Guidant didn’t issue a warning until 2005. In at least seven cases, the devices failed to issue a lifesaving shock and the patient died.
In 2005, Guidant sent a product update to doctors, advising that a yellow warning screen indicated a potentially serious problem. However, the FDA says the company should have sent a product correction, rather than a product update, since the change reduced the risk of serious injury, and should have notified the FDA of the change within 10 days. Guidant ultimately recalled its three devices in 2005.
Attorneys for the affected patients are now urging the court to reject the plea deal because it will not provide restitution payments to victims. The government prosecutor has argued that the victims have other remedies for compensation and that the applicable law does not require restitution. The prosecutor points to the fact that most of the victims have settled civil suits with the company and the company has paid out over $650 million in settlement and warranty payments. Additionally, $42 million of the plea amount is forfeited funds and victims can petition the Justice Department for their share.