Boston Scientific has once again paid out big dollars on behalf of its wholly owned subsidiary, Guidant LLC. This time, the total bill is $9.25 million to the United States government.
The Natick, Mass.-based Boston Scientific purchased Guidant, one of the largest makers of implantable cardiac defibrillators, in 2006, knowing that it would likely face lawsuits over Guidant’s heart devices. The lawsuits have piled on and the medical devices company has paid out millions over Guidant’s defective implantable heart products. A story in Boston Magazine in July said Boston Scientific has already paid the federal government more than $300 million.
The latest pay out to the federal government is a civil settlement resolving allegations by the government that Guidant “inflated the cost of replacement pacemakers and defibrillators to federal healthcare programs by knowingly failing to grant warranty credits and rebates to hospitals for pacemakers and defibrillators that were explanted while covered under a product warranty or another credit program,” said a press release issued by the Department of Justice on Monday.
“Major device manufacturers will be held accountable for improper marketing strategies,” said Derrick L. Jackson, the Special Agent in Charge of the Department of Health and Human Services Office of Inspector General in Atlanta, in a statement. “This settlement sends the clear message that defrauding federal healthcare programs is a losing business proposition.”
“Overcharging for lifesaving medical devices wastes taxpayer dollars,” said Tony West, assistant attorney general for the Justice Department’s Civil Division added in the same statement. “As we all look for ways to reduce public expenditures, settlements like this one – which recapture funds that were spent due to fraud – help support important public healthcare programs that so many people depend on.”
Boston Scientific denies the allegations, but, says Denise Kaigler, senior vice president of corporate communications, “is pleased this settlement resolves all claims in the case.”
The allegations were part of a whistleblower lawsuit filed in federal court in Tennessee. Under the qui tam provisions of the False Claims Act, private citizens may bring civil actions on behalf of the U.S. government. The whistleblower, Robert A. Fry, will receive payments totaling more than $2.3 million from the settlement, said the DoJ’s press release.
Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.