Boston Scientific Corp. (NYSE:BSX) will pay $9.25 million to settle allegations that the med-tech goliath’s Guidant subsidiary overcharged federal health care programs for medical devices.
The government accused Natick, Mass.-based Boston Scientific’s Guidant subsidiary with exaggerating the reliability of its pacemakers and defibrillators and then failing to grant credits to purchasers when the devices failed while still under warranty.
"The settlement resolves allegations that Guidant actively promoted the longevity and reliability of its pacemakers and defibrillators to physicians in an effort to convince them to purchase Guidant products over competing devices," according to a press release. "Guidant reinforced these claims by touting the generous credits available should a device need to be replaced while covered under warranty."
"Boston Scientific has denied the allegations but is pleased this settlement resolves all claims in the case," BSX’s senior VP of corporate communications Denise Kaigler told MassDevice.
Under the False Claims Act, the Justice Dept. accused Guidant of being "fully aware" of its failure to give appropriate credits to purchasers, thus inflating the cost of the devices and causing hospitals to overcharge Medicare.
"Overcharging for lifesaving medical devices wastes taxpayer dollars," assistant attorney general for the civil division Tony West said in prepared remarks. "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 health care programs that so many people depend on."
The probe was the result of a whistleblower lawsuit filed by former employee Robert Fry, who will get more than $2.3 million from the settlement, according to the DOJ.
The case, filed in January, is the latest in a set of federal lawsuits against Guidant.
Last year the DOJ officially charged Guidant with a failure to report safety issues with its implantable defibrillators. BSX promised to pay nearly $300 million to settle the case, even though the alleged infractions occurred prior to its $26 billion acquisition of the Indianapolis-based company.