Boston Scientific to pay $9 million to settle U.S. Justice Dept.'s Guidant probe

September 26, 2011 by MassDevice staff

Boston Scientific's Guidant subsidiary will pay $9.25 million to settle U.S. Justice Dept. allegations that it overcharged federal health programs by failing to grant credits for devices that failed under warranty.

BSX, Guidant logos

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."

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"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.