NATICK, Mass. (AP) -- Boston Scientific Corp. said Friday it doesn't expect the civil lawsuit filed by the U.S. government over implantable heart devices to cost the company a significant amount of money.
Nevertheless, investors sold shares of the company, sending it down 2.8 percent, or 20 cents, to $6.96 in afternoon trading as the broader markets also declined. The stock has traded between $5.04 and $8.99 over the last 52 weeks.
On Thursday, the Justice Department filed a complaint in federal court in Minnesota, alleging that medical device maker Guidant knew as early as April 2002 that one model of its implantable cardioverter defibrillators might not deliver a life-saving jolt when needed but continued to sell them anyway, putting patients' lives at risk. A similar problem was found in another model in 2003.
Boston Scientific bought Guidant in 2006. Guidant pleaded guilty last year in a criminal case to two misdemeanors for misleading the Food and Drug Administration about the problems. The company was ordered last month to pay $296 million in fines and fees and serve three years of probation.
The new civil complaint alleges that Guidant fixed the problems, but continued to sell the defective devices it had in stock and did not recall the devices already on hospital shelves. It also alleges that the company hid the issue from patients, doctors and the FDA and continued to file for Medicare reimbursements for defective implants.
The last allegation would be a violation of the False Claims Act. The government alleges that about 2,000 false claims were submitted to Medicare for patients with defective models. The U.S. wants that money back, and is seeking unspecified damages plus civil penalties on behalf of the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, which administers the Medicare program.
"The company is disappointed that the federal government, after reaching a criminal resolution with Guidant LLC, has chosen to seek additional money in a civil lawsuit," Boston Scientific said in a statement. "However, the company believes that the ultimate resolution of this matter should not have a significant financial impact."
The Natick, Mass.-based company said it has previously disclosed to shareholders the possibility of the government filing a civil lawsuit in regulatory filings.
Nevertheless, investors sold shares of the company, sending it down 2.8 percent, or 20 cents, to $6.96 in afternoon trading as the broader markets also declined. The stock has traded between $5.04 and $8.99 over the last 52 weeks.
On Thursday, the Justice Department filed a complaint in federal court in Minnesota, alleging that medical device maker Guidant knew as early as April 2002 that one model of its implantable cardioverter defibrillators might not deliver a life-saving jolt when needed but continued to sell them anyway, putting patients' lives at risk. A similar problem was found in another model in 2003.
Boston Scientific bought Guidant in 2006. Guidant pleaded guilty last year in a criminal case to two misdemeanors for misleading the Food and Drug Administration about the problems. The company was ordered last month to pay $296 million in fines and fees and serve three years of probation.
The new civil complaint alleges that Guidant fixed the problems, but continued to sell the defective devices it had in stock and did not recall the devices already on hospital shelves. It also alleges that the company hid the issue from patients, doctors and the FDA and continued to file for Medicare reimbursements for defective implants.
The last allegation would be a violation of the False Claims Act. The government alleges that about 2,000 false claims were submitted to Medicare for patients with defective models. The U.S. wants that money back, and is seeking unspecified damages plus civil penalties on behalf of the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, which administers the Medicare program.
"The company is disappointed that the federal government, after reaching a criminal resolution with Guidant LLC, has chosen to seek additional money in a civil lawsuit," Boston Scientific said in a statement. "However, the company believes that the ultimate resolution of this matter should not have a significant financial impact."
The Natick, Mass.-based company said it has previously disclosed to shareholders the possibility of the government filing a civil lawsuit in regulatory filings.
