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November 12, 2019

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Boston Scientific to Pay $30 Million in Healthcare Fraud Case

The Department of Justice announced last week that Boston Scientific Corp. and Guidant, a subsidiary of the company, will pay $30 million to settle allegations that it sold defective implantable defibrillators to health care facilities, who then implanted them in Medicare patients. These devices are used to treat individuals who are at risk of cardiac arrest due to an irregular heartbeat. When operating normally, the defibrillator senses when a patient’s heartbeat becomes irregular, and sends an electrical pulse to the heart to send it back into normal rhythm.

However, federal officials (who joined the suit alongside a qui tam whistleblower named James Allen) allege that two lines of Boston Scientific’s implantable devices, manufactured and sold by Guidant, contained a defect that resulted in “arcing.” Arcing occurs when the device detects an irregular heartbeat and delivers a shock, but instead of the current traveling to the heart and resetting the rhythm, the current “arcs” back to the device itself and causes it to short circuit.

According to the government, Guidant knew as early as 2002 that the line known as the Prizm 2 was defective, and as early as 2003 that the Renewal 1 and 2 line was similarly defective. Although Guidant took steps to fix the defects, the company allegedly continued to sell the remaining stock of defective devices. The government further alleged that Guidant took steps to hide the problematic defect from patients, doctors, and even the FDA.  Instead of disclosing the problem outright, Guidant allegedly issued a misleading communication to doctors regarding the nature of the defect and did not fully disclose the problem with the devices until May of 2005, after being contacted by a New York Times reporter.  The company recalled the devices after the New York Times article about the defects appeared on the front page.

The healthcare whistleblower in this case, James Allen, was one of the recipients of these defective defibrillators. Thanks to the False Claims Act, Allen was able to bring his case on behalf of the federal government to expose this form of Medicare fraud. Under the qui tam provision of the False Claims Act, a private citizen, known as a “relator,” can sue on behalf of the federal government and share in any recovery of funds the government is able to make. As a Medicare whistleblower in this healthcare fraud case, Allen will receive $2.25 million in compensation.

© 2019 by Tycko & Zavareei LLP

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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

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