Guidant settles with DoJ for $9.25M on whistleblower suit

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Boston Scientific's subsidiary Guidant is on the hook for $9.25 million because it inflated the cost of pacemakers and implantable cardioverter-defibrillators sold to hospitals and reneged on credits owed the Department of Veterans Affairs for replacement of units still under warranty.

In reporting the settlement Monday, the U.S. Department of Justice (DoJ) said the whistleblower behind the action—Robert A. Fry, a former Guidant sales rep—will reap more than $2.3 million from the deal.

The DoJ statement also cites 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. Guidant reinforced these claims by touting the generous credits available should a device need to be replaced while covered under warranty.”

Denise Kaigler, Boston Scientific’s senior vice president of corporate communications said in a statement, “Boston Scientific has denied the allegations but is pleased this settlement resolves all claims in the case.”

The Wall Street Journal reported that Boston Scientific bought implantable defibrillator maker Guidant for $28.4 billion in 2006 but has struggled to make the costly acquisition pay off.