Judge rejects Bos Sci's $296M plea with DoJ, urges probation

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In a surprising decision, Judge Donovan W. Frank of the U.S. District Court in Minnesota has declined to accept the $296 million plea agreement between Guidant and the Department of Justice (DoJ), related to product advisories issued in 2005, before Boston Scientific acquired Guidant.

Specifically, the judge faulted the plea for not putting Guidant or Boston Scientific on probation. “The court believes that a term of probation would be appropriate in this case," wrote Frank in his order, issued Tuesday.

Also, according to Boston Scientific, the court recommended the parties consider a modified agreement fashioned to further serve the public interest, including community service, public education and charitable activities, suggesting the DoJ allocate a portion of the settlement funds to Medicare.

This move will bring the Natick, Mass.-based medical device maker and attorneys from the Justice Department back to the drawing board.

According to the DoJ, the company’s admission of criminal wrongdoing is the result of a four-year investigation into Guidant's handling of short-circuiting failures of three models of its implantable cardioverter-defibrillators: the Ventak Prizm 2DR (Model 1861) and the Contak Renewal (Models H135 and H155). Guidant's cardiac rhythm management division, which produced the defibrillators, is headquartered in Arden Hills, Minn.

Under the terms of the plea agreement with the Justice Department to resolve the charges, which was rejected by Judge Frank, Guidant pleaded guilty today to withholding information from the FDA regarding catastrophic failures in some of its lifesaving devices. Specifically, Guidant admitted to:making a materially false statement in a required submission to the FDA with regard to the Ventak Prizm 2DR device; and failing to notify the FDA of a "correction" to the Contak Renewal devices, which the company made to reduce a risk to health caused by the devices. As a result of these accepted charges, the agreement called for Guidant/Boston Scientific to pay a combined criminal penalty in excess of $296 million.

On Tuesday, Boston Scientific said it plans to work with the DoJ in an effort to develop a modified plea agreement that is acceptable to the court, the DoJ and the company.