False Claims Act Case May Stick to Guidant

     (CN) – A manufacturer of heart devices cannot dismiss claims that it defrauded Medicare with defective defibrillators, a federal judge ruled.



     James Allen filed the original 2008 complaint under seal in the Western District of New York, and the U.S. government intervened last year after the case was removed to the District of Minnesota.
     Around the same time, a St. Paul federal judge ordered Guidant, a wholly owned subsidiary of Boston Scientific Corp., to pay $296 million for criminal mishandling of short-circuiting failures of three models of its implantable cardioverter defibrillators: the Ventak Prizm 2 DR (Model 1861) and the Contak Renewal (Models H135 and H155).
     The Food and Drug Administration approved the Guidant Prizm 1861 and the Renewal in 2002 for people with life-threatening irregular heart rhythms.
     But the companies allegedly continued selling their products despite reports that the defibrillator short-circuited. When Guidant finally came public about the arcing problem in 2005, the FDA recalled Prizm 1861 devices made before April 2002.
     Claiming that the claims against it are public knowledge, Guidant moved to dismiss the complaint Allen filed as a relator to the government.
     But U.S. District Judge Donovan Frank ruled last week that Allen’s claims involve devices sold and marketed after 2002, while the government has targeted older models.
     “However, if the government only partially intervenes in an action, a relator may retain standing to prosecute those aspects of his or her complaint as to which the Government has not intervened,” he wrote.
     “Moreover, the government has not sought to dismiss or settle relator’s claims or to limit relator’s participation in the action.”
     Because Allen came forward first with knowledge of Guardian’s actions and his own personal experience with the Prizm defibrillator, Frank said he is an original source with direct and independent knowledge of the information behind his False Claims Act claims.
     One aspect of Allen’s complaint says Guidant hid safety issues with its defibrillator and continued submitting false claims to the Veterans Administration and Medicare.
     This False Claims Act allegation meets the requirements of Rule 9(b) of the Federal Rules of Civil Procedure, according to the decision.
     Finding, however, that Allen failed to connect his injuries to Guidant’s wrongful conduct with government entities, the judge dismissed the common-law claims of unjust enrichment and payment by mistake of fact.

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