(CN) - Guidant will pay $30 million to settle charges that it knowingly sold defective defibrillators to be implanted into Medicare patients' hearts, the Justice Department said Thursday.
Guidant sold the defective defibrillators from 2002 to 2005; Boston Scientific bought Guidant in 2006.
Guidant called the defective defibrillators the Prizm 2 and the Renewal 1 and 2. They both malfunctioned by arcing, which means they sent a shock to themselves, rather than to the heart, short-circuiting themselves, rather than correcting an irregular heartbeat.
Guidant knew as early as April 2002 that the Prizm was defective, and by November 2003 that the Renewals had the same problem, but it "continued to sell its remaining stock of the old, defective versions of the devices," prosecutors said in the statement.
It also hid the problems from patients, doctors and the FDA, and did not fully disclose the malfunction until a New York Times reporter asked. Guidant recalled the devices after the Times ran the story on page 1.
Whistleblower James Allen, who filed a False Claims Act lawsuit in 2010, will get $2.5 million from the settlement.
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