Boston Scientific ordered to pay up for pacemaker replacement surgery by EU court

Boston Scientific's Marlborough, MA-based corporate headquarters--Courtesy of Boston Scientific

Boston Scientific ($BSX) advised physicians about a particular pacemaker in 2005--but then declined to pay the bills for those surgeries that it subsequently received from German health insurers. An EU court ruled on March 5 that the company is liable for those costs, according to Reuters.

This is another legal blow for the company, albeit much smaller, which disclosed a settlement in February with Johnson & Johnson ($JNJ) over a long-standing lawsuit stemming from the 2006 purchase of Guidant for $27 billion by Boston Scientific. In its annual report for 2014, the Marlborough, MA-based company reported that the $600 million in litigation-related charges for the settlement, or $386 million after taxes, resulted in a net loss of $119 million for the year.

Ironically, the pacemaker in question at the EU court was originally a Guidant product, according to an adverse event report from the FDA. So, the situation occurred during the disputed Guidant acquisition process.

In this latest ruling by the European Court of Justice, the court found that the German arm of Boston Scientific is liable to replace potentially defective pacemakers. In this instance, the company warned doctors in 2005 that a hermetic sealing component might experience degradation over time and lead to premature battery exhaustion.

At that time, it recommended doctors consider replacing the devices and agreed to provide replacements free of charge. But when billed for the cost of the surgeries themselves, Boston Scientific balked and declined to pay.

The ruling determined that the disclosed risk of the device defect was reason enough to justify their surgical replacement. Therefore, the company is liable to bear the associated costs.

It's been a busy week for Boston Scientific, which also said it would acquire the urology device portfolio from Endo Pharmaceuticals for $1.65 billion. It also replaced two board members with former EVP and CFO of Covidien Charles Dockendorff and President and CEO of Hologic Stephen MacMillan.

- here is the Reuters story

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