Boston Scientific's ($BSX) $27.5 billion Guidant buyout didn't just tank its profits; the megadeal saddled the Massachusetts device giant with hundreds of pending product-liability lawsuits. Now, Boston Scientific has agreed to fork over $30 million to settle the last federal claims tied to two recalled defibrillators.
At issue are Guidant's Prizm and Renewal, devices the company knew were defective when it sold them to Medicare patients, according to the Department of Justice. The defibrillators had already been recalled when Boston Scientific acquired Guidant in 2006, but the legal fallout was far from over, and the company agreed to pay the government $296 million back in 2009 to settle charges that Guidant officials misled the FDA.
"This settlement, along with the prior criminal prosecution of Guidant, demonstrates that there will be significant consequences when companies engage in conduct that threatens health and safety and violates the law," Assistant Attorney General Stuart Delery said in a statement.
The $30 million wraps up a whistleblower suit first filed by a Minnesota patient and later joined by the Department of Justice. Once the settlement is paid, Boston Scientific will be clear of all federal claims tied to Prizm and Renewal, a company spokesperson told The Wall Street Journal.
Still, the ghosts of Guidant are still visible on Boston Scientific's balance sheet. It was only a year ago that the company took a $3.4 billion goodwill impairment write-off tied to the acquisition, which Forbes dubbed "arguably the second-worst ever." CEO Mike Mahoney's current destroy-and-rebuild plan is in part designed to wipe away the sins of his predecessors, and through job cuts, cost reductions and targeted M&A, Boston Scientific has rebounded and impressed investors under his tenure.
- read DOJ statement
- here's the WSJ story (sub. req.)