Abbott Laboratories ($ABT) was cleared by a Texas federal jury of accusations it violated the False Claims Act by wrongly marketing bile duct stents in a whistleblower case that sought more than $1 billion in damages.
The three-week, landmark trial ended Thursday and centered on claims by a former Guidant salesman, Kevin Colquitt, who accused the company of pushing bile duct stents intended for short-term uses for more complex vascular cases. The suit, filed in 2006 on behalf of the U.S. government, claimed the company encouraged physicians and hospitals to falsely code bills to Medicare. Abbott acquired Guidant's stent business the same year the suit was filed.
During the trial, Abbott attorneys denied it attempted to induce anyone to file false claims to Medicare, adding that the use of biliary stents for peripheral vascular or arterial disease was an accepted medical practice and Medicare knowingly approved payments.
"This verdict supports a decades-long, generally accepted medical practice that benefited tens of thousands of patients," Elissa Maurer, an Abbott spokeswoman, told Bloomberg. "We're pleased with the jury's decision."
Chris Hamilton, an attorney for Colquitt, said they will appeal the verdict.
Colquitt had asked for $219.4 million in damages, which would have been tripled under the U.S. false claims law. Additionally, he was seeking as much as $11,000 for each wrongly coded bill submitted to Medicare that amounted to 35,297 claims filed for the devices between February 2004 to June 2006.
Colquitt also charged Abbott with ghostwriting articles, false advertising and paying physicians to train other doctors about off-label use of the device. The company settled with the feds over off-label marketing of the stents in 2013 for $5.5 million.
Abbott acquired the biliary stent business from Guidant for $6.4 billion. Boston Scientific ($BSX) divested the businesses when it acquired the rest of Guidant for $27 billion in 2006, though the deal turned sour quickly, for the company's cardiac rhythm management devices were found to suffer from quality control problems.
Making matters worse, Boston Scientific last year agreed to pay Johnson & Johnson ($JNJ) $600 million to settle claims that it acted improperly during the companies' tussle over Guidant. Now Abbott too is dealing with legal issues from the infamous transaction, but at least it walked away with the successful Xience drug-eluting coronary stent.
- here's the Bloomberg story