A federal judge signed off Wednesday on a plea agreement that calls for Boston Scientific Corp.'s Guidant unit to pay $296 million for failing to properly disclose changes made to some implantable heart devices, but added three years of probation to the deal.
U.S. District Judge Donovan Frank had rejected the plea deal last spring as insufficient. His acceptance Wednesday came after Guidant filed papers giving him more information about its compliance policies and community service programs.
Guidant has 10 days to pay the fines and forfeiture fees.
Prosecutors supported the plea agreement. They have called the $296 million in fines and forfeiture fees the largest criminal penalty ever against a medical device company.
As part of the probation, Frank said, the court will annually review Boston Scientific and Guidant's compliance efforts to make sure it can verify Boston Scientific keeps its commitments.
"We do believe it's fair and appropriate and a good resolution to the case," Assistant U.S. Attorney Robert Lewis said.
Attorneys for Guidant had no comment after the hearing.
Guidant discovered a short-circuiting problem in 2002 and 2004 with some of its defibrillators, a problem that could render them unable to deliver the lifesaving jolts that patients depended on. The company changed the devices but was accused of falsely reporting on the changes or not reporting them at all, leaving doctors and patients unaware of potentially dangerous problems.
The company eventually pleaded guilty to two misdemeanors: submitting a false and misleading report to the Food and Drug Administration about one defibrillator model and failing to notify regulators about a safety correction to another line of devices.
In a document filed last week, defense attorney Daniel Scott wrote that Guidant had improved its compliance policies since 2005 and upgraded them further after the Indianapolis-based company was acquired by Natick, Mass.-based Boston Scientific in 2006.
Among the changes, Boston Scientific has taken steps to be more transparent, posting quarterly reports about product performance on its website. Scott also wrote that the company revised its reporting procedures to eliminate "judgment calls" by requiring that changes stemming from safety issues in the field be reported to the FDA for approval.
He also detailed community service in several programs, including one designed to improve treatment of cardiovascular disease among women, blacks and Hispanics, and another that gives middle and high school students a background in science, technology, engineering and math.
Prosecutors said in court documents supporting the deal that it would resolve a four-year investigation into events leading up to Guidant's recalls of three models of implantable defibrillators in 2005. Prosecutors said that as of October, 13 deaths associated with product failures have been reported.
The 20,146 devices at issue in the criminal case are Ventak Prizm 2 and Contak Renewal 1 and 2 defibrillators, which monitor for deadly irregular heartbeats and shock the heart back to a normal rhythm.
Guidant discovered in 2002 that its Ventak Prizm 2 DR was prone to short circuiting. Guidant fixed the flaw that November, but in August 2003 falsely told the FDA the change did not affect the safety or effectiveness of the device, according to the plea agreement.
The deal also says that in mid-2004, the company found a short-circuiting problem with two Renewal models. That device would beep when there was a problem, sending patients to the doctor -- but a warning screen did not tell doctors the extent of the problem.
In mid-2004, a patient died just a week after he was sent home by a doctor who followed prompts on the screen. In March 2005, Guidant sent out a product update advising doctors that the warning screen indicated a potentially serious problem. But because the change was made to reduce a health risk, it should have been reported as a product correction, not a product update, the plea deal says. Guidant broke the law by not notifying the FDA about the change within 10 days.
Guidant issued safety advisories on the devices in June 2005.
In April, some patients had complained that the deal didn't require restitution. But Frank concluded no patients were directly harmed by the two specific acts to which Guidant pleaded guilty. Prosecutors had noted that patients had other ways to pursue compensation. Many have already sued and reached settlements.
The criminal case was filed in Minnesota because Guidant's heart rhythm management unit was based in the St. Paul suburb of Arden Hills.