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Judge Rejects Boston Scientific’s Federal Preemption Defense—and Others

Earlier this month, a federal district court in Minneapolis ruled that product liability claims against Boston Scientific Corp. (Natick, MA) regarding implantable cardioverter-defibrillators (ICDs) can proceed to trial. The claims are part of the estimated 1660 lawsuits that Boston Scientific inherited as part of its $27 billion acquisition of Guidant last year.

Plaintiffs in the cases, which involve Guidant's Ventak Prizm 2 DR ICD (Model 1861), charge that Guidant was aware of a rare but potentially fatal problem with some of its ICD units as early as 2002, but failed to notify doctors and patients about the faulty devices until 2005. Guidant has attributed at least three deaths to the malfunctioning ICDs. The company eventually recalled an estimated 108,000 of the devices across its entire ICD line.

Frank

Boston Scientific's motion to have the cases dismissed on the basis of federal preemption was denied by Judge Donovan Frank. In doing so, Frank stated, "The court is mindful of Guidant's arguments that allowing these claims to go forward will open the floodgates and unfairly stifle medical invention. The court does not see such a harsh result. The FDA regulatory system and a state tort system can and should work together. Each serve different, yet related, functions. A regulatory system ensures products on the market have a favorable risk-reward profile, and a tort system provides incentives to manufacturers to develop and maintain safe devices. In this way, private tort remedies strengthen federal standards."

Boston Scientific also sought to have the cases thrown out on the grounds that none of the plaintiffs in the cases experienced a malfunction of their devices. However, Frank denied the motion, stating, "When there is evidence to suggest that this defect could have been tested or detected, the law is not furthered by allowing a manufacturer to escape liability for a defective product simply because a plaintiff elected to remove a medical device before it malfunctioned and possibly killed him."

Boston Scientific also argued that Guidant was not required to inform doctors of the defect due to the low incidence of device failure. In denying this and other motions to dismiss, Frank focused heavily on the issue of disclosure." This case concerns the issues of whether, how, and to whom information was shared--and to whom it should have been shared--about a device with an alleged defect and the cause of that alleged defect," Frank said.

Additionally, in denying Boston Scientific's motion for the dismissal of punitive damages, Frank issued a particularly strongly worded rebuke: "There is clear and convincing evidence to show that Guidant acted with fraud, malice, or oppression with respect to Guidant's actions concerning the manufacturing and disclosures about . . . Prizm 2.

The first case is set for a July 27 trial date.

Responding to the court's rulings, a spokesperson for Boston Scientific said, "We are fully prepared to take the bellwether cases to trial and remain confident that when juries look into the individual facts, they will side with us. Guidant defibrillators continue to be among the most reliable in the industry."

Class-action suits against Guidant ICDs continue to be filed. According to Boston Scientific's May 4 filing with the Securities and Exchange Commission, prosecutors in 29 states have requested information about how the company handled the faulty ICD matter. Additionally, consumer protection officials from a number of states are investigating the possibility of criminal violations.

Shortly after acquiring Guidant, Boston Scientific said it had set aside $732 million for legal settlement fees. But in light of the recent ruling and continued filing of claims, some industry observers are questioning the adequacy of such an allotment.

The worldwide market for ICDs is currently valued at around $5.6 billion. Following the Guidant recall, sales of ICDs from all manufacturers declined. As confidence in the devices has begun to recover, sales have started to trend upward again. Boston Scientific continues to use the Guidant brand for its ICDs.

Prior to the recall, Guidant held the number-two position in the ICD market, a place it has since ceded to St. Jude Medical Inc. (St Paul, MN). Medtronic Inc. (Minneapolis) is the world's largest manufacturer of ICDs and other cardiac rhythm devices. St. Jude Medical and Medtronic have also recalled certain models of their ICDs, and both face a number of lawsuits.

© 2007 Canon Communications LLC

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