Guidant Owner OKs $195 Million Settlement |
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Boston Scientific's Agreement Will Resolve More Than 4,000 Claims Over Faulty Heart Defibrillators |
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Bloomberg News Jef Feeley |
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July 14, 2007—Boston Scientific Corp.'s Guidant unit agreed to pay $195 million to settle claims it hid defects in its heart defibrillators, the company said. The settlement will resolve more than 4,000 claims filed over Guidant's implantable defibrillators, which customers contend short-circuited from faulty insulation, Boston Scientific officials said in a statement Friday. The settlement means Guidant, formerly based in Indianapolis, won't have to face a first trial over its defibrillators, which had been scheduled for July 27 in Minneapolis. After defects forced recalls by Guidant and its biggest rivals, Medtronic and St. Jude Medical, starting in 2005, global sales of the devices shrank to $5.6 billion last year from $6 billion. "It'll be nice to move on, get a little bit of silence from the company and stop the bad news flow," said Daniel Owczarski, a Soleil-Belmont Harbor Research analyst in Chicago. Boston Scientific officials said they were pleased to have resolved a large portion of the suits alleging Guidant's defibrillators were flawed. Some state court suits over the devices still are pending, said Jim Tobin, the Natick, Mass.-based company's president and chief executive. The settlement "will better allow us to focus our time and resources on developing innovative products to serve physicians and patients," Tobin said. Boston Scientific's shares rose 1.5 percent to $15.65 in after-hours trading Friday. The stock closed at $15.41 in New York Stock Exchange trading. In a May 9 filing with the Securities and Exchange Commission, Boston Scientific officials said they had reserved $732 million for suits spawned by the Guidant acquisition. Boston Scientific's settlement may help restore confidence in Guidant's devices, which have been linked to seven deaths. The accord removes the threat of substantial jury awards over the devices. Guidant issued a recall in June 2005 that eventually was expanded to include 109,000 defibrillators. Lawyers for patients contend the company knew as early as June 2002 that the devices were flawed and hid the defects to protect sales. |
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Guidant Owner OKs $195 Million Settlement Boston Scientific Recalls Some Guidant Heart Devices Boston Scientific Device Woes Grow |