Medical Device Manufacturer Pays $9.25 million For Overcharging Federal Health Programs

A wholly owned subsidiary of Boston Scientific agreed to pay $9.25 million to the U.S. to settle False Claims Act allegations that it overcharged federal health programs for replacement pacemakers and defibrillators.

According to allegations in a qui tam suit filed by whistleblower Robert A. Fry, Guidant LLC failed to give warranty rebates and credits to hospitals for devices that were explanted even if those devices were still covered under a product warranty or credit.

In order to boost its sales to doctors and hospitals, Guidant would claim to potential customers that its devices were reliable and long-lived and that there were significant credits were available if a product needed to be replaced while under warranty.

Despite its claims, however, Guidant knew that it would not give the appropriate credit to a purchaser of a device that failed while still under warranty. As a result of its failure to give rebates or credits, Guidant submitted invoices to Department of Veterans Affairs’ hospitals and Department of Defense facilities that failed to accurately reflect the real cost of a replacement pacemaker or defibrillator. Guidant also overcharged Medicare by causing private hospitals that were reimbursed by Medicare to pay more for replacement defibrillators and pacemakers than they should have.

For bringing this fraud to light, Fry will receive $2.3 million of the settlement.

For more information see:  http://www.justice.gov/opa/pr/2011/September/11-civ-1256.html