Boston Scientific Fails to Have Punitive Charges Dismissed

06/13/2007 - A federal court Tuesday ruled against Boston Scientific's attempts to have litigation over faulty defibrillators thrown out of court. It inherited the 1,660 lawsuits when it purchased Guidant in 2006. Boston Scientific has budgeted for at least $732 million in damages and legal costs. The current ruling concerns the recall of Guidant's 1861 defibrillators. In 2002 Guidant discovered a rare flaw that could it to malfunction, but didn't inform doctors and patients until 2005. Three patients died, although the plaintiffs involved in the current ruling didn't experience a malfunction. Boston Scientific argues Guidant didn't need to inform doctors due to the small failure rate (1/500), and says it told doctors the devices were imperfect, and that it told the FDA that the failure rate was up to 1/20. It also argues that patients whose devices weren't faulty shouldn't be allow sue for punitive damages. The court disagreed: "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." Boston Scientific says it is confident that juries will ultimately see things its way. Shares are down 6.6% YTD and 18.6% over the past year.

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