Company Increases Amount Paid for Faulty Medical Equipment

Boston Scientific Corp. announced that it has agreed to increase the amount it will pay to settle thousands of heart patients’ legal claims involving potentially faulty defibrillators by $45 million.

The increase means the medical device maker will pay as much as $240 million, instead of the $195 million from a settlement announced July 13, 2007 that didn’t cover additional litigation included under the new total.

The previous settlement involved a least 4,000 patients’ claims involving Guidant Corp. defbrillators that were subject to recalls and safety warnings in 2005 and 2006 before Boston Scientific Corp. acquired Guidant in April 2006 for $27 billion. The expanded settlement covers 8,500 claims, including claims that had been consolidated into a case in U.S. District Court in Minnesota, and other claims nationwide.

Natick, Mass.-based Boston Scientific said it believes the expanded agreement covers “substantially all” U.S. cases arising from the recalls and warnings. Charles Zimmerman, an attorney or a steering committee representing plaintiffs, called the amended agreement “great news” that will provide plaintiffs “with substantial relief.”

The plaintiffs claimed Guidant knowingly sold defibrillators with potentially life-threatening defects over a three-year period. Some of the problems involved wiring flaws that could prevent a defibrillator from delivering a shock to jump-start a suddenly failing heart and restore a healthy rhythm.

The company was criticized for dragging its feet in notifying doctors, patients and regulators about the problems. Many of the plaintiffs’ devices never malfunctioned, but they sought compensation for medical monitoring and anxiety.

In a March 31, 2007 regulatory filing, Boston Scientific said it had set aside $732 million to cover expenses in the cases – about three times the amended settlement amount.

The new settlement total is in addition to $16.75 million that Boston Scientific said in August it would pay to settle investigations into the defibrillator problems by attorneys general in 35 states and Washington D.C.