In an unusual move Tuesday, a federal judge rejected a $296 million settlement the government reached with Guidant Corp. over charges the company concealed crucial safety information about its heart devices from federal regulators.
With District Judge Donovan Frank rejecting the deal, the U.S. Department of Justice and Guidant, now part of Boston Scientific Corp., are back at square one.
They can re-craft the agreement, Guidant could plead guilty and take its chances in court, or the government may drop the deal and prosecute.
"Now the government and Guidant have to go back to the drawing board," said Charles Zimmerman, a Minneapolis attorney who represented some of the Guidant victims. "They need to come up with something that will serve the public better."
Approval of the plea would have ended a painful controversy that has rocked Minnesota's signature medical technology industry for the past five years. It began when two Minneapolis doctors went public in 2005 with their concerns about a heart defibrillator made by Guidant after it failed to revive their young patient, who had collapsed and died.
After a four-year investigation, the Justice Department announced in April that Guidant pleaded guilty to two federal criminal charges, including making false statements to the Food and Drug Administration (FDA) over modifications made to the design of the Ventak Prizm and Contak Renewal heart defibrillators. Those changes affected the device's safety and effectiveness.
Boston Scientific, which employs about 2,000 Minnesotans at the former Guidant operations in Arden Hills, also agreed to pay a $296 million fine -- a criminal penalty would have ranked as the largest ever in medical technology for violating federal laws. (Boston Scientific bought Guidant for $27 billion in 2006.)
Fine not enough