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Guidant Pleads Guilty To Criminal Charges, But Escapes Civil Liability

Guidant-Timeline-04-07-10.jpgSometimes, personal responsibility is hard to come by. The same can be true of corporate responsibility, which is another version of personal responsibility (under the law, corporations are entities capable of suing and being sued, and doing many of the same things that people do).

Exhibit A is Guidant’s plea in federal court on Monday. Guidant (recently acquired by Boston Scientific) pleaded guilty to criminal violations of the Federal Food, Drug, and Cosmetic Act. Specifically, it pleaded guilty to two violations:

  1. making a materially false statement in a required submission to the FDA (Ventak Prizm 2DR)
  2. Failing to notify the FDA of a “correction” made to reduce a health risk caused by defibrillators (Contak Renewal)

As part of the plea, Guidant agrees to pay over $296 million in criminal penalties, the largest criminal penalty ever imposed on a device manufacturer. Judge Donovan Frank is reviewing the plea agreement.

The defibrillators are devices implanted near the heart, designed to provide life-saving electrical jolts to patients with heart defects. Because of the defective devices, people have died when the devices did not function as they were expected to. Prosecutors allege that the manufacturer, which had notice of the problems, tried to cover up the fact that those deaths were caused by the defibrillators.

It is important to remember that none of the $296 million will go to Guidant’s victims or their families. The company is being held criminally responsible, but civil responsibility is elusive here. Even though Guidant admitted its wrongdoing, the U.S. Supreme Court decision in Riegel v. Medtronic holds that medical device manufacturers cannot be held civilly responsible for devices approved by the FDA’s pre-market approval process.

So, there’s only limited responsibility here. The Medical Device Safety Act (introduced in Congress as S. 540 and H.R. 1346) is designed to remedy that situation.
If a rich man clubs a child with a baseball bat, shouldn’t he be sent to jail and subject to paying for the child’s injuries? The same thing should hold true for corporations.