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Boston Scientific agrees to settle product lawsuits

Boston Scientific has revealed that it has reached an agreement to settle claims associated with a series of product communications issued by Guidant Corporation in 2005 and 2006

Boston Scientific has revealed that it has reached an agreement to settle claims associated with a series of product communications issued by Guidant Corporation in 2005 and 2006.

Boston, which acquired Guidant in 2006, said the agreement was reached during mediation sessions conducted before US Magistrate Judge in Minneapolis.

Boston, which develops, manufactures and markets medical devices whose products are used in a broad range of interventional medical specialties, will pay a total of USD 195m. The agreement includes approximately 4,000 claims of individuals that have been consolidated in the US District Court for the District of Minnesota in a Multi-District Litigation (MDL).

The agreement also includes an undetermined number of additional similar claims throughout the US. As a result, the trials in the bellwether cases in the MDL scheduled to start on July 30 have been suspended pending implementation of the agreement.

Jim Tobin, President and CEO of Boston, said: "We are pleased by this resolution, which is in the best interest of all involved. It will better allow us to focus our time and resources on developing innovative products to serve physicians and patients."

Boston had avoided settling the cases, as it said that most plaintiffs had not experienced a device defect or failure and had no need to have their devices removed and thus should not be able to sue for emotional distress. The company added that the failures were rare (fewer than one in 500 in the case of one type of defibrillator) and that it already had warned doctors and patients that the devices were not 100 per cent reliable.

Plaintiffs have argued that removing the device was the only way to make sure it was faulty. Judge Donovan W Frank, who presided over the cases sided with the plaintiffs.
The judge questioned Guidant's relationships with some doctors who had implanted its devices and later defended the company. Plaintiffs accused the company of paying for consulting fees and golfing trips for the doctor of the plaintiff in the first case.

Judge Frank was quoted as saying: ìContrary to Guidant's assertions, the Court doubts that Guidant provides European-birthday-golfing trips to most electro-physiologists in the US."

Boston had estimated the suits could be in excess of USD 700m but had not set aside any reserves. In addition, approximately 100 state lawsuits, which are not part of the settlement, are pending. A number of state attorneys general have said that they were investigating and thus could be a source of added liabilities.

Boston shares fell USD 0.05 to rest at USD 15.41 on 13 July on the New York Stock Exchange pm composite trading. After the announcement, shares rose USD 0.24 in after-hours trading.

18th July 2007


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