Guidant’s Facing Big Legal Worries - New York Daily News - June 14, 2003

Guidant’s Facing Big Legal Worries
By: Nancy Dillon
New York Daily News
June 14, 2003

The admission by medical device maker Guidant that it hid 12 deaths and other serious problems caused by one of its products may bolster individual patient lawsuits.

One lawyer who's been investigating deaths related to the aortic stent said he moved up his plan to file a class action lawsuit, after Guidant pled guilty to 10 felony counts Thursday.

'It pushed up our nice, methodic timetable to the point we'll be filing next week,' said attorney Kenneth Moll, of Kenneth Moll and Associates in Chicago. 'Any evidence in a criminal case can be used in a civil court proceeding.'

Moll said a year of research by his law firm leads him to believe some 6,000 people have experienced injuries or defects with the stent system manufactured by Guidant's Endovascular Technologies unit.

Assuming the average damage award for each patient would be $5 million, the entire class could win some $30 billion, he said.

U.S. Attorney Kevin Ryan for the Northern District of California said Guidant agreed to cooperate with an investigation of unidentified people. The company is still the subject of a Health and Human Services investigation that could lead to its exclusion from federal health care programs.

Guidant's share price responded to market fear over potential civil liability by sliding as much as $3.59 yesterday before closing down 61 cents at $39.95.

'I doubt [the civil damages] could reach tobacco case proportions,' said Jan Wald, senior healthcare analyst at A.G. Edwards & Sons. 'And typically companies have their civil liabilities covered by insurance.'

Still, Wald conceded, 'it's left to be seen whether the insurance providers will pay' in light of the guilty pleas.

Guidant, which makes everything from implantable defibrillators to pacemakers, agreed to pay $92.4 million for misleading Food and Drug Administration officials the 12 deaths and thousands of reported problems related to its stent product used to treat aortic aneurisms.

The problem with the product centered around the equipment used to insert the stent into a patient's aorta. The insertion system was prone to lodge in patients' bodies. Guidant's sales force recommended that doctors break apart the equipment to remove it - which sometimes only made things worse.