Guidant lawsuit settlement may be First Tied to Defibrillators

posted on:
November 22, 2005

author:
Staff

Guidant Corp., the second-largest maker of defibrillators, agreed to settle a lawsuit over the death of a 21-year-old man who used a company-made heart device that failed, said a lawyer representing the man’s family.

The agreement with the family of Joshua Oukrop, who died in Utah on March 14, 2005, may be the first civil settlement related to Guidant’s recall of 109,000 heart0020defibrillators, lawyers said. Since the recall, Guidant’s shares have plunged, state and federal regulators have begun probes and the company agreed to a reduced takeover price from Johnson & Johnson.

“The only thing I’m at liberty to say is the case is resolved,” said Matt Curtis, the Oukrop family’s lawyer. “It was within the past two weeks,” said Curtis, a lawyer at Sommers Schwartz PC in Southfield, Michigan. He declined to disclose settlement terms, citing confidentiality provisions.

The settlement may be the first of dozens that Guidant needs to resolve. About 45 class action claims and 50 individual lawsuits have been filed for patients who once had or still have the recalled Guidant devices in their chests, according to a U.S. Securities and Exchange Commission filing.

The settlement could be worth $500,000 to $5 million, said Barry Hill, a Wheeling, West Virginia, trial lawyer who specializes in drug and medical device cases. His law firm—Hill, Toriseva and Williams PLLC—represents about 300 Guidant defibrillator patients from 13 states, he said.

Guidant shares fell 45 cents, or less than 1 percent, to $61.70 yesterday in New York Stock Exchange composite trading. The shares have fallen 14 percent this year.

Guidant spokesman Steven Tragash said the Indianapolis- based company doesn’t comment on litigation, and the company’s outside counsel, Kansas City lawyer Timothy A. Pratt, didn’t respond to a request for comment.

Potentially Liable

Guidant announced the recall after Oukrop’s cardiologist, Barry Maron, who works at the Minneapolis Heart Institute, told the New York Times the company wasn’t publicly disclosing that some devices may fail without warning.

“It never occurred” to Guidant “that by their actions and strategy they were placing” doctors “in a liable position,” Maron said in a telephone interview yesterday.

Oukrop suffered from hypertrophic cardiomyopathy, an excessive thickening of the heart muscle that increases risk of cardiac arrest. Maron recommended a defibrillator, which he said would allow Oukrop to live a full life. The device failed while Oukrop was on a mountain biking vacation.

Lance Harke, a Miami trial lawyer pursuing a class action claim against Guidant, said plaintiffs lawyers nationwide have been cooperating with each other. On Nov. 7, a federal multidistrict litigation panel consolidated cases before one federal judge in Minnesota.

Sales Decline

“These devices are fantastic medical instruments and technological advances, and people rely on them to save their lives,” Harke said. “Yet there’s great concern about whether when it’s needed it would do the opposite and lead to your death. It’s a tightrope that these people are walking.”

Harke said lawyers are planning to argue that Guidant violated promises it made to abide by a 2003 corporate integrity agreement with the U.S. Justice Department following a different device failure. In that case, Guidant pleaded guilty to concealing defects in products used to treat abdominal aneurysms. Those devices were linked to 12 deaths, and Guidant paid a record $92.4 million fine.

The recall prompted a 26 percent decline in defibrillator sales and also prompted hospitals to diversify suppliers to reduce the risk that any one defibrillator recall would disrupt medical services, said Alexander Arrow, a health-care analyst at Lazard Capital Markets LLC in New York.

More Vendors

More hospitals are ordering from all three makers, Guidant, Minneapolis-based Medtronic Inc. and St. Paul, Minnesota-based St. Jude Medical Inc., Arrow said.

“Many that were previously two-vendor hospitals want to become three-vendor hospitals,” Arrow said. “The vendor that overwhelmingly benefits from that is St. Jude, because it’s in the fewest hospitals.”

The investigations and decline in Guidant’s stock price prompted New Brunswick, New Jersey-based J&J to renegotiate its acquisition. The companies agreed to reduce the price to $21.5 billion from $25.4 billion.

Government investigations sparked by the Oukrop case are proceeding. New York Attorney General Eliot Spitzer sued Guidant Nov. 2, saying the company failed to tell doctors of a design flaw in one model that might have fatal consequences, the Ventak Prizm 2 DR Model 1861.

Nationwide Probes

In a U.S. Securities and Exchange Commission filing, Guidant said it was being investigated by attorneys general in 34 states and the District of Columbia in a coordinated probe related to implantable defibrillators. Officials from California, Texas, Maryland, Illinois, and the District of Columbia declined to comment.

Among the many investigations pending is a SEC probe of trading in Guidant shares and product disclosures, according to a company filing with the SEC.

Maron said that on May 12 he met with Guidant officials, including a senior medical officer, to discuss the malfunction in Oukrop’s device. At that point, he said, Guidant officials told him they discovered potential defects in 2002 and then made production line improvements to solve them.

The officials told him that the failures were unlikely and that disclosing information about them would prompt too many patients to change their defibrillators. The surgery would carry greater dangers of complications and infections than leaving the questionable devices in place, Guidant said, according to Maron.

Maron said the FDA was properly alerted by Guidant. “They never shaded that,” he said of Guidant officials. “The problem is one of informed consent. You can’t keep secret from doctors and patients information about defective devices. I don’t think they saw it as an ethical dilemma.’‘

Free Legal Consultation
At Beasley Allen, there is never a fee for legal services, unless we collect for you. Contact us today by filling out a brief questionnaire, or by calling our toll free number, 1-800-898-2034, for a free, no-cost no-obligation evaluation of your case.
back to top