Boston Scientific has been named in a shareholder lawsuit over last month’s massive recall <"http://www.yourlawyer.com/practice_areas/defective_medical_devices">of implantable cardiac defibrillator and implantable cardiac resynchronization therapy defibrillator devices. The lawsuit was filed in United States District Court for the District of Massachusetts on behalf of anyone who purchased Boston Scientific Corporation common stock between April 20, 2009 and March 12, 2010.
As we reported previously, Boston Scientific halted sales and began retrieving field inventory of all its implantable cardioverter defibrillators (ICDs) and cardiac resynchronization therapy defibrillators (CRT-Ds) on March 15. The recall impacted seven brands of Boston Scientific defibrillators: COGNISÂ®, CONFIENTâ„¢, LIVIANâ„¢, PRIZMâ„¢, RENEWALÂ®, TELIGENÂ® and VITALITYâ„¢. All of the devices in the recall were acquired by Boston Scientific in 2006 when it purchased medical device manufacturer Guidant Corp., of St. Paul, Minn., for $28.4 billion.
The company said it initiated the recall because it did not get approval from the Food & Drug Administration (FDA) for changes to its manufacturing processes. According to The Boston Globe, Boston Scientificâ€™s lapse was related to documentation, the paperwork that companies are required to submit to federal regulators whenever they make material changes in their production processes.
The shareholder lawsuit accuses Boston Scientific and certain of its officers and directors of violating the Securities Exchange Act of 1934 by issuing materially false and misleading statements regarding its business and prospects between April 20, 2009 and March 12, 2010. According to the complaint, Boston Scientific shares dropped 12.6%, to close at $6.80 after it announced the recall.
In addition to the shareholder lawsuit, Boston Scientific faces other legal woes stemming from the March recall. An internal memorandum circulated to executives late last month revealed that both the Department of Justice and the Securities and Exchange Commission (SEC) have opened probes. According to the memo, federal prosecutors have sent Boston Scientific a subpoena, and the SEC has begun an informal inquiry.
The SEC and Justice investigators are seeking Boston Scientific documents regarding the its discovery that it hadnâ€™t gotten FDA approval, as well as communications with regulators, physicians and stock analysts about the withdrawal. Investigators are also seeking any reports of injuries, the memorandum said. The memorandum said the firm was cooperating with the two agencies.