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CASE 0:11-cv-00022-DWF -AJB Document 45 Filed 01/27/11 Page 18 of 3571. In 2002 and early 2003, Guidant continued to receive reports from the fieldabout arcing in devices made prior to April 2002.72. Nonetheless, Guidant closed Trend Report TR 02019 in April 2003 becausethose failures were consistent with what the Company expected would happen—that somedevices manufactured before the corrective action would experience arcing and fail.73. In closing the Trend Report TR 02019, Guidant established criteria fordetermining when to reopen it: namely, the report of either four arcing events in a 12-monthperiod among the defective devices or a single arcing event from the fixed device population.74. In fact, more than the four arcing events did occur in the defective devicepopulation. A March 2004 Tachy Field Performance Monitoring Review states that no fewerthan eight arcing events were reported for the Prizm 2 in the preceding 12 months.75. Nonetheless, Guidant did not reopen TR 02019 because “[a]ll events were precorrectiveaction,” the failures did not occur in any devices made after the manufacturingchange, and the failures were consistent with what the company expected to happen in thedefective device population.76. After the Change Order was implemented in April 2002, there were still manydevices that had been manufactured before April 2002 on shelves as inventory in health carefacilities such as hospitals, or in stock held by Guidant sales representatives responsible fordistributing and selling the devices.77. Guidant continued to sell its existing stock of defective devices after theimplementation of the April 2002 Change Order.18
CASE 0:11-cv-00022-DWF -AJB Document 45 Filed 01/27/11 Page 19 of 3578. Instead of alerting physicians, patients, or even its own sales force about thearcing issue, asking for the return of devices made before April 2002 or issuing a recall,Guidant did nothing.79. As a result, nearly 4,000 devices manufactured before April 2002 that had thearcing defect and the attendant potential to fail to deliver a life-sustaining shock wereimplanted by physicians into patients in the United States after April 2002, when neither thephysicians nor the patients knew about the defect or the risks. Approximately 1,800 of theseimplants were in Medicare patients.80. The implantation of Prizm 2 devices with the arcing defect when non-defectivedevices were available was “not reasonable and necessary for the diagnosis or treatment ofillness or injury or to improve the functioning of the malformed body member.” 42 U.S.C.§ 1395y(a)(1)(A).81. From 2002 until 2005, the Company learned of at least 26 separate arcingevents that had occurred in patients that had Prizm 2 devices that had been manufacturedprior to the corrective action.82. One of these failure events occurred in March 2005 in the defective deviceimplanted in a 21-year-old patient, J.O., who died of cardiac arrest after his Prizm 2 failedto deliver the shock he needed to return his heart rhythm to normal and to save his life.83. In total, out of about 27,000 pre-fix Prizms sold that had the potential to arc,there are at least 39 confirmed arcing events and four patient deaths potentially attributable19
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