MINNEAPOLIS - (Mealey's) Guidant LLC's proposed plea agreement to pay a criminal fine of $254,962 and criminal forfeiture of $42,079,675 for charges that it twice violated the Food, Drug and Cosmetic Act (FDCA) by submitting false or no information about changes made to its Prizm and Renewal implantable cardioverter defibrillators was rejected by a federal judge April 27 after he found that the agreement's failure to include a provision requiring probation and a presentence investigation report "are not in the best interests of justice and do not serve the public's interest because they do not adequately address Guidant's history and the criminal conduct at issue" (United States of America v. Guidant LLC. formerly doing business as Guidant Corp., et al., No. 10-mj-67, D. Minn.).
U.S. Judge Donovan W. Frank of the District of Minnesota also found that although the court had the power to order restitution under the Crime Victim's Rights Act, there were no victims who were directly and proximately harmed by the manufacturer's criminal conduct as it related to the crimes to which it pleaded guilty. In addition, Judge Frank held that it is unclear how the criminal forfeiture amount was calculated and where the funds would go if they are not distributed to any victims.
On Feb. 25, the government charged Guidant with violating the FDCA by submitting a false and misleading report to the Food and Drug Administration on Aug. 19, 2003, that concerned a change made to the Prizm on or about Nov. 13, 2002. Guidant is also accused of failing and refusing to file a report to the FDA in June 2005 concerning a correction made to the Renewal device. Because both products are Class III devices, the manufacturer could not make any modification that affects the safety or effectiveness without first receiving approval from the FDA. As many as 20,146 patients in the United States may have been implanted with the devices between late 2002 and June 2005, and of those patients, 2,657 are claimants in the Guidant products liability multidistrict litigation in the District of Minnesota.
Guidant submitted the plea agreement in which it stated that it would plead guilty to the criminal charges on April 6, and Judge Frank heard arguments from Guidant, the government and the MDL plaintiffs as to whether the agreement should be adopted.
Judge Frank rejected the government's and Guidant's arguments that the court lacked the power to order restitution. In support of his finding, Judge Frank looked to the Sixth Circuit U.S. Court of Appeals' ruling in In re: McNulty (597 F.3d 344 [6th Cir. 2010]. The judge also found, though, that the MDL plaintiffs are not victims of conduct underlying the criminal charges against Guidant.
Judge Frank further found that he could not accept the plea agreement because probation is appropriate in this case based on Guidant's history and "could be fashioned in order to serve the public's interest."
Although Guidant can withdraw its guilty plea, Judge Frank said the court may dispose of the case less favorably than the plea agreement contemplated even if the company does not withdraw the plea. The judge also informed the government and Guidant that they are free to submit a modified plea agreement and that he would likely consider a modified agreement to be in the interests of justice if it addressed the concerns in his ruling.
[Editor's Note: Full coverage will be in the May 6 issue of Mealey's Emerging Drugs & Devices. In the meantime, the opinion is available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #28-100506-020Z. For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]
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