Justice Department Wants Guidant Documents

The government wants information suggesting Guidant was selling defibrillators it knew might be defective.
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Guidant

(GDT)

is all set to be acquired for $27 billion, and the Indianapolis heart-device maker just can't seem to get away from the negative press.

The Justice Department has told a Texas lawyer that it wants documents showing Guidant was selling certain defibrillators even though it knew the products might cause problems for patients, according to the

Associated Press

.

The

AP

reported Saturday that as part of a government probe of the company, the feds sent a subpoena to an attorney named Bob Hilliard telling him to produce the items.

Hilliard got the documents, including some said to suggest the company decided to sell models that it was aware could have rare but life-threatening problems, while readying a product-liability case against Guidant, the

AP

reported. The news report said Hilliard is representing around 70 patients who have filed lawsuits.

Guidant was plagued by recalls of thousands of its pacemakers and defibrillators during the second half of last year. The report stated that malfunctions of its products have been associated with at least seven deaths.

On Friday, Guidant said its fourth-quarter sales dropped 14% from a year ago to $828.2 million as the various recalls weighed on its top line. Earnings for the quarter slid to $78.9 million from $104.5 million in the same period the previous year.

Boston Scientific

(BSX) - Get Report

agreed to buy Guidant for $80 a share last week, outbidding

Johnson & Johnson

(JNJ) - Get Report

, which was also aiming to acquire the company.

As it turns out, Boston Scientific itself isn't immune to government scrutiny. This past Thursday, the company said regulators sent it a warning letter related to its quality-control measures.

The letter said that recent Food and Drug Administration inspections at three of Boston's facilities revealed "serious regulatory problems involving your medical devices." The letter went on tell Boston that a plan to remedy the matter, relating to three previous warning letters issued last year, was inadequate.

On the upside, Boston received a second FDA letter saying a review of the manufacturing practices at its Galway, Ireland, facility didn't find any problems.