Corporate Compliance

Class action suit may change view of corporate integrity agreements

Compliance Monitor, June 22, 2005

A New York-based attorney has filed a class action lawsuit against medical device maker Guidant Corp., a move that may open the door for civil actions based on violations of corporate integrity agreements, the Broward (FL) Daily Business Review reported June 17.

Wendy Fleishman, a partner in Lieff Cabraser Heinmann & Bernstein, filed suit in an Indianapolis court (Brennan v. Guidant Corp.) alleging that Guidant violated the terms of its corporate integrity agreement reached in 2003, the Daily Business Review reported.

Under the terms of its five-year agreement, Guidant was ordered to pay a record $92 million after admitting to 10 felonies in covering up for thousands of cases in which its cardiac stents malfunctioned. Now regulators have discovered that Guidant may have covered up another device problem in 2002, this time an electrical problem with an implantable defibrillator, the Daily Business Review reported.

Fleishman's case may wind up representing a legal breakthrough by making way for punitive damages in violations of corporate integrity agreements. Fleishman told the Daily Business Review that "punitive damages are allowed for willful and wanton misconduct, but private litigators cannot assert a claim that belongs to the Food and Drug Administration."

The FDA was reviewing the case as of presstime.

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