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New York Attorney General Eliot Spitzer is suing Indiana-based Guidant, which has major operations in Arden Hills, Minn. Guidant is the second-largest maker of implantable devices that shock an erratically beating heart back into a normal rhythm. The lawsuit charges the company with repeatedly defrauding physicians and consumers by hiding potentially fatal design flaws. The lawsuit may allow Johnson & Johnson to back out on its $25 billion deal to buy the company.

St. Paul, Minn. — Guidant recalled about 109 thousand defibrillators this summer after they were linked to two patient deaths. Spitzer's complaint alleges Guidant repeatedly concealed critical design flaws in its Prizm 1861 from physicians and patients. The flaws could cause the device to short out and stop working.

Approximately 14,000 of the defibrillators remain implanted in patients in the United States. Spitzer charges Guidant with repeated and persistent fraud in selling the device.

Ultimately this could improve the environment for patients from a safety standpoint. - Minneapolis Heart Institute cardiologist Dr. Robert Hauser

"Concealment of negative facts that might influence a consumer to purchase another manufacturer's product is the essence of fraud," Spitzer said. "We wouldn't permit this type of conduct in connection with the sale of cars or washing machines. It is simply unconscionable that it occurred with a critical medical device."

Guidant spokesman Steven Tragash says the company does not comment on pending lawsuits.

According to Spitzer's lawsuit, in April 2002, Guidant found a defect in the Prizm Model 1861 and fixed it but didn't tell physicians or patients and continued to sell the device.

The lawsuit seeks restitution and damages to all Guidant consumers and insurers, including government health programs. The damages would include Guidant paying for the patient's choice of a replacement device and all Guidant's profits from the Prizm 1861 after 2002.

Minneapolis Heart Institute cardiologist Dr. Robert Hauser was among several physicians who went public with concerns over the Guidant devices. Hauser says Spitzer's lawsuit is on target.

"Manufacturers of medical devices should be more forthcoming with product information; should be more transparent when defects do occur; and ultimately this could improve the environment for patients from a safety standpoint," said Hauser. The lawsuit could help Johnson & Johnson back out of its agreement to buy Guidant for $25 billion. Johnson & Johnson says it continues to view Guidant's "regulatory investigations, claims, and other developments as serious matters affecting both Guidant's short-term results and long-term outlook. Johnson & Johnson believes that these events have had a material adverse effect on Guidant, and as a result, that it is not required under the terms of the merger agreement to close the Guidant acquisition."