By David Ingram
WASHINGTON (Reuters) - Boston Scientific Corp agreed to pay $30 million to settle allegations that the Guidant unit it acquired in 2006 knowingly sold defective heart devices implanted in Medicare patients, the U.S. Justice Department said on Thursday.
Guidant from 2002 to 2005 sold the implantable defibrillators even though it knew they could short-circuit and become ineffective at correcting heartbeat rhythms, the department said in a statement.
In 2010, similar allegations led Boston Scientific to plead guilty to two misdemeanor charges of withholding information from the U.S. Food and Drug Administration (FDA) and agree to pay $296 million in fines.
The latest settlement resolves a civil lawsuit the Justice Department brought in 2011 under a law designed to recover money defrauded from government programs such as Medicare.
Boston Scientific spokesman Peter Lucht said: "While the company continues to deny the allegations made in the complaint, it felt it was in the best interests of all parties to settle this matter and avoid further protracted litigation."
Boston Scientific bought Guidant for $27 billion in 2006.
Guidant did not fully disclose to doctors and the FDA the problems with its heart devices until May 2005 after it was contacted by a New York Times reporter, according to the government's suit.
James Allen, a patient who received one of the devices and who initially brought the civil suit under the anti-fraud False Claims Act, will receive $2.25 million as a whistleblower, the department said.
(Editing by Gerald E. McCormick; Editing by Bernard Orr; Editing by Carol Bishopric)