## Facts

- Guidant LLC manufactured implantable cardioverter defibrillators (ICDs), including the Ventak Prizm 2 DR (Model 1861) and Contak Renewal models (H135 and H155).
- The government alleged Guidant learned certain ICDs could short-circuit, become inoperative, and fail to deliver life-saving shocks.
- In 2002, Guidant modified the Prizm 2 design to address short-circuiting; in an August 2003 submission, it allegedly reported to the FDA that the design change did not affect safety or effectiveness.
- Guidant later identified similar issues in Renewal devices; after a 2004 patient death in Spain associated with a shorted Renewal ICD, it sent physicians a “Product Update” the government characterized as a reportable “correction” requiring prompt FDA notice.
- Guidant later issued safety advisories in June 2005 and, after investigation, negotiated a binding Rule 11(c)(1)(C) plea agreement to resolve misdemeanor FDCA charges.
- The proposed agreement required a large fine and forfeiture but contained no probation, no court-supervised compliance conditions, and no restitution.

## Issues

1. Whether the court should accept a binding Rule 11(c)(1)(C) corporate plea agreement imposing only monetary sanctions for FDCA reporting-related misconduct.
2. Whether corporate probation with enforceable compliance, ethics, and related conditions may be necessary to satisfy sentencing objectives and the public interest in a medical-device case.

## Decision

- The court declined to accept the proposed Rule 11(c)(1)(C) plea agreement.
- The court concluded that the absence of corporate probation and meaningful compliance obligations made the agreement inconsistent with the public interest and sentencing goals.
- The court indicated that an acceptable resolution could include corporate probation with compliance and ethics program requirements, structured cooperation and reporting to the FDA, and possible community service aimed at restoring confidence.

## Legal Principles

- A district court has an independent duty under Rule 11 to evaluate whether a binding plea agreement serves the public interest and aligns with sentencing objectives; it is not required to approve a negotiated disposition.
- In corporate criminal cases, large fines and forfeiture may be inadequate when they do not ensure internal reforms, particularly where misconduct involves regulatory reporting and candor failures affecting public health.
- Corporate probation can be an appropriate sentencing tool to impose judicially enforceable compliance and ethics programs, monitoring, and regulator-facing reporting duties tailored to preventing recurrence.
- Sentencing considerations include deterrence, protection of the public, and corporate reform; measures that change organizational practices may be needed where financial penalties risk being treated as a cost of doing business.

## Conclusion

The court rejected a binding corporate plea resolving FDCA misdemeanors because it relied on monetary penalties without probation-based compliance controls, concluding that public protection and accountability in a medical-device case may require judicially enforceable structural reforms.


United States v. Guidant, LLC, 708 F. Supp. 2d 903 (D. Minn. 2010)