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Execs Tried To Cover Up Defective Pacemakers, Prosecutors Say

September 1, 1988

MIAMI (AP) _ A medical equipment company pleaded guilty to selling thousands of defective pacemakers to doctors, knowing the devices could stop working without warning, and four executives were charged with the cover-up.

The officers of The Cordis Corp. ignored internal memos urging that doctors be informed about the defects and sent false statements to the Food and Drug Administration to conceal the problems, according to federal indictments returned Wednesday.

Cordis, a Miami-based company that has since sold its heart pacemaker division, pleaded guilty to concealing the defects in federal court in a related action. The company said the plea covers only Cordis, and not its officers at the time.

The 43-count indictment against the officers said the problems affected tens of thousands of the pacemakers sold between 1980 and 1985. The battery- powered devices are implanted beneath the skin of heart patients to regulate their heartbeat by electrical impulses.

Food and Drug Administration Commissioner Frank E. Young stressed that the defective pacemakers have long since been the subject of notifications to physicians, and are no longer on the market. Prosecutors did not allege that anyone had died as a result of the devices.

One of the former officers, Harold Hershenson of San Carlos, Calif., is accused of criminal conspiracy as well as 22 felony counts and 10 misdemeanor counts of violating federal law.

The indictment said Hershenson, the executive vice president who ran the day-to-day operations of the company, rejected an internal memo in 1981 urging Cordis to inform doctors of the pacemaker’s problems.

Also charged was John Pagones of Coral Gables, a former vice president who had direct responsibility for ensuring quality for the pacemakers, and Dean Ciporkin of Miami and Stephen Vadas of Homestead, both of whom worked for Pagones.

If convicted, the four each face possiblity prison sentences from 40 to 127 years and fines of more than $350,000.

Calls to Hershenson’s home were not returned Wednesday night, but Pagones’ attorney, Ted Klein, accused the government of misrepresenting management decisions at the company.

″They assume these people intentionally put out a defective product and it just isn’t so. The evidence is going to show nobody was injured,″ Klein said.

The FDA said that most of the potentially defective pacemakers were not removed and are being monitored by doctors, but some patients highly dependent on the devices have had them removed by surgery.

″Basically the defects were the sudden loss of the ability to control the heartbeat - the pacemakers were not pacing,″ said Diane Cossin, spokeswoman for the U.S. Attorney’s office.

Attorneys for Cordis entered guilty pleas to 11 felony and 13 misdemeanor counts before U.S. District Judge Stanley Marcus. The company agreed to pay $264,000 in fines and costs.

The company reported net losses of $56.1 million in 1987, but underwent a major restructuring since selling the pacemaker operation to Telectronics of Australia. Net earnings for 1988 totaled $2.4 million on sales of $132 million.

Cordis’ main operations now include making catheters for diagnosing and treating heart problems and gauges for monitoring pressure on the brain.

The case is ″the most significant felony prosecution to date″ under the 1976 Medical Device Amendments to the FDA law, said a statement by Assistant Attorney General John R. Bolton, head of the Justice Department’s civil division in Washington, and by interim Miami U.S. Attorney Dexter Lehtinen.