"They knew they were going to kill people based on this defect," Mr Hilliard told Lawyers Weekly.
He says, Guidant performed a risk analysis that showed there was a possibility the devices could short-circuit, and that, if they did, "the likelihood of death or serious injury was very likely."
Mr Hilliard also told Lawyers Weekly that Guidant violated federal regulations by redesigning the devices to eliminate the flaw in 2002, without informing the FDA. Meanwhile, he said, the company continued selling the older devices without notifying patients of the possible risks.
The subpoena reveals that the government is investigating Guidant for possible violations of health care statutes. Two legal specialists, consulted by the Times, said the broad range of the statutes cited, indicate the serious nature of the investigation and could mean Guidant may face civil or criminal charges.
"They are investigating in the broadest possible way," Joan Krause, a director of the Health Law and Policy Institute at the University of Houston told the Times.
"They are looking at potential fraud," she said, "involving government plans like Medicare, private health plans and employee benefit plans."
In addition to the SEC and FDA, the company is also being investigated by attorneys general on behalf of 34 states, according to the article, Litigation Mounts Over Guidant Heart Devices, in Lawyers Weekly USA, on January 30, 2006
Academic attorney, Barry Turner, who teaches ethics courses in the UK, says these government investigations could ultimately lead to the company's biggest nightmare by paving the road to victory for plaintiffs in lawsuits filed under the federal and state false claims statute, and the Sarbanes Oxley Act. Over the last two years Mr Turner has assisted US attorneys in lawsuit preparation for these types of cases.
In most instances, fines and damages in FCA actions, he says, come out of profits which in turn causes the stock value to drop leading to lawsuits by shareholders under the Sarbanes Oxley Act.
When a product causes death and injuries, Mr Turner says, it is not the personal injury lawsuits that will hurt the company the most. "The subsequent shareholder class actions can result in criminal charges," he notes, "and send the crooks to jail."
"When a medical device is put on the market," he states, "it is incumbent on the manufacturer to have carried out exhaustive tests to see that it is safe."
"If it is not safe it is a risk not just to the individuals who have the misfortune to have these products foisted on them," he explains, "but for those who have money tied up in the companies that make them."
"Where a company's board knowingly allows a faulty or dangerous product to be marketed, it risks shareholder funds," he says. "Shareholders will face huge losses, losses," he notes, "that would have been avoided if the truth had not been hidden."
"Of course," he continues, "company executives have to take risks and sometimes these go wrong." However, Mr Turner says, "there is a fundamental difference in taking calculated ethically sound risks and taking grossly negligent risks."
"If their investment has been attracted to a faulty product that the manufacturers knew about," he explains, "they have risked shareholder funds beyond the pale."