St. Jude Medical and three top officers were sued by the $607 million Norfolk County Retirement System, Canton, Mass., claiming the firm boosted share value by making misleading statements about the quality of its Durata cardio-defibrillator wires.
“Defendants made false and misleading statements, and concealed material information relating to the safety, durability, and manufacturing processes” of the Durata leads, according to the complaint filed Tuesday in U.S. District Court in Minneapolis.
The lawsuit seeks group status for anyone who acquired stock in St. Jude Medical from Oct. 19, 2011, to Nov. 20, 2012, as well as unspecified money damages.
Named as co-defendants are CEO Daniel J. Starks, Executive Vice President John C. Heinmiller and CFO Donald J. Zurbay.
On Nov. 21, St. Jude shares fell $4.34, or 12%, after the Food and Drug Administration publicly criticized the company’s method of testing the Durata wires. The Durata leads had been brought to market to replace the company’s Riata-branded wires, which were recalled in 2010 after research showed they could breach their insulating casing, potentially leading to excessive shocks or failing to work when needed.
Durata’s Optim insulation was later found to fray when it rubbed against another object.
“As early as October 19, 2011, defendants made positive statements about the safety and efficacy of Durata Leads despite being aware that they suffered similar design flaws and presented similar risks to Riata,” according to the complaint.
St. Jude officials “believe the lawsuit is without merit” and will fight the allegations, Amy Jo Meyer, a company spokeswoman, said in an e-mailed statement.
