July 23, 2026  ·  Complaint filed July 10, 2026  ·  mad, No. 1:26-cv-13174

By David Brunk, civil litigation attorney

Read the filing

Crognale v. Mahoney Alleges Boston Scientific Hid Pacemaker Defects That Killed 4

Board Ignored Years of Battery-Test Failures, Complaint Says

"This action seeks to remedy wrongdoing committed by the Individual Defendants from July 23, 2025, through the present..." the verified derivative complaint states (Compl. ¶1). Two Boston Scientific Corporation stockholders filed the complaint on July 10, 2026, alleging that the company’s officers and directors breached their fiduciary duties by failing to oversee and disclose critical risks tied to a defective pacemaker battery that caused four patient deaths and 2,557 serious injuries. The suit, Joseph Crognale and Feghali Foods, Inc. PSP, derivatively on behalf of Boston Scientific Corporation v. Michael F. Mahoney, et al., targets 13 current and former directors and executives, including CEO Michael F. Mahoney and CFO Jonathan R. Monson, for allegedly concealing risks tied to the ACCOLADE battery defect.

Internal battery tests conducted between 2019 and 2023 revealed unexpected failures, and a 2024 test identified a batch of batteries with an "extremely high failure rate." By March 19, 2026, the U.S. Food and Drug Administration had classified the defect as a Class I recall—the agency’s most serious category—affecting 1.6 million implanted devices. The complaint alleges that the oversight failure resulted in "patient deaths, thousands of injuries, and a 1.4-million-device Class I recall" (Compl. ¶140), exposing the company to product liability litigation, regulatory exposure, reputational harm, and remediation costs.

A patient died in June 2024 after an ACCOLADE pacemaker battery failed, according to the complaint. The FDA issued its first Class I recall for the devices on February 21, 2025, followed by a recall correction in August 2025 and an expanded recall on March 19, 2026. The board "consciously failing to monitor or respond to red flags waved in the face of a supine Board" (Compl. ¶124), including internal battery-test failures, the pre-advisory patient death, and the December 2024 advisory. The complaint further alleges that Defendants failed to act despite knowing or recklessly disregarding that the battery defect posed a mission-critical risk to the company’s cardiac rhythm management (CRM) business unit (Compl. ¶8). The complaint states that "battery safety is mission-critical for [the] CRM business unit" (Compl. ¶8).

Audit Committee Named for Failing to Oversee Financial Disclosures

The complaint names five members of Boston Scientific’s Audit Committee—David S. Wichmann (chair), David C. Habiger, Edward J. Ludwig, Susan E. Morano, and John E. Sununu—for allegedly failing to ensure the integrity of the company’s financial statements and disclosures. The Audit Committee’s charter, adopted on November 18, 2025, tasked the committee with overseeing the integrity of the company’s financial statements, compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, and the performance of the company’s internal audit function and independent auditors. The complaint alleges that the committee failed to oversee the integrity of the company’s financial statements, risk exposures, internal controls, and compliance, despite its charter explicitly stating that "Those investigatory powers applied directly to the ACCOLADE battery defect, the FDA Class I recalls in February 2025, August 2025, and March 2026..." (Compl. ¶51).

The Q1 2026 earnings release issued on April 22, 2026, reported $5.203 billion in net sales and 13.5% growth in the Cardiovascular segment but omitted the March 19, 2026, Class I recall correction, the four patient deaths, the 2,557 serious injuries, and contingent liabilities tied to the defect. The complaint alleges that the Audit Committee’s representations about overseeing financial reporting integrity were materially false and misleading due to these omissions. The committee’s failure to act on red flags included ignoring internal battery-test failures, prior recalls, the June 2024 patient death, an expanding affected population, FDA inspection findings, and an internal 2025 test showing an "extremely high failure rate" (Compl. ¶98).

The complaint also highlights the committee’s failure to investigate the battery defect despite its charter’s grant of full access to all books, records, facilities, and personnel of the company and the authority to retain independent counsel, accountants, or other advisors. The committee’s oversight failure resulted in an "oversight failure that resulted in patient deaths, thousands of injuries, and a 1.4-million-device Class I recall" (Compl. ¶140). The FDA issued an urgent communication regarding the ACCOLADE pacemakers on May 8, 2026, further underscoring the severity of the oversight failure (Compl. ¶55).

Proxy Statements Falsely Claimed Compliance With Code of Conduct

The complaint alleges that Boston Scientific’s 2025 and 2026 proxy statements contained materially false and misleading statements about the company’s oversight of product quality and safety. The 2026 proxy statement described the Risk, Science, and Technology Committee’s responsibilities as including oversight of the company’s product quality and safety. However, the complaint alleges that the committee failed to oversee the ACCOLADE battery defect, the FDA recalls, the patient deaths and injuries, and the contingent liabilities arising therefrom. The committee’s charter, adopted on November 18, 2025, tasked it with overseeing the company’s product quality and safety, including the management of risks associated with the company’s products and services. The complaint states that the proxy statements were materially false and misleading because the company’s Code of Conduct and committee charters were not complied with (Compl. ¶130).

The proxy statements also claimed that the board oversaw enterprise-wide risk management, despite its failure to monitor the battery-safety risk. The 2025 and 2026 proxy statements further represented that the company complied with its Code of Conduct, which requires employees to report potential product complaints or quality or regulatory issues and prohibits the falsification of business records. The Code of Conduct, which applies to all officers and directors, states that "integrity is 'fundamental to Boston Scientific'" (Compl. ¶44) and that employees must "improve the quality of patient care and all things Boston Scientific" (Compl. ¶46). The Code of Conduct also mandates that "No person may falsify or improperly alter any Boston Scientific record" (Compl. ¶47). The complaint alleges that the proxy statements’ representations about compliance with the Code of Conduct were materially false and misleading because the company failed to promptly report the battery defect and omitted it from public disclosures.

The complaint also highlights the proxy statements’ disclosure of 150% bonus funding for 2024, despite the December 2024 advisory and the February 2025 Class I recall. The 2026 proxy statement described the company’s robust quality system and disclosed that the company’s annual bonus funding for 2024 was 150% of target (Compl. ¶107). The complaint alleges that this disclosure was misleading because it omitted the battery defect and the recalls, which exposed the company to substantial liabilities and reputational harm.

Defendants Allegedly Misled Investors About U.S. Electrophysiology Growth

The complaint alleges that Boston Scientific’s officers and directors made materially false and misleading statements about the sustainability of the company’s U.S. electrophysiology (EP) segment, which contributed over 50% of the company’s 2025 growth. The company reported full-year 2025 net sales of $20.074 billion and GAAP net income of $2.898 billion (Compl. ¶76). The complaint states that defendants knew or recklessly disregarded that the U.S. EP growth rate was unsustainable due to declining procedure volumes, competitive pressures, and regulatory headwinds, including those referenced by the American Hospital Association.

During the company’s Q3 2025 earnings call on October 22, 2025, defendants touted 20.3% reported net sales growth and 15.3% organic net sales growth, with the EP segment driving much of the growth. The company reported $5.065 billion in net sales, $755 million in GAAP net income, and $0.75 in adjusted earnings per share for the quarter.

The company’s 2025 Investor Day, held on September 30, 2025, further touted the EP segment’s growth, projecting 10%+ average organic revenue growth through 2028. The company highlighted 94% EP sales growth in Q2 2025 and 63% growth in Q3 2025, as well as a 50% global PFA penetration exit rate for 2025 and a targeted 80% penetration by 2028. The company also targeted a 25% WATCHMAN concomitant procedure rate, with a goal of exceeding 50%, and reported a 91% WATCHMAN market share (Compl. ¶73). The WATCHMAN device had shown 28% growth in Q2 2025 (Compl. ¶61).

The company’s Q4 2025 earnings release, issued on February 4, 2026, reported net sales of $5.286 billion and 15.9% reported net sales growth but fell short of previously issued guidance. The company reported $672 million in GAAP net income and $0.45 in EPS, below the guidance range of $0.48–$0.52. The company’s adjusted EPS for Q4 2025 was $0.80. The complaint alleges that these results contradicted the company’s prior statements about the U.S. EP segment’s growth and triggered a 17.6% stock drop, resulting in a $24 billion market capitalization loss. Boston Scientific’s stock price closed at $91.62 on February 3, 2026, and dropped to $75.50 on February 4, 2026 (Compl. ¶79). During the Q4 2025 earnings call, Mahoney conceded that the company was losing market share in the U.S. EP segment due to competitive launches, and another defendant acknowledged that efficiency gains from the FARAPULSE launch were now built into the system. The company’s U.S. EP sales fell $35 million below consensus estimates in Q4 2025, according to Barclays (Compl. ¶77). The U.S. EP and WATCHMAN segments contributed 26% of the company’s total sales and over 50% of its 2025 growth (Compl. ¶79).

Federal Securities Claims Target Proxy Statements and Financial Disclosures

The complaint asserts two federal securities law claims against the individual defendants: a violation of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 for false and misleading proxy statements, and control person liability under Section 20(a) of the Exchange Act. The complaint alleges that the 2025 and 2026 proxy statements contained materially false and misleading statements about the company’s oversight of product quality and safety, its compliance with the Code of Conduct, and its enterprise-wide risk management. The complaint states that the proxy statements were materially false and misleading because the company’s Code of Conduct and committee charters were not complied with, and the company’s disclosures regarding product quality and safety, enterprise risk management, and financial reporting integrity were materially false and misleading.

The complaint also targets materially false and misleading statements made in earnings releases, earnings calls, and investor conferences. For example, the complaint alleges that the company’s Q2 2025 earnings release on July 23, 2025, and its Q3 2025 earnings release on October 22, 2025, omitted adverse trends in the U.S. EP segment and failed to disclose the risks associated with the ACCOLADE battery defect. The company’s full-year 2025 EPS of $1.94 was allegedly misleading because it did not account for the contingent liabilities and reputational harm tied to the battery defect (Compl. ¶76).

The complaint also highlights the company’s participation in investor conferences, where defendants made materially false and misleading statements. On December 2, 2025, Defendant Joseph M. Fitzgerald participated in the Citi Annual Global Healthcare Conference, and on January 13, 2026, Defendant Mahoney spoke at the J.P. Morgan Healthcare Conference. The complaint alleges that these statements omitted adverse trends in the U.S. EP segment and failed to disclose the risks associated with the ACCOLADE battery defect (Compl. ¶72, ¶73).

Derivative Claims Seek to Hold Defendants Personally Liable

The complaint asserts two derivative claims on behalf of Boston Scientific: breach of fiduciary duty and unjust enrichment. The complaint states that the defendants breached their fiduciary duties of trust, loyalty, good faith, and candor by making and/or failing to correct materially false and misleading statements and omissions regarding the company’s financial outlook, U.S. EP segment trajectory, and product safety. The complaint further alleges that the defendants failed to exercise prudent supervision over the company’s management, policies, and internal controls, including board-level reporting for product-safety risks. The complaint states that "They were and are required to use their utmost ability to control, manage, and oversee Boston Scientific in a fair, just, honest, and equitable manner" (Compl. ¶38).

The unjust enrichment claim alleges that the individual defendants retained bonuses, compensation, and other benefits to which they were not entitled due to their alleged breaches of fiduciary duty. The complaint highlights the company’s disclosure of 150% bonus funding for 2024, despite the December 2024 advisory and the February 2025 Class I recall. The complaint states that the defendants’ actions were not a good-faith exercise of prudent business judgment and that they unjustly enriched themselves at the expense of the company and its stockholders. The complaint alleges that the defendants "consciously failing to monitor or respond to red flags waved in the face of a supine Board" (Compl. ¶124) and that their oversight failure resulted in "patient deaths, thousands of injuries, and a 1.4-million-device Class I recall" (Compl. ¶140). The complaint also notes that eight of the ten current directors served during the multi-year period of internal battery-test failures, and all ten were on the board at the time of the March 2026 recall correction (Compl. ¶117).

The allegations in the complaint are unproven, and no defendant has yet responded. The complaint seeks to hold the individual defendants personally liable for the alleged breaches of fiduciary duty and unjust enrichment, as well as for the federal securities law violations.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.