Johnson & Johnson is trying once again to use the bankruptcy courts to settle tens of thousands of cases that claim its talc products cause cancer. The pharmaceutical company is now willing to pay $8.9 billion to plaintiffs over 25 years.
For a second time, a J&J subsidiary called LTL on Tuesday filed for bankruptcy — a strategy the company said could “equitably and efficiently resolve all claims arising from cosmetic talc litigation” in North America, according to a regulatory filing. A previous attempt to use Chapter 11 bankruptcy protection to resolve the talc cases was rejected by an appellate court, which ruled the company couldn’t go bankrupt because it wasn’t in financial distress.
This time, J&J’s LTL spinoff upped the offer by $6.9 billion over the initial $2 billion settlement. The company says it has secured commitments from over 60,000 current claimants against J&J to support the resolution. The company says the settlement does not constitute an admission of wrongdoing. Johnson & Johnson has long held that talcum powder products are safe to use. Although J&J claims it has won the majority of its talc lawsuits, juries have awarded some customers billions of dollars in damages, siding with claimants’ arguments that the company’s talc products caused their cancer.
“The company continues to believe that these claims are specious and lack scientific merit,” said Erik Haas, Johnson & Johnson’s worldwide vice president of litigation, in a statement. “However, as the bankruptcy court recognized, resolving these cases in the tort system would take decades and impose significant costs on LTL and the system.” Haas said resolving the claims through bankruptcy benefits both the company and the claimants, because it will get money to claimants faster and gives J&J the ability to end substantially all litigation related to talc suits in North America.
Attorneys representing thousands of claimants basted the proposed bankruptcy. “This sham deal does not even pay for most victims’ medical bills,” says Jason Itkin, founding partner of the Houston-based personal injury law firm Arnold & Itkin LLP. “Medical costs alone can range from $140,000 to more than $1.4 million per victim for ovarian cancer cases. The costs for mesothelioma are even higher.”