Johnson & Johnson Adds $1.1B to Proposed Talc Settlement
The increase would boost the size of the settlement to more than $9 billion paid over 25 years. J&J on Wednesday said it reached an agreement with a plaintiffs’ lawyer representing 12,000 clients to recommend the settlement offer to them, adding to support already received from other claimants.
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The healthcare giant is preparing to have a subsidiary declare bankruptcy to finalize the proposed settlement before the end of this month, one of the people said. J&J would continue operating without filing for Chapter 11. The company maintains its talc products are safe and do not cause cancer.
The timing of a bankruptcy filing could change depending on how the counting of additional votes unfolds.
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J&J said Allen Smith, the plaintiffs’ lawyer now supporting its plan, agreed to the settlement offer in exchange for “additional monetary and non-monetary benefits for all talc claimants” in a bankruptcy plan it expects a judge to later approve.
J&J declined to comment on the amount of additional money it plans to pay and did not respond to an inquiry regarding the timetable for a subsidiary filing for bankruptcy protection.
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The company earlier this summer gave talc claimants until July 26 to vote on its proposed bankruptcy settlement. In August, J&J allowed claimants additional time at the request of plaintiffs’ lawyers including Smith, the company said.
J&J’s current settlement offer is “the best and most realistic option available for claimants to recover for their claims in a timely manner,” Smith said in a J&J news release Wednesday.
With votes from Smith’s clients, J&J expects to garner support from more than 75% of claimants alleging the company’s talc sickened them. Support from 75% of claimants is the legally required threshold for a judge to approve the kind of bankruptcy settlement J&J has proposed. The additional votes will put J&J “well above” that bar, the company said.
J&J faces talc lawsuits from more than 62,000 plaintiffs, according to a company filing. But the figure swells as high as 100,000 when counting claimants who haven’t sued, Erik Haas, J&J’s global vice president of litigation, has said.
Some lawyers representing cancer victims oppose J&J’s plan to resolve the litigation and are locked in a bitter battle with the company.
J&J has previously described its settlement offer as having a net present value of about $6.48 billion with the amount of actual cash paid over 25 years totaling $8 billion. The increased payout J&J is planning raises the latter figure above $9 billion.
After being rebuffed twice by federal courts, J&J is attempting again to end the talc litigation in a so-called “Texas two-step” bankruptcy.
The two-step maneuver involves offloading its talc liability onto a newly created subsidiary, which then declares Chapter 11. The goal is to use the proceeding to force all claimants into one settlement without requiring J&J to file bankruptcy itself.
J&J’s latest settlement offer addresses allegations talc caused ovarian and other gynecological cancers, which are the bulk of the claims J&J faces.
It excludes other claims, including those from plaintiffs alleging asbestos-laced talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc does not contain asbestos.
(Reporting by Spector and Knauth in New York and Roy in Bengaluru; Editing by Shinjini Ganguli, Bill Berkrot and Marguerita Choy)