Philips
(NYSE: PHG)
is set to pay at least $479 million to settle claims related to its ongoing Respironics recall.
It could just be the beginning of settling what has arguably been one of the medical device industry’s most serious recalls in recent decades. (Here is a full timeline of the Philips recall.)
Subject to approval in the U.S. District Court in Western Pennsylvania, the deal only covers economic losses incurred by the users of millions of Philips CPAPs and other respiratory devices recalled over sound abatement foam that could potentially degrade and get into airways. The $479 million amount is the minimum that Philips has agreed to pay.
“This uncapped settlement is one of the largest consumer class action settlements ever negotiated, and I expect it will be worth substantially more than the prefunded amounts as more users of recalled Philips devices enroll in the settlement and seek out compensation,” said Sandy Duggan of Levin Sedran & Berman, co-lead counsel of multidistrict litigation, in a statement shared with MassDevice.
Philips did not admit liability, wrongdoing or fault in the settlement, and still faces significant lawsuits claiming deaths, injuries and medical costs related to the recall. Plus, there are ongoing consent decree talks with the U.S. Department of Justice.
Since April 2021, the FDA has received 105,000 reports of problems, including 385 reports of deaths potentially associated with the foam degradation issue. (It’s important to note that FDA’s Medical Device Reporting (MDR) system is a passive system with limitations.)
Philips CEO Roy Jakobs has said the Dutch medtech giant is deeply sorry about the recall.
In a statement shared by a spokesperson for the company, Philips said of the settlement: “Patient safety and quality are our top priorities, and we want patients to feel confident when using their Philips Respironics devices. We have structured this settlement to quickly deliver value to eligible patients in the U.S. and provide an additional measure of confidence in the safety and quality of Philips Respironics products. We have sought to resolve these claims now so that we may dedicate more time and energy to our central focus of transforming patient lives.”
Medical device lawsuit settlements can run into the billions of dollars. Here are but a few examples from MassDevice‘s archives:
- Johnson & Johnson in 2013 announced a $2.5 billion settlement to resolve many of the metal-on-metal hip implant lawsuits in the U.S.
- Stryker had a $1 billion metal-on-metal hip implants lawsuit settlement in 2014.
- Bayer announced in 2020 that it would pay $1.6 billion to settle approximately 90% of U.S. claims involving women alleging injuries related to its Essure permanent birth control device.
- Last month, 3M said it would pay $6 billion in cash and stock over the rest of the decade to resolve hundreds of thousands of veterans lawsuits over faulty earplugs.
