The agreement resolves all economic loss claims in the U.S. multidistrict litigation (MDL) related to the voluntary recall. Philips expects to submit the settlement to the U.S. District Court for the Western District of Pennsylvania later today, Sept. 7. Subject to court approval, the settlement includes no admission of liability, wrongdoing or fault by any of the Philips parties.
A press release from the co-lead plaintiffs counsel — Sandra L. Duggan of Levin Sedran & Berman LLP; Kelly K. Iverson of Lynch Carpenter LLP; Christopher A. Seeger of Seeger Weiss LLP; and Steven A. Schwartz of Chimicles Schwartz Kriner & Donaldson-Smith LLP — stated that Philips agreed to provide a minimum of more than $479 million to device users who purchased or rented recalled devices and incurred out-of-pocket costs and payers who reimbursed users for the cost of recalled devices.
As of Sept. 5, the number of civil actions transferred to the MDL had reached 300.
Shares of PHG fell more than 1% to $21.16 apiece during morning training on the NYSE today. (The company’s PHIA shares in Amsterdam closed the day down more than 1%.) MassDevice‘s MedTech 100 Index, which includes stocks of the world’s largest medical device companies, was also down about 1%.
A serious recall involving millions of CPAPs and other devices
The recall, which kicked off in mid-2021, has effectively knocked Philips out of the sleep-respiratory market for the past two years. Philips’ Respironics unit recalled millions of CPAP and BiPAP ventilators and other respiratory devices. The sleep apnea therapy devices had sound abatement foam that could potentially degrade and get into the airways.
As of last month, the FDA received 105,000 reports of problems. That includes 385 reports of deaths associated with the foam degradation issue. Philips CEO Roy Jakobs previously said the Amsterdam-based company is deeply sorry about the recall.
There was no word today on when Philips will resolve ongoing consent decree talks with the U.S. Justice Department. “This needs to be done diligently,” Jakobs said during the company’s Q2 earnings call on July 24.
More about the settlement reached with Philips
Philips said the cost of the final settlement may vary based on a variety of factors. That could include how many patients participate and what the court awards for professional fees relating to resolutions. Philips Respironics recorded a provision for €575 million (approximately $615.14 million) in the first quarter of 2023 to cover the estimated costs of the final settlement.
The final cost of the settlement may vary based on, among other things, how many patients participate in the settlement and what the Court awards for the professional fees relating to the resolutions. Philips Respironics has recorded a provision for an amount of €575 million in the first quarter of 2023 to cover the estimated costs of the final settlement.
The agreement provides predefined cash awards to all eligible participants in the U.S. It depends on the type of device, extended warranties on all replacement devices, and an additional cash award if they return the recalled device to Philips Respironics.
Philips said it plans for the settlement to further compensate certain individuals who acquired replacement devices post-recall. It doesn’t expect to begin payments until the first quarter of 2024 at the earliest. This agreement does not settle any personal injury or medical monitoring claims in the MDL, which the Philips parties have moved to dismiss.