Recently, according to media reports, the U.S. Department of Health and Human Services (HHS) may seek more than $1 billion in compensation from Johnson & Johnson (JNJ.N). A government lawyer told the media, “This amount will be used to compensate federal health agencies for medical expenses related to patients who claim to have developed cancer from the company’s baby powder and other talc products.”
Reports indicate that the U.S. Department of Health and Human Services and the Department of Veterans Affairs recently opposed Johnson & Johnson’s plan to settle tens of thousands of ovarian cancer lawsuits with $10 billion (approximately 72.8 billion RMB). The agreement would resolve all existing lawsuits and prevent new ones from being filed. The agencies argued that resolving these cases through bankruptcy could damage the government’s reimbursement rights.
The report also revealed that U.S. Department of Justice attorney Bethany Theriot, representing the two government agencies, recently expressed strong opposition to the plan during a bankruptcy court hearing in Houston, stating: “The Department of Health and Human Services and the Department of Veterans Affairs have indeed made significant claims, but we strongly oppose the way this plan might undermine federal rights.”
The lawyer stated that the Department of Health and Human Services alone could seek $1.1 billion in compensation under the Medicare Secondary Payer Act. However, as more people develop cancer in the future, the government may seek additional compensation.
It is well-known that Johnson & Johnson has been involved in talc product cancer lawsuits for nearly a decade. According to media reports, Johnson & Johnson has faced approximately 50,000 lawsuits in recent years, accusing its baby powder and other talc products of containing asbestos, leading to cancer in long-term users. Although the company has denied these allegations, insisting its products are safe, juries in several lawsuits have ruled that Johnson & Johnson must compensate the victims, with payouts reaching billions of dollars.
Johnson & Johnson’s plan to settle tens of thousands of ovarian cancer lawsuits for $10 billion included filing for bankruptcy for its subsidiary, Red River Talc, on September 20, 2024, in an attempt to force all plaintiffs to settle by transferring the debt to the newly established subsidiary and using the bankruptcy system. However, the court rejected Johnson & Johnson’s previous two efforts to resolve the talc powder lawsuits, ruling that the subsidiary was not eligible to file for bankruptcy because it was not in “financial distress.”
It is understood that Johnson & Johnson is attempting to file for bankruptcy again in another bankruptcy court. The company stated that this third attempt could be successful because the settlement plan now has broad support based on voting results. Johnson & Johnson will defend its bankruptcy plan at a multi-day court hearing starting on February 18, where Judge Christopher Lopez will consider competing requests and either approve or reject the talc settlement plan.
Notably, on May 17, 2024, Johnson & Johnson completed the sale of its remaining 9.5% stake in Kenvue, marking the full separation of its consumer health business. This also signifies Johnson & Johnson’s complete exit from the cosmetics industry. Some view this move as an effort to reduce the impact of the “talc cancer scandal” on the company.
