Johnson & Johnson Adds $1.75 Billion to Cancer Lawsuit Bankruptcy Proposal

Update (09/23/2024): This article has been updated with news that Johnson & Johnson is adding $1.75 billion to its lawsuit settlement proposal to expedite its bankruptcy plans. The original article said Johnson & Johnson was adding $1.1 billion, which was initially true.

Johnson & Johnson is sweetening the pot in hopes of settling tens of thousands of cancer lawsuits accusing the company of exposing people to asbestos.

Johnson & Johnson is accused of exposing consumers to asbestos through the use of Johnson & Johnson Baby Powder and other brand products. The company filed for bankruptcy to avoid facing lawsuits or paying multi-million-dollar verdicts, as the company has had to do several times over the past few years.

The health care giant is adding $1.75 billion to its original proposal of $6.4 billion to settle pending lawsuits. The current value of the bankruptcy settlement proposal now exceeds $8 billion. Johnson & Johnson hopes the additional funding will convince plaintiff objectors with pending lawsuits to agree to the settlement proposal.

This is Johnson & Johnson’s third attempt to use bankruptcy to avoid lawsuits. The first two tries were rejected by the courts.

 

Johnson & Johnson Baby Powder and Asbestos

Johnson & Johnson Baby Powder is made with talc, which is a naturally occurring mineral. Talc is prized as a cosmetic ingredient for absorbing moisture and keeping skin dry.

Talc and asbestos are connected, however, since asbestos is also a naturally occurring mineral found in the same geographic areas. Asbestos can cause cancer, such as lung cancer, ovarian cancer and the rare cancer known as mesothelioma.

Mesothelioma is diagnosed in approximately 2,500 people in the United States each year. The cancer has poor survival rates due to how rare, aggressive and difficult it is to treat. Nearly all of the lawsuits against Johnson & Johnson were filed by people with ovarian cancer or mesothelioma.

 

How Is Johnson & Johnson Using the Texas Two-Step?

Johnson & Johnson is using a Chapter 11 bankruptcy tactic called the “Texas Two-Step.” This legal maneuver allows companies to avoid facing ovarian cancer and mesothelioma lawsuits.

Even though the company claims the products are safe and asbestos-free, it is still moving to settle the cases. This tactic moves all pending lawsuits into one massive settlement without requiring Johnson & Johnson to file for bankruptcy.

Last week, Johnson & Johnson announced the creation of a subsidiary company to house all legal liabilities related to Johnson & Johnson Baby Powder and other talc products. The subsidiary company’s name is Red River Talc LLC, which filed for bankruptcy last week in Houston, Texas.

The first two bankruptcy attempts used a subsidiary company called LTL Management, which filed for bankruptcy in New Jersey. Texas bankruptcy courts are considered more favorable to this approach, especially considering the tactic originated in Texas, hence the name “Texas Two-Step.”

The bankruptcy proposal is relying on approval from at least 75% of the plaintiffs in pending lawsuits. Approval from 75% of the plaintiffs is required legally for a judge to approve this kind of bankruptcy settlement.

According to Johnson & Johnson, it has secured 83% approval from plaintiffs. Red River Talc LLC filed for bankruptcy to proceed forward with the settlement after reaching this benchmark of approval with plaintiffs.

 

How Much Johnson & Johnson Plans to Pay Cancer Patients

The original proposal of $6.48 billion intends to resolve tens of thousands of ovarian cancer cases. The company says it is adding $1.1 billion to the bankruptcy trust fund for claimants and $650 million to resolve legal fees for plaintiffs. The present value of the bankruptcy proposal is approximately $8 billion. Johnson & Johnson claims the amount of actual cash paid over 25 years will total approximately $10 billion.

Future claims would be compensated from a fund set up through the subsidiary’s bankruptcy plan. This would be similar to an asbestos trust fund, which is created to compensate people who learn of their asbestos disease after the company went bankrupt.

Mesothelioma, for instance, develops 20-50 years after exposure to asbestos. The cancer can begin spreading and causing symptoms well after the victim was exposed to asbestos.

 

How Many Pending Lawsuits Are Against Johnson & Johnson?

According to news reports, there are more than 60,000 pending lawsuits against Johnson & Johnson. The majority of people affected by cancer from Johnson & Johnson Baby Powder are women, who applied the powder to themselves or their children.

Johnson & Johnson’s settlement proposal only applies to lawsuits for ovarian cancer. It would not settle pending mesothelioma lawsuits. Most of the pending lawsuits involve ovarian cancer, which is much more common than mesothelioma. According to Johnson & Johnson, fewer than 1% of the pending lawsuits are for mesothelioma.

If you ever used Johnson & Johnson Baby Powder and have been diagnosed mesothelioma or ovarian cancer, contact the patient advocates at Mesothelioma Guide. They will explain your options for financial help and put you in touch with legal experts experienced in talc and asbestos claims. Email Carl Jewett at cjewett@mesotheliomaguide.com today.