J&J Pays About $1 Billion to Resolve Pinnacle-Hip Suits

(Bloomberg) -- Johnson & Johnson agreed to pay about $1 billion to resolve most lawsuits claiming it sold defective metal-on-metal hips that ultimately had to be removed, according to people with knowledge of the matter.

With the agreement, J&J has now resolved more than 95 percent of the 6,000 cases in which surgeons extracted the Pinnacle implants because of defects that left patients unable to walk and in pain, according to two people familiar with the settlements. They spoke on the condition of anonymity because they aren’t authorized to talk publicly about the accords.

The roughly $1 billion total includes an earlier settlement for more than $400 million. Still pending are about 4,500 suits by patients with artificial hips that aren’t made totally of metal or haven’t been surgically removed, the people said. It’s unclear how many, if any, of those cases will be settled, they said.

Rather than set up a global settlement program, attorneys for J&J and its DePuy unit, maker of the Pinnacle hip replacements, cut separate deals with plaintiffs’ lawyers to resolve their clients’ cases, the people said. It’s unclear when all the hip suits will be disposed of, they said.

Mindy Tinsley, a J&J spokeswoman, said Tuesday in a statement that settlement negotiations for the Pinnacle cases are continuing and that the world’s largest maker of health care products had set aside funds for the litigation.

While the settlements wrap up more than four years of high-profile litigation, J&J is still grappling with other legal problems, including a wave of cases targeting its baby powder for allegedly causing cancer and other suits alleging it took a “kingpin” role in the opioid-painkiller epidemic. J&J faces a May trial in Oklahoma over the state’s allegations that it helped fuel a surge of overdoses in the state.

The hip settlements came after Texas juries over the last three years ordered J&J to pay more than $1.5 billion to Pinnacle hip patients who accused the company of misleading them about the devices’ health risks and durability. Some of those awards were cut while others were thrown out on appeal.

Mark Lanier, one of the plaintiff’s lawyers leading the litigation, originally announced the latest settlement deal in February, as J&J prepared to face claims in federal court in Dallas by five Pinnacle hip patients who blamed the devices for their injuries, including metal poisoning. At the time, Lanier declined to reveal the settlements’ financial details.

Lanier didn’t return calls Tuesday seeking comment on the total amount of the settlements.

The February announcement came a month after J&J agreed to pay $120 million to settle 46 state attorneys generals’ claims that the company had made deceptive marketing claims about the hips’ durability. The company said 99.2 percent of the metal-on-metal hips held up for three years. European health regulators put the rate at around 7 percent.

The Lawyers

Although J&J, of New Brunswick, New Jersey, has agreed to resolve the cases involving surgical removal, it isn’t paying to settle cases brought by patients worried they might need hip surgery in the future, the people said.

They said J&J is resolving individual lawyers’ Pinnacle-case inventories for a set amount and then allowing the lawyers to divvy up the recovery among their clients, so the more seriously injured patients get higher recoveries.

In an earlier settlement, J&J agreed to pay more than $400 million to resolve 20 law firms’ inventories of Pinnacle cases, people familiar with that deal said at the time. That may have resolved more than 3,000 cases, they said. Those are among the 6,000 cases in which surgeons extracted the implants because of defects.

In a February report to the U.S. Securities and Exchange Commission, before the settlements, J&J officials noted the company still faced a total of 10,500 Pinnacle suits. The company didn’t specify how much it had set aside to deal with settlements and litigation costs.

$1 Billion Verdict

J&J pulled Pinnacle’s metal-on-metal version of the hip off the market in 2013 after the U.S. Food and Drug Administration toughened regulations covering such devices. Pinnacle hips made out of different materials continue to be sold in the U.S.

The suits are consolidated before U.S. District Judge Ed Kinkeade in Dallas for pre-trial information exchanges and test trials. J&J won the first case and lost the next two, including a $1 billion verdict.

Pinnacle Ultamet devices weren’t covered by J&J’s 2013 settlement of suits targeting its ASR line of artificial hips. In 2010, J&J recalled 93,000 of those implants worldwide, saying 12 percent failed within five years. With legal fees, the cost of that settlement to J&J climbed to more than $4 billion. J&J is settling similar cases in India.

The Pinnacle case is In Re DePuy Orthopaedics Inc. Pinnacle Hip Implant Products Liability Litigation, 11-md-2244, U.S District Court, Northern District of Texas (Dallas).

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