Johnson & Johnson has set aside $400 million to settle consumer protection actions by US states as part of a broader $8.9 billion effort to resolve claims that Baby Powder and other talc products causes cancer.
J&J subsidiary LTL Management filed a bankruptcy plan in New Jersey on Monday detailing how the company plans to pay various types of cancer victims in a bankruptcy settlement. J&J says its talc products are safe and do not cause cancer. It is trying for the second time to resolve more than 38,000 bankruptcy cases and prevent new cases from coming in the future.
LTL’s bankruptcy plan will pay $400 million to a separate trust for claims filed by state attorneys general that say J&J violated unfair business practices in the state and consumer protection law by misleading consumers about the safety of talc products.
Several states initiated consumer protection actions against J&J before LTL’s initial bankruptcy filing halted investigations from continuing in 2021. New Mexico and Mississippi have already filed case against Johnson & Johnson in the past, and the states of Arizona, Maryland, North Carolina, Texas and Washington have issued lawsuits or subpoenas in the civil investigation, according to LTL court documents.
New Mexico and Mississippi moved to remove the LTL bankruptcy, joining the cancer victims and the bankruptcy of the US Department of Justice, arguing that a profitable company like J&J cannot benefit from the protections of bankruptcy for distressed debtors.
LTL’s first attempt to file for bankruptcy was dismissed after similar arguments, when a US appeals court ruled that LTL was not in “financial difficulty” and did not qualify for bankruptcy protection. LTL filed for a second bankruptcy just over two hours after that dismissal, arguing that its second attempt was different because there was less money available and more support for a settlement.
New Mexico and Mississippi said in their motion to dismiss that LTL’s bankruptcy filing violates state law enforcement powers by attempting to unilaterally remove the company’s liability for actions to protect the state consumer.
LTL’s new filings also include more details on how the company will evaluate and pay cancer claims if the bankruptcy plan is approved.
The maximum payout under the settlement is $500,000 for people diagnosed with terminal mesothelioma before age 45, and $260,000 for people diagnosed with terminal ovarian cancer before age 45.
From there, the proposed settlement applies discounts depending on the type and severity of the cancer, the individual’s age, history of talc use and other factors. For example, a woman who uses talc products weekly, has a family history of ovarian cancer and is diagnosed with stage II ovarian cancer at age 55 could be in line for a $21,125 payment under the plan.
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