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J&J May Pay $3 Billion in DePuy Hip Settlements

As part of the global DePuy ASR hip recall, Johnson & Johnson pulled 93,000 of its faulty metal-on-metal implants off the market in 2010, including at least 37,000 in the United States. Now, legal insiders tell Bloomberg that J&J is considering paying more than $3 billion to settle the thousands of products liability lawsuits alleging severe complications from the ASR hip device. According to five people who are familiar with the litigation, DePuy hip settlements could exceed more than $300,000 per case, pushing the company’s payouts to well over $3 billion.

Though a spokesperson for DePuy, Lorie Gawreluk, said that any estimates on resolution amounts were early and speculative, she did confirm that the company had earmarked DePuy hip lawsuit settlement funds, which have increased since June 30. “The company also continues to support ASR patients with a reimbursement program to address recall-related testing and treatment costs,” said Gawreluk, who told Bloomberg that J&J has spent $993 million on medical expenses related to the ASR recall.

The world’s largest seller of health care products and parent company of DePuy, J&J has created a reimbursement program that has made thousands of payments to ASR patients for metal contamination testing and treatment, caused by the system’s alloy components that were prone to corrosion, fretting and premature failure.

DePuy hip settlements could exceed $3 billion

While plaintiffs may be that much closer to reaching settlement negotiations, several hurdles remain before payouts are made, according to Bloomberg sources. As one DePuy hip attorney speculated, “J&J’s strategy will be to find a way to negotiate a grid to settle each of the claims based on five or six variables that could be plugged in and changed up or down to determine the value of any claim.”  A DePuy hip lawsuit settlement would factor in multiple variables including the age of the plaintiff, the extent of the injuries and complications, and how many revision surgeries were performed to replace the faulty hip replacement.

Issues that J&J must still decide upon is whether or not settlements would include a reimbursement policy with Medicare for any claims paid and the amount of compensation provided for extreme cases – those which entailed multiple corrective surgeries, or long hospitalization periods to deal with infections. A San Francisco-based lawyer who represents 270 ASR plaintiffs added, “There are a significant subset of clients who got very badly hurt by the device, and their injuries are much more than a simple revision…If those cases went to trial and there was a finding of liability, a jury would award them general damages in the seven figures.”

This past January, insiders stated that J&J officials were willing to offer $2 billion to resolve ASR litigation, but legal counsel for the plaintiffs rejected that amount on grounds that it was insufficient. If settlements are reached at just over $300,000 per case, this amount would triple the 2001 accord offered by Sulzer AG, which paid out a record-breaking $1 billion to resolve lawsuits involving its knee and hip implants.

Upcoming DePuy ASR trials

While confidential DePuy hip settlement talks continue, the first bellwether trial in the ASR products liability MDL in Ohio has been postponed yet again. On September 6, 2013, District Judge David A. Katz delayed the trial’s start date to September 24, 2013 referring to a need for “additional discovery and the consideration of additional legal matters.” The bellwether hearing for Ann McCracken was originally slated to occur in May, but the date was delayed twice to handle unforeseen pretrial matters. Katz is presently presiding over more than 8,000 cases centralized as multidistrict litigation in Ohio federal court.

In addition to the upcoming MDL bellwether hearings, ASR trials will take place in state courts in San Francisco, New Jersey, Florida, Chicago and Los Angeles in the coming year. Each of the 11,500 plaintiffs who filed a DePuy hip lawsuit would have the right to refuse a settlement and opt for a trial if they believe a jury verdict may be higher than the proposed accord amount.