The U.S. Department of Health & Human Services (HHS) is reportedly preparing to seek more than $1 billion in reimbursements from Johnson & Johnson (JNJ.N) to cover federal healthcare expenditures for patients who claim that the company’s baby powder and other talc products led to cancer. A government attorney detailed this development on Friday.
HHS, alongside the Department of Veterans Affairs (VA), has raised objections to J&J’s proposed $10 billion settlement intended to resolve tens of thousands of ovarian cancer claims. The agencies argue that resolving the litigation through bankruptcy could significantly limit the government’s ability to recover costs incurred in treating affected patients.
Bethany Theriot, a U.S. Justice Department attorney representing both HHS and VA, explained that under the Medicare Secondary Payer law the government could pursue up to $1.1 billion in reimbursements from J&J. This law enables federal health agencies to recover expenses when another party is primarily responsible for the healthcare costs.
“Both HHS and the VA have substantial claims here, and we are deeply concerned about any settlement strategy that might undermine federal reimbursement rights,” Theriot stated during a bankruptcy court hearing in Houston on Friday.
The estimate of $1.1 billion is derived from the number of individuals who have alleged that J&J’s talc products caused their cancer. Theriot further noted that as additional claims emerge over time, the government’s reimbursement demands could increase accordingly. These remarks were made before U.S. Bankruptcy Judge Christopher Lopez, who is overseeing the bankruptcy proceedings of a Johnson & Johnson subsidiary.
Johnson & Johnson, which maintains that its baby powder and talc products do not contain asbestos nor cause cancer, did not immediately respond to requests for comment on the matter.
J&J is attempting to resolve tens of thousands of lawsuits alleging that its talc products caused ovarian cancer through a $10 billion settlement that would resolve all existing claims and bar new lawsuits. To facilitate this settlement, the company placed its subsidiary, Red River Talc, into bankruptcy on September 20, 2024.
This is not J&J’s first effort to settle these lawsuits via bankruptcy; two previous attempts were dismissed by courts on the grounds that the subsidiary was not sufficiently in financial distress to warrant bankruptcy protection. However, J&J claims that its current proposal has garnered significant support, which could enable it to succeed where prior attempts failed.
The proposal faces opposition from attorneys representing some cancer victims, insurers, and the Office of the U.S. Trustee—a Justice Department agency responsible for ensuring integrity and efficiency in bankruptcy proceedings. Opponents argue that cancer victims should be allowed to continue pursuing their lawsuits rather than being compelled to settle under J&J’s terms.
Johnson & Johnson contends that its settlement has the backing of over 80% of the plaintiffs involved in talc litigation and asserts that resolving the lawsuits through bankruptcy is both a faster and more equitable process than addressing each case individually.
J&J is scheduled to defend its bankruptcy plan in a multi-day court hearing beginning on February 18. During the proceedings, Judge Lopez will evaluate the competing arguments regarding whether to approve or reject the proposed talc settlement.
