Philips Sleep Apnea Deal Leaves Room for Future Cancer Lawsuits

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(Bloomberg) — Royal Philips NV’s $1.1 billion settlement in U.S. lawsuits against 5.5 million recalled sleep apnea machines resolves only current cases and does not provide funds for possible future cancer lawsuits over the devices.

The Dutch company has committed 982 million euros ($1.1 billion) to fund a settlement of allegations that the faulty sleep aid devices pose a cancer risk due to deteriorating sound-dampening foam. The deal also includes funds to cover medical bills while users monitor their future health.

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The deal aims to resolve about 60,000 U.S. lawsuits over so-called continuous positive airway pressure (CPAP) machines that were targeted by U.S. regulators in 2021. However, funding for future illnesses allegedly caused by the recalled devices will not be acknowledged, according to Philips officials.

Cancers that some researchers link to the degraded polyurethane can take many years to develop. Philips representatives deny that the devices pose “any significant harm” to users.

“Philips is confident that the agreement to resolve the personal injury litigation and medical surveillance class action lawsuit in the United States will end the uncertainty associated with litigation in the United States,” Philips spokesman Steve Klink said in response to Bloomberg’s question about possible future cases.

Larger estimate

Philips described the deal as a containment of the US CPAP litigation. That represents about 22% of the nearly $5 billion at risk that stock analysts say the company could face. Shares jumped on the announcement, reaching their highest level in two years.

“What can happen is that an individual can still come forward,” Philips CEO Roy Jakobs said in response to Bloomberg’s question about whether the company might still face lawsuits after a six-month opt-in period for plaintiffs . But that “person would have to meet fairly high thresholds before they can make a claim,” he said.

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Legal experts believe that the Dutch manufacturer could continue to be involved in CPAP suits well beyond this period. “This litigation is far from over,” said Carl Tobias, a law professor at the University of Richmond. “Anyone who thinks that Philips can get rid of this case with a $1.1 billion settlement is fooling themselves.”

The U.S. Food and Drug Administration has ordered Philips to remove its crumbling foam CPAPs from the market after ordering the most serious recall the agency can require. FDA officials said in January that they had received 561 reports of deaths that may have been caused by faulty machines. Earlier this year, Philips was also ordered to suspend sales of the devices in the US following an agreement with the FDA.

In court filings, injured CPAP users allege that Philips executives — in both the Netherlands and the U.S. — knew about problems with noise-dampening foam for the devices at least three years before the safety recall.

No cases known

The settlement of the cases – consolidated in federal court in Pittsburgh – came before they were heard by U.S. juries. That raises questions about how to properly evaluate individual tort claims, said Elizabeth Burch, a law professor at the University of Georgia who specializes in mass tort law.

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The health monitoring portion of the agreement, structured as a class action, remains subject to approval by U.S. District Judge Joy Flowers Conti. The remainder of the compensation covers individual personal injury claims. Conti has already agreed to a separate $479 million class action lawsuit in cases brought by CPAP users who purchased or rented one of the 16 recalled lines of machines.

“I am concerned about mass tort cases like this being resolved through testing without examining the merits,” Burch said. “Given the number of death claims and the low settlement value compared to financial analyst projections, one wonders whether the plaintiffs’ attorney got a cheap settlement.”

Plaintiffs’ lawyers who supported the settlement faced serious procedural hurdles in the CPAP cases, and Philips – or one of its entities – could have been forced into bankruptcy due to the overwhelming financial burden of the lawsuits. Other companies facing mass lawsuits have taken such a step.

Conti was considering whether one of Philips’ U.S. units, Pennsylvania-based Respironics Inc., was the only company that could be held legally liable for the faulty machines when the agreement was announced. That would limit the pot of money that harmed consumers could target Respironics’ assets, which are valued at more than $500 million.

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Perry Weitz, a veteran New York plaintiffs’ attorney who was not involved in the CPAP settlement negotiations, said MDL lawyers are sometimes forced to seek a settlement before early trials can test the value of alleged claims.

“Sometimes you have to get what you can get,” Weitz said.

Six months

Public revelations about the agreement show that injured consumers have six months to accept Philips’ offer, litigate their case before Flowers or refile the lawsuit in U.S. federal courts. According to the disclosures, Philips may back out of the deal if 95% of current CPAP users do not sign up. Consumers who choose to go to trial must bear the costs of investigating the case and must not rely on the information collected by MDL lawyers.

Klink said the number of CPAP machines recalled and consumers injured is “limited,” even if there are future claims. The company says some claims are barred by state laws that regulate how long injured consumers can wait before suing.

The company also said in disclosures that it faces lawsuits outside the U.S. in countries including Australia, Canada, Israel and Chile. “The complaints each allege economic loss, personal injury and, in some cases, the need for medical monitoring,” the documents state. Philips has not disclosed how many cases are pending in other countries.

“It’s very difficult to close a case like this when you’re talking about possible long-term consequences,” said Mark de Hek, a Netherlands-based lawyer who focuses on personal injury claims. De Hek, who represents just over 1,000 Dutch patients affected by the sleep apnea recall, said he expects to “continue working on the case for many years as long as these consequences remain unclear.”

The case is IN RE Philips Recall CPAP, Bi-Level PAP and Mechanical Ventilator Products Liability Litigation, 21-MD-3014, U.S. District Court for the Western District of Pennsylvania (Pittsburgh).

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