Long road ahead in Philips recall litigation

The company determined that the polyester-based polyurethane (PE-PUR) sound abatement foam in devices manufactured between 2009 and 2021 could pose a range of health risks if it degrades and particles are inhaled. Gases released by the foam may also carry toxic chemicals that the FDA warned could cause cancer.¹https://www.fda.gov/medical-devices/safety-communications/update-certain-philips-respironics-ventilators-bipap-and-cpap-machines-recalled-due-potential-health To date, there have been no reports of fatal impacts related to chemical emissions, although the company said it has been notified of potential effects due to foam degradation.²https://www.philips.com/a-w/about/news/archive/standard/news/press/2021/20210614-philips-issues-recall-notification-to-mitigate-potential-health-risks-related-to-the-sound-abatement-foam-component-in-certain-sleep-and-respiratory-care-devices.html

Forum Interviews in October and November 2021 with an executive at KJC Law Group discussed what makes this case unique, how it is likely to progress, and the scope of potential payouts. 

As of 18 October 2021, 114 lawsuits have been filed and consolidated into a multi-district litigation (MDL), with the specialist expecting cases to run into the thousands over the coming months. Indeed, the roster of symptoms announced as being linked to these products will “open the floodgates” for those who have used one of the affected sleep devices, we heard.

The bellwether trial, essentially a test trial during which the plaintiffs must establish their case, is an important milestone and will have the biggest influence on how long proceedings will last, we’re told. It’s important to note that to date there have been no absolute findings that the devices cause any of the issues identified, and proving that they do is a complex matter. If pre-trial motions are filed, it will probably be “at least another year” before the bellwether trial takes place, the expert said. 

They emphasised that we’re in the early stages of the litigation process — only last month did a court in the Western District of Pennsylvania agree to consolidate the cases in an MDL. “This case, these proceedings could really go on for years.” They added that lawyers will be “very incentivised to find these cases”, with hundreds, if not thousands, more lawsuits expected to be filed — particularly as those who purchased the devices are unlikely to have signed arbitration agreements. Because each case in the MDL is its own lawsuit, and the costs of trying these “could be about USD 1m, not to mention attorney fees”, Interviews suggest it is likely that Philips will seek to resolve all the cases. 

“Assuming that causation is established, they [the defendant] almost always will settle just because… the exposure and expense to the company is so astronomical,” the specialist told us. Settlements could range from USD 20,000 to USD 1m, with the expert predicting a ceiling of USD 3bn. As for potential punitive damages, a “general rule”, we heard, is that there should be a single-digit ratio between these damages and compensatory damages. An array of factors will determine whether might also Philips also face punitive damages, namely how quickly and appropriately the company responded to the information it obtained about the potentially dangerous foam. The FDA’s Form 483, filed in August 2021, suggests that Philips was aware of some of the issues regarding PE-PUR foam degradation and potential health implications as far back as 2015.³https://www.fda.gov/media/154099/download

How this case plays out will depend on several factors including how many lawsuits are ultimately filed, whether the foam is indeed found to have harmed users of the various devices, and Philips’ continued work with the FDA on the recall and mitigation plan. The expert we spoke to believes this case could last for years and that, today, we are only seeing the tip of the iceberg. 

Meanwhile, Philips said in its Q3 2021 results that its repair and replacement programme in the US and other markets is under way, having produced around 750,000 repair kits and replacement devices, of which over 250,000 have reached customers. The company added that, given the uncertain nature and timing of the liabilities, if any, the company is “unable to reliably estimate the financial effect of these matters”.⁴https://www.philips.com/a-w/about/news/archive/corpcomms/news/press/2021/philips-third-quarter-results-2021.html