Johnson & Johnson adds $1.1 billion to proposed talc settlement

Johnson & Johnson plans to pay an additional $1.1 billion to settle tens of thousands of lawsuits alleging that baby powder and other talcum powder products caused cancer, two people familiar with the matter said.

The increase would increase the size of the settlement to more than $9 billion paid over 25 years. J&J said Wednesday it had reached an agreement with a plaintiffs’ attorney representing 12,000 customers to recommend the settlement offer to them, adding to the support already received from other plaintiffs.

Related: J&J in Talks with Holdouts for $6.5B Talc Solution

The health care giant is preparing for a subsidiary to file for bankruptcy to complete the proposed deal before the end of this month, one of the people said. J&J would continue to operate without filing for Chapter 11. The company claims its talc products are safe and do not cause cancer.

The timing of filing for bankruptcy may change depending on how the additional votes are counted.

Related: J&J Sees Texas as Site for Next Round of Baby Powder Fight

J&J said Allen Smith, the attorney for the plaintiffs now supporting its plan, agreed to the settlement offer in exchange for “additional monetary and non-monetary benefits to all talc claimants” in a bankruptcy plan that it expects a judge to approve it later.

J&J declined to comment on how much additional money it plans to pay and did not respond to an inquiry about a subsidiary’s timeline for filing for bankruptcy protection.

Related: J&J gets plaintiff backing in $6.5 billion baby powder settlement

The company earlier this summer gave filers until July 26 to vote on its proposed bankruptcy resolution. In August, J&J granted the plaintiffs additional time at the request of the plaintiffs’ attorneys, including Smith, the company said.

J&J’s current settlement offer is “the best and most realistic option available to plaintiffs to recover their claims in a timely manner,” Smith said in a J&J press release Wednesday.

With votes from Smith’s customers, J&J expects to win support from more than 75 percent of plaintiffs who say the company’s talc made them sick. Support from 75 percent of the plaintiffs is the legally required threshold for a judge to approve the type of bankruptcy settlement J&J is proposing. The additional votes will put J&J “well above” that bar, the company said.

J&J faces defamation lawsuits from more than 62,000 plaintiffs, according to a company filing. But the number rises to 100,000 when plaintiffs who did not sue are counted, said Erik Haas, J&J’s global vice president of litigation.

Some lawyers representing cancer victims oppose J&J’s plan to settle the litigation and are locked in a bitter battle with the company.

J&J previously described its settlement offer as having a net present value of about $6.48 billion, with the cash actually paid over 25 years totaling $8 billion. The increased payout that J&J is planning brings the latter figure to more than $9 billion.

After being rejected twice by federal courts, J&J is again trying to end the talc litigation in a so-called “Texas two-step” bankruptcy.

The two-step maneuver involves offloading its talc debts to a newly created subsidiary, which then files for Chapter 11. The goal is to use the procedure to force all plaintiffs into a single settlement without requiring J&J to file bankruptcy itself.

J&J’s latest settlement offer addresses allegations that talc caused ovarian and other gynecological cancers, which make up the bulk of the claims J&J faces.

It rules out other claims, including those by plaintiffs who claim asbestos talc caused their mesothelioma, a deadly cancer that attacks a thin layer of tissue that covers many internal organs. J&J says its talc is asbestos-free.

(Reporting by Spector and Knauth in New York and Roy in Bengaluru; Editing by Shinjini Ganguli, Bill Berkrot and Marguerita Choy)