DePuy Hip Recall Leads to $922M Set-Aside for Settlements, Litigation Costs

Johnson & Johnson announced its fourth quarter earnings this week, which included a charge of $922 million to cover litigation costs and potential settlements associated with a DePuy hip recall issued last year. 

Johnson & Johnson and their DePuy Orthopaedics subsidiary face a mounting number of lawsuits over DePuy ASR hip replacements, which have been linked to a higher-than-expected failure rate within a few years of implant, often requiring additional revision surgery.

According to an earnings statement released on Tuesday, Johnson & Johnson reported net earnings of $1.94 billion, which was a 12 percent drop from the previous year. The net earnings were greatly affected by the DePuy ASR hip recall litigation set aside of nearly $1 billion, which will cover some of the company’s anticipated DePuy hip settlement costs, litigation defense expenses and other costs associated with the DePuy hip recall.

Last month, the U.S. Judicial Panel on Multidistrict Litigation consolidated the DePuy hip recall lawsuits before U.S District Judge David A. Katz, and ordered that all cases filed in any federal district court be transferred to the U.S. District Court for the Northern District of Ohio for pretrial proceedings.

Within weeks of the MDL being established, the number of DePuy hip recall lawsuits transferred to Judge Katz from federal district courts throughout the United States quickly grew to more than 100 cases. However, it is expected that thousands of cases will ultimately be involved in the litigation as DePuy hip recall lawyers continue to investigate and file new claims for individuals who received one of the defective implants.

It is expected that Johnson & Johnson will ultimately have to pay out much more than the $922 million it set aside this quarter to address claims filed by individuals who face a risk of DePuy hip complications.

More than 90,000 DePuy ASR XL Acetabular Systems and DePuy ASR Hip Resurfacing Systems were sold before the hip replacements were recalled in August. The manufacturers have acknowledged that data so far has shown that about 12% to 13% of these hips will fail within five years. However, as individuals with one of the recalled hip replacements continue to be monitored by their doctors, it is expected that the DePuy ASR failure rate will ultimately be much higher.

In addition to the DePuy ASR lawsuits, Johnson & Johnson also faces potential lawsuits over DePuy Pinnacle hip replacements. Although a recall for this other hip replacement has not been issued, a handful of DePuy Pinnacle hip lawsuits have already been filed by consumers who have experienced metallosis or other problems from the metal-on-metal hip replacement parts wearing down.