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Johnson & Johnson has agreed to pay more than $4 billion to settle lawsuits over its recalled metal hip implants. Why is this such a big deal?
According to Reuters, J&J is expecting to resolve more than 7,500 lawsuits against the company's DePuy orthopedics unit in both state and federal courts. Those lawsuits were brought by plaintiffs who have "already had the defective devices removed."
What does this proposed settlement hold for similar implant cases?
Kransky Suit Gave Cause to Settle
The advancing charge in the literally thousands of lawsuits against J&J for their defective metal hip implants was a California case that went to trial in January. The trial brought out fairly damning allegations of J&J's knowledge of several defects in the hip implant device.
In March, the jury returned with a $8.3 million award for the plaintiff, Loren Kransky, with $8 million of the award allocated for pain and suffering. Oddly, the jury didn't find J&J liable for any punitive damages stemming from willfully ignoring defects, for which Kransky was seeking $179 million.
After the March verdict, Bloomberg reported that there were 10,750 similar lawsuits over J&J hip implants still pending trial, though Bloomberg's new estimate is about 12,000 suits nationwide. With this new settlement, J&J could take a potential liability of tens of billions of dollars and settle more than half of the cases with only $4 billion.
What About the Remaining Cases?
Part of J&J's reason for settling may involve concerns that jurors would be willing to award plaintiffs like Kransky huge pain-and-suffering damages as a way to punish the corporation for bad conduct.
In order to award punitive damages, the court must find that the defendant acted willfully, in bad faith, recklessly, or fraudulently, which can often be hard to prove. Instead, jurors may be swayed to put their hatred against a big corporation like J&J into the victim's side of the equation -- pain and suffering.
While some states have damages caps to limit the amount of pain and suffering awarded in relation to the medical compensatory damages (i.e., the related medical costs), Kransky's $8 million award dwarfs the approximately $300,000 awarded for his hip surgery related to the implant.
This may signal future settlements in implant cases if jurors are this sympathetic to victims and resentful of medical-device company plaintiffs.