NEW YORK, Jan 31 (Reuters) - The U.S. Department of

Health & Human Services may seek over $1 billion from Johnson &

Johnson ( JNJ ) as reimbursement for federal health agencies'

payments of medical costs for patients who allege that the

company's baby powder and other talc products caused them to

develop cancer, a government attorney said Friday.

HHS and the Department of Veterans Affairs recently objected

to J&J's $10 billion proposed settlement of tens of thousands of

ovarian cancer lawsuits, saying that resolving those cases in

bankruptcy could impair the government's reimbursement rights.

Bethany Theriot, a U.S. Justice Department attorney

representing the two agencies, said that HHS alone could seek

$1.1 billion under the Medicare Secondary Payer law, which

allows federal health agencies to seek reimbursement from other

parties that are primarily responsible for health care costs

incurred by the government.

"HHS and VA do have significant claims here, and we have

serious objections to the ways in which the plan appears to

potentially curtail federal rights," Theriot said at a Friday

bankruptcy court hearing in Houston.

The HHS estimate is based on the number of people who have

alleged that J&J products caused their cancer, and the

government could seek additional reimbursements as more people

develop cancer in the future, Theriot told U.S. Bankruptcy Judge

Christopher Lopez, who is overseeing the bankruptcy of a J&J

subsidiary.

J&J, which has denied allegations that its baby powder or

other talc products contained asbestos and caused cancer, did

not immediately respond to a request for comment on Friday.

J&J is attempting to resolve tens of thousands of lawsuits

alleging that its talc products caused ovarian cancer through a

$10 billion settlement that would resolve all current lawsuits

and prevent new cases from being filed. J&J placed its

subsidiary Red River Talc into bankruptcy on Sept. 20, 2024, in

an attempt to finalize the settlement.

Courts have rejected J&J's two previous efforts to resolve

the talc litigation, ruling that J&J's subsidiary was not

eligible for bankruptcy because it was not in "financial

distress." J&J is trying again in a different bankruptcy court,

and it says that the third effort can succeed where the others

faltered because it now has votes showing a broad level of

support for its settlement proposal.

J&J's proposal is opposed by attorneys representing some

cancer victims, insurers, and the Office of the U.S. Trustee, a

Justice Department watchdog that promotes integrity and

efficiency in U.S. bankruptcy proceedings. Cancer victims

who oppose the bankruptcy said they should be allowed to resume

their lawsuits instead of being forced to settle on J&J's terms.

J&J said its proposed settlement is supported by more than

80% of the people who have filed talc lawsuits, and that

settling the lawsuits in bankruptcy is faster and more equitable

than continuing to fight the lawsuits one at a time.

J&J will defend its bankruptcy plan in a multi-day court

hearing scheduled to begin on Feb. 18. Lopez will consider

competing demands to approve or reject the talc settlement.