NEW YORK (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.