*

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

lawsuits through a subsidiary's bankruptcy

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Health agencies say the proposal blocks them from seeking

reimbursement for healthcare costs

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A different government agency has argued the bankruptcy

should

be dismissed outright

By Dietrich Knauth

Jan 27 (Reuters) - Two U.S. federal health agencies have

objected to Johnson & Johnson's ( JNJ ) $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.

The U.S. Departments of Veterans Affairs and Health & Human

Services said in a Friday court filing that federal health

programs, including Medicare and Medicaid, have the right to

seek reimbursement from companies that caused injuries and

insurers that could be responsible for paying for treatment.

The agencies' filing did not say how much federal health

programs might be owed for providing medical coverage to

patients who allege that J&J's baby powder or other talc

products contained asbestos and caused them to develop ovarian

cancer.

J&J's bankruptcy proposal is inconsistent in how it

describes federal agencies' rights, sometimes saying they are

"unimpaired" while emphasizing in other places that all of its

talc-related liabilities would be extinguished through the

bankruptcy of its subsidiary, Red River Talc, according to the

two agencies.

"If the Plan does not affect the rights or interests of the

United States or otherwise bind the United States, the Plan must

make that clear," the agencies wrote.

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

other talc products contained asbestos and caused cancer,

declined to comment on the agencies' objection on Monday.

The two agencies weighed in on the bankruptcy for the first

time after Republican Donald Trump took office as President on

Jan. 20, following earlier challenges by the federal government

to the plan that were pursued by the U.S. Department of

Justice's bankruptcy watchdog during Democratic former President

Joe Biden's administration.

HHS and the VA said that their objection was meant to

address the government's regulatory powers and reimbursement

rights, not the "other ways in which the Plan is unlawful,"

which were covered by the DOJ's Office of the U.S. Trustee.

The U.S Trustee, attorneys representing cancer victims and

insurers also filed objections on Friday, which was a court

deadline for opposing the company's bankruptcy plan. 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 placed Red River Talc into bankruptcy on Sept. 20, 2024,

after courts rejected two previous efforts to resolve the talc

litigation through a subsidiary's bankruptcy. 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 faces more than 58,000 talc lawsuits in a consolidated

federal court proceeding in New Jersey. The company's proposed

bankruptcy settlement would end those lawsuits and prevent any

similar lawsuits from being filed in the future.

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 February

court hearing in Houston, Texas, where U.S. Bankruptcy Judge

Christopher Lopez will consider competing demands to approve or

reject the talc settlement.

The case is In Re: Red River Talc LLC, U.S. Bankruptcy Court

for the Southern District of Texas, No. 24-90505

For Red River Talc: Greg Gordon of Jones Day

Read more:

J&J unit files for bankruptcy to advance $10 billion talc

settlement

The battle over J&J's bankruptcy plan to end talc lawsuits