Two federal agencies are investigating allegations that Johnson & Johnson talcum powder is contaminated with asbestos.
In an annual financial report filed on Wednesday, Johnson & Johnson acknowledged receiving preliminary inquiries and subpoenas for documents related to recent talcum powder asbestos concerns from the U.S. Department of Justice and the Securities and Exchange Commission.
“The Company is cooperating with these government inquiries and will be producing documents in response,” the filing stated.
The federal subpoenas follow publication of a Reuters investigation last December, which revealed that executives at Johnson & Johnson were aware since the early 1970s that its raw-talc and finished talcum powders had periodically tested positive for small amounts asbestos. However, they concealed the test results from regulators and consumers out of concern that the information would undermine Johnson & Johnson’s image as a “caring company.”
The healthcare products giant is currently named a defendant in more than 13,000 product liability lawsuits alleging Baby Powder and other popular brands caused cancer.
“The Company has successfully defended a number of these cases but there have been verdicts against the Company, including a verdict in July 2018 of $4.7 billion,” Johnson & Johnson said in its February 20th financial report. “The Company believes that it has strong grounds on appeal to overturn these verdicts. The Company has established an accrual for defense costs only in connection with product liability litigation associated with body powders containing talc.”
Johnson & Johnson is also facing a securities class action lawsuit, as well as two ERISA class actions, related to the talcum powder asbestos controversy.
Imerys Talc America, a major supplier of raw talc used in Johnson & Johnson’s Baby Powder and a co-defendant in talcum powder lawsuits, cited the costs associated with the growing litigation when it sought Chapter 11 Bankruptcy last week.
Imerys Talc Vermont and Imerys Talc Canada filed for bankruptcy the same day.
“The Chapter 11 process will allow the filing companies the time and protection to negotiate a global agreement with creditors, primarily representatives of current and future claimants in cosmetic talc-related litigation, while defining a path forward for the impacted talc businesses,” the companies said in a statement announcing the February 13th filings in Delaware bankruptcy court.
The filing was more bad news for Johnson & Johnson, which must now bear the burden of the massive litigation on its own. In fact, Imerys has already been dropped as a defendant in a talcum powder lawsuit currently on trial in California.
“That jury in California won’t have to decide who is more at fault for this lady’s illness because they only have one defendant in the case now,’’ one legal expert told Bloomberg News. “It really puts J&J more in the crosshairs for all of these cases.’’