Philips will pay $1.1 billion to settle breathing machine lawsuits
Dutch conglomerate Philips has reached a $1.1 billion deal to resolve claims in the United States tied to more than 1 million recalled breathing machines.
The devices were pulled back in 2021 amid concerns they carried a cancer risk for users, and the company has already halted further U.S. sales. The deal resolves injury claims brought by roughly 58,000 people, earmarking a $1.075 billion personal injury settlement and $25 million for medical monitoring.
“Ultimately, these combined agreements accomplish what we sought to achieve when this litigation began – holding Philips accountable by obtaining care for those with physical injuries and compensation for those needing new respiratory devices,” plaintiffs’ lawyers said in a statement.
An estimated 33 million Americans rely on continuous positive airway pressure, or CPAP, machines to treat sleep apnea, according to the National Council on Aging. The condition causes the muscles in the back of the throat to relax and block airways during sleep. Left untreated, it can raise blood pressure levels and heighten the risk of developing diabetes and heart disease.
Some customers alleged that the Philips’ DreamStation machines, once a market-leader, had been shooting gas and bits of foam into their lungs. But the company, which made no admission of wrongdoing under the terms of the settlement, contends most of the claims filed stem from “alleged technical malfunctions” that don’t involve any serious injury or death.
Chief executive Roy Jakobs said in a statement Monday that the company regrets “the concern that patients may have experienced.”
Philips is effectively out of the U.S. market for sleep machines and ventilators because of the litigation, with the exception of selling replacement parts and servicing the machines that already exist in hospitals and patients’ homes.
The company agreed to a consent decree earlier this year that forced it to halt U.S. sales of any new devices until certain conditions are met. It agreed to repair and replace the more than 1 million breathing machines already in patients’ hands through a process that the company said was “almost complete” as of Monday.
Royal Philips NV shares soared nearly 30 percent in Amsterdam on news of the settlement, which came in lower than expected. Barclays analysts had forecast a range of $2 billion to $4 billion, according to Reuters, and a “worst case of $10 billion.” Insurers agreed to pay 540 million euros ― $570 million ― of the costs.
“The remediation of the sleep therapy devices for patients is almost complete, and the test results to date show the use of these devices is not expected to result in appreciable harm to health,” Jakobs said in a statement.
Payments tied to the settlement are expected to be completed in 2025, the company said. Customers have a six-month window to sign up. Because the total amount is capped at $1.1 billion, the size of each payout depends on how many people apply for it.