Philips Settles Respirator Case for $1.1 Billion
Dutch medical technology giant Philips has announced a $1.1 billion settlement to resolve lawsuits in the United States related to potentially defective respiratory devices, marking a significant step in addressing a challenging chapter for the company.
The settlement aims to provide closure to a tumultuous period that has adversely impacted both Philips’ financial standing and its reputation. In 2021, concerns arose regarding foam used in respiratory machines designed to treat conditions like sleep apnea, which could degrade over time, potentially releasing harmful particles into patients’ masks.
While Philips emphasized that it did not admit fault or liability for any injuries caused by the devices, the settlement is expected to address claims from both a class action lawsuit and individual personal injury cases in the US.
The resolution arrives sooner than anticipated and carries a lower financial burden than initially projected, with analysts previously estimating potential costs as high as $4.5 billion. Following the settlement announcement, Philips’ stock surged by over 40%.
The faulty devices, produced by Philips’ US subsidiary Philips Respironics, triggered widespread concerns, leading to the recall of more than five million units globally. Reports from users highlighted issues such as the presence of black particles and dust inside masks.
In response to the settlement, Philips Respironics has entered a consent decree with the US Department of Justice, subjecting its US facilities to regular inspections over the next five years. Additionally, the company will contribute a portion of its revenues to the US Treasury and is barred from selling certain respiratory devices in the US until meeting specified conditions for repairing or replacing older models.
Roy Jakobs, CEO of Philips, hailed the agreements as “significant milestones” that provide clarity on the company’s path forward. Lawyers representing victims expressed satisfaction with the resolution, emphasizing that it will provide compensation to affected individuals and facilitate vital research for injury treatment.
