A federal jury in Dallas has ordered Johnson & Johnson—and its subsidiary, DePuy Orthopaedics—to pay more than $30 million in actual damages for six plaintiffs and more than $1 billion in punitive damages to patients who claim the company hid design flaws in its Pinnacle artificial hips. The plaintiffs allege their DePuy hips leached cobalt and chromium material into their bloodstreams, leading to the device failures and surgical removal. Jurors ruled that officials of DePuy were negligent in designing the implant; failed to warn physicians and patients about concerns regarding the product; failed to recall it; and intentionally misrepresented the product's effectiveness to patients and their doctors.

 

This isn’t the first Pinnacle implant litigation. Indeed, this is the third bellwether—or test—trial of thousands of similar lawsuits filed against the companies. In the first trial, in 2014, a jury ruled in favor of the medical companies. However, in March, a Dallas jury awarded more than $500 million to a group of plaintiffs who suffered similar complications from the hip implants. The judge in that case, U.S. District Court Judge Edward Kinkeade, who also presided over last week’s ruling, later reduced the amount of awarded damages to $154 million, citing Texas law.

 

“The jury is telling J&J that they better settle these cases soon,” says Mark Lanier, who represented the group of six hip patients who sued J&J and DePuy, Bloomberg reports. “All they are doing by trying more of these cases is driving up their costs and driving the company’s reputation into the mud.”

 

On the other hand, J&J executives believe the companies have strong grounds for appeal and remain committed to the long-term defense of the lawsuit allegations. J&J’s DePuy unit acted appropriately in designing and testing the product, DePuy spokeswoman Mindy Tinsley said in a statement.

 

“We have no greater responsibility than to the patients who use our products, and our goal is to create medical innovations that help people live more active and comfortable lives,” Tinsley said, CNN reports. “DePuy acted appropriately and responsibly in the design and testing of ULTAMET Metal-on-Metal, and the product is backed by a strong track record of clinical data showing reduced pain and restored mobility for patients suffering from chronic hip pain.”

 

J&J said it will ask Kinkeade to reduce or throw out the jury award before appealing to the 5th U.S. Circuit Court of Appeals in New Orleans, Reuters reports today. The company contends the multi-plaintiff format created an unfavorable advantage by parading a series of victims in front of the jury and exaggerating the number of complaints about the implant.

 

In the meantime, J&J still faces almost 9,000 lawsuits over Pinnacle hip failures, according to a May filing with the U.S. Securities and Exchange Commission. A fourth bellwether trial is scheduled for September 2017.

 

Despite its pledge to appeal the latest verdict, J&J shouldn’t wait for an outcome to approach hip patients with settlement offers, says Erik Gordon, a University of Michigan law professor, who teaches classes about how drugs and medical devices are developed and regulated.

 

“They may think they have good defenses to these claims, but they don’t seem to be working with juries,” Gordon says in a CNN report. “There’s no easy way out of these cases now that they have a billion-dollar verdict against them. They better start thinking of how they can settle these claims before the price goes up any more.”

 

It should be pointed out that week’s verdict has had little impact on J&J stock. As Les Funtleyder, a portfolio manager with ESquared Asset Management, says in today’s Reuter’s article, investors assume large health products companies will occasionally be sued and lose, and that the costs are ultimately manageable. A question to be asked, however, is whether consumers and their doctors think the same way or if there is now a reputational cost for J&J and DePuy?