Johnson & Johnson is having increasing legal troubles with talc, a trend that has potential implications for the property/casualty insurance industry.
Executive SummaryThe fact that Johnson & Johnson is self-insured for much of its product liability exposure should not lull P/C insurers into complacency. Potential allegations of asbestos in cosmetics and the willingness of juries to award large damages in spite of unsettled science suggest a changing overall legal climate, experts say, arguing that insurers need to stay current on developments in both science and law.
That’s because a number of juries have ruled against the conglomerate in lawsuits alleging connections between its consumer talc products and cancer.
While some acknowledge the potential insurer costs and fallout, they caution that there are a number of mitigating factors that limit the suits’ long-term effects against the company and other products liability coverage legal situations in general. Still, the industry has taken notice.
“The half-dozen or so verdicts in suits over asbestos in talc show that juries are willing to award significant damages to plaintiffs in these cases,” said Charlie Kingdollar, vice president of emerging issues for Gen Re’s Global P/C division, referring to industrial talc cases (discussed below).
He added that insurers providing coverage for personal care consumer products “may not be fully aware of other potentially harmful substances” possibly contained in the products. Some cosmetics and sunscreens, for example, may have nanomaterials, whose long-term health effects are unknown.
Charlie Kingdollar, Gen Re
Industrial Talc vs. Cosmetic Talc
Industrial talc liability lawsuits have been around longer than cosmetic talc suits, and so they deserve closer scrutiny when trying to understand the P/C industry impact of the J&J cosmetic talc suits, said Laura Foggan, a partner in Crowell & Moring LLP’s Washington, D.C. office, where she is a member of the firm’s Insurance/Reinsurance group.
“Suits involving talc have alleged that certain industrial talc is contaminated with asbestos. These suits are based on studies of particular mines for talc deposits. The suits claimed that the asbestos in the talc is allegedly associated with mesothelioma contracted by employees who mined industrial talc,” Foggan said.
Laura Foggan, Crowell & Moring LLP
Foggan noted that there are disputed issues over whether the industrial talc in question “in fact contains asbestos and whether mining exposures to it are associated with higher rates of mesothelioma.”
Lawsuits alleging cancer from cosmetic talc, such as the J&J cases, are a newer legal trend, and they remain controversial for different reasons, she said. These suits avoided the asbestos content issue entirely, she noted, focusing instead on science “underlying the alleged causal connection between talc exposure and ovarian cancer, [although] the existence of any causal link is hotly disputed.”
With that in mind, there are plenty of liability variables in terms of future risks. Foggan said that talc is used in legions of consumer products, from cosmetics to pharmaceuticals and even food additives. More and more plaintiffs’ attorneys are trying to allege that asbestos in cosmetic talc may be connected to mesothelioma, she said, and if they succeed, the liability exposure could be far bigger than the J&J ovarian cancer cases. She pointed out, however, that scientific hurdles stand in the way.
Plaintiffs’ legal strategies in any future cosmetic talc lawsuits could also limit impact on P/C insurers. In the wake of the J&J suits, Foggan said the potential insurance liability for cosmetic talc suits, assuming they are viable, may be for years of past exposure. “The impact on future coverage may not be as big an issue.”
There’s also the reality of asbestos-related exclusions in the relevant product liability coverages.
“Today, most liability policies, including product liability policies, exclude coverage for asbestos-related injury. This has been true for several decades,” Foggan pointed out. “New coverage for exposures due to these types of allegations, particularly the presence of asbestos, is unlikely unless it is written on very individualized [manuscripted] terms.”
However, that doesn’t mean insurers are free and clear.
Foggan said that because the J&J ovarian cancer cases don’t allege asbestos as a factor in the injury, they “would not appear to be subject to asbestos exclusions. But other cosmetic talc suits attempting to allege mesothelioma from asbestos in products would be.”
Why Insurers Should Know About Biomarkers
William Wilt, president of Assured Research, which focuses on diverse topics involving P/C insurance, said it is unclear that the big J&J jury verdict, “even if it is upheld or reduced modestly…will have an immediate impact on the insurance and reinsurance markets.” Part of the reason is because J&J has been self-insured, which limits the market impact of such a verdict.
“The propensity of jurors to accept unsettled science about the links between talc and ovarian cancer and to award such a large verdict says to me that the mood of the legal system in the country could be changing.”
William Wilt, Assured Research
Still, he said that insurers could deal with issues down the road due to the scope so far of suits Johnson & Johnson has dealt with relating to talc.
“Any time big verdicts on new exposures materialize, this catches the attention of the plaintiffs’ bar, and the risk to insurance companies does” grow, he said.
At the same time, there are nuances to consider, Wilt added.
“The lesson to be taken from these verdicts may not be in the specific area of talc and baby powder exposure,” he said. “Companies, commercial insurers and reinsurers may not have that much exposure because product liability is so often self-insured. But the propensity of jurors to accept what I understand is unsettled science about the links between talc and ovarian cancer and to award such a large verdict says to me that the mood of the legal system in the country could be changing.”
Wilt recommended that carriers prepare for cases such as the J&J cosmetic talc lawsuits by investing in understanding “what are really rapid developments in science and in medicine—developments that can help physicians understand the biomarkers.”
“They can be new biomarkers that can be used to tie certain types of products to certain types of diseases,” he said.
Wilt said he was not quite ready to say that a few verdicts against J&J mean social inflation trends have returned. But he’s noticed some upward movement toward more lawsuits all the same.
Social inflation trends “have been quiet for a decade or more,” he said. “But it seems like the risks of rising social inflation are accelerating in general.”