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Some companies are using bankruptcy courts to block lawsuits

A MARTINEZ, HOST:

Tens of thousands of cancer patients, mostly women, are suing Johnson & Johnson. They say asbestos in the company's baby powder made them sick, an allegation that Johnson & Johnson denies. But now J&J is using a controversial bankruptcy maneuver to delay and possibly block their lawsuits permanently. With their cases in legal limbo, NPR's Brian Mann found that some are running out of time.

BRIAN MANN, BYLINE: I went to visit Hanna Wilt and her mom Hope in a little town on the New Jersey coast.

HOPE: He doesn't bite. He doesn't bite.

(SOUNDBITE OF DOG BARKING)

MANN: It was a bright morning. Sunshine filled the living room. Hanna was having a tough day.

HANNA WILT: I'm tired, and I'm very, very bloated 'cause I get fluid build-up in my belly.

MANN: Picture a woman in her mid-20s, bright yellow hair, sitting kind of hunched while we talked. Hanna told me most of her life she was super healthy, but then she started feeling terrible pain in her abdomen.

WILT: It was really, really weird. And as the days went on, I started to not be able to walk right.

MANN: The doctor thought she had cysts on her ovaries. So Hanna went in for what was supposed to be fairly routine surgery. Her mom Hope says it's hard talking about that day.

HOPE: The surgery took much longer than it should have.

MANN: The doctor told Hope Hanna's body was riddled with a rare, aggressive form of cancer called mesothelioma.

HOPE: Then I just started to wail. It was the worst news any mother could get.

MANN: Hope then had to tell Hanna - she wasn't just sick; she was dying.

WILT: It's the scariest thing to ever hear. And I just remember feeling like, how? How am I going to do this?

MANN: This is the moment when Hanna's life also crashed into this complicated legal world and this new strategy companies are using to block lawsuits when they're accused of wrongdoing. Here's how the dots connect. Hanna quickly learned her kind of cancer, mesothelioma, is almost always linked to asbestos. She then learned the FDA had found trace amounts of asbestos in a product she used a lot - Johnson's baby powder.

WILT: I would use that every day, maybe even, like, a couple times a day.

MANN: So Hanna joined roughly 38,000 people with ovarian cancer and mesothelioma who've sued J&J, claiming tiny amounts of asbestos in Johnson's baby powder made them sick. They also accused J&J of knowing about the risk and not warning customers.

WILT: There's definitely an aspect of justice. This powerful group of people, they lied and were able to, you know, potentially ruin so many people's lives.

MANN: NPR asked J&J repeatedly for an interview for this story, and a company spokesperson said no. J&J executives have long maintained in public statements and court filings their talc baby powder is completely safe - no asbestos, they say, no link to cancer. They did take their iconic baby powder off the shelves in the U.S. a couple years ago but say they only took that step after bad publicity hurt sales. And normally, this is what a lawsuit like Hanna's would answer. A judge or jury would look at the evidence and decide - did J&J do anything wrong or not? But last October, J&J found a way to shut all these cases down. Here's J&J executive Joseph Wolk speaking on a conference call with investors.

(SOUNDBITE OF ARCHIVED RECORDING)

JOSEPH WOLK: There's an established process that allows companies facing, you know, abusive tort systems to resolve claims in an efficient and equitable manner. It's really the bankruptcy courts that will ultimately decide this.

MANN: You can hear him there talking about bankruptcy court. But of course, Johnson & Johnson isn't bankrupt. It's worth more than $400 billion. So what J&J did was create a new subsidiary, then shove all those baby powder lawsuits onto the other new company's balance sheet, then they pushed that new firm into bankruptcy.

WILT: What I see is who can play the game best?

MANN: When I visited Hanna Wilt, she was getting sicker, running out of time. And she was outraged J&J's maneuver had worked.

WILT: Big corporations trying to work the system in a way that they don't have to take full responsibility is not something new.

MANN: This bankruptcy strategy is becoming more common. Wealthy companies and individuals have used similar maneuvers to block lawsuits in big opioid cases, child sexual assault cases, environmental cases and on and on. This angers a lot of people, including members of Congress from both parties who are considering legislation to limit these maneuvers. Here's Illinois Senator Dick Durbin speaking on the Senate floor, where he pointed out this legal strategy is only available to those with enough money to pay for it.

(SOUNDBITE OF ARCHIVED RECORDING)

DICK DURBIN: There's a justice system for rich people, powerful corporations, and then there's a justice system for everybody else. And many days, it seems that the gulf between these two systems is just getting wider and deeper.

MANN: Bankruptcy maneuvers like the one used by Johnson & Johnson do have supporters. Some judges and corporate executives see bankruptcy court as an efficient way to reach closure on complex litigation. They argue companies sometimes wind up paying victims faster. In this case, while denying their product hurt anyone, J&J offered to create a fund for people with cancer, and last month, a federal bankruptcy judge signaled support for that plan. But this strategy also often leads to legal wrangling and appeals that last months or years, while women like Hanna wait.

WILT: It is so expensive to be sick. And I can't work, so, like, I'm not providing an income. My mom can't work. She's taking care of me.

MANN: I asked if she was angry about the way the legal system worked. Hanna told me anger and grief were all tangled together.

WILT: I'm a young girl. My entire life has been dramatically changed. I think there's a lot of sadness.

MANN: Hanna died last month. She was 27 years old. Her lawsuit, along with tens of thousands of other baby powder cases, is still stuck in bankruptcy court. While finishing work on this story, I called her mom Hope to check in. And she said it made it harder, watching Hanna die without closure.

HOPE: For her to see justice would have not saved her life, but she would have felt like a company like this couldn't get away with causing such horrible heartache.

MANN: Again, Johnson & Johnson maintains it did nothing wrong. And it's not clear how a court would rule in any of these baby powder cases if they're ever allowed to move forward. What is clear, what all the experts agree on, is that if J&J's legal maneuver works this time, even more wealthy companies will start using bankruptcy courts to block lawsuits when they're accused of wrongdoing.

Brian Mann, NPR News. Transcript provided by NPR, Copyright NPR.