Philips wins Dutch ruling over recall of 15 million devices as legal cases continue
Key Facts
The Enterprise Chamber of the Amsterdam Court of Appeal on October 10 rejected a request by shareholders to investigate Philips' policies and management over its sleep apnea device recall. The petitions concerned allegations of misleading disclosures and management failures related to the crisis, according to Reuters. Philips welcomed the decision, having denied shareholders' accusations over its handling of the problems that led to the recall. The proceedings were limited to examining the grounds for an investigation into the company's policies and conduct. The ruling did not determine whether errors had occurred at its Respironics subsidiary. Investors' entitlement to compensation for their losses also remained outside the scope of the proceedings.
The court said it found no indication that Philips had known about the problems long before issuing the warning, Reuters reported. It also found no reason to assume that the company's management should have intervened earlier at Respironics. Its review of internal files and documents showed that the company's systems were based on international standards, were regularly audited and had been strengthened over time. According to the court, reliable and sufficient research data indicating the foam's potential health risks became available only in the early months of 2021. The decision followed a hearing before the Enterprise Chamber on June 25, 2026, according to a Philips filing with the U.S. Securities and Exchange Commission. The hearing followed requests for an investigation submitted by the Dutch investors' association, Vanguard and entities representing other investors.
The device crisis dates back to a recall announced in June 2021 over potential health risks, covering 15 million devices worldwide, according to the U.S. Food and Drug Administration. The recall extended to ventilators and continuous and bilevel positive airway pressure devices. The agency said the soundproofing foam inside the devices could break down, allowing black particles to be inhaled or swallowed. It could also release invisible volatile chemicals. The regulator said it did not consider Philips' testing and analysis sufficient to fully assess the risks of the recalled devices. It therefore requested additional testing, which the company agreed to conduct.
In the United States, Philips agreed in April 2024 to a $1.1 billion settlement to resolve personal injury and medical monitoring lawsuits related to the devices. The settlement covered personal injury claims as well as medical monitoring claims, according to the company's announcement. Philips recorded a provision of 982 million euros for the settlement in its first-quarter 2024 results. The agreement announcement stated that Philips and Respironics "do not admit any fault or liability." This provision was included in the announcement of the financial settlement of the U.S. lawsuits.
On the operational front, a U.S. consent decree imposed restrictions on the production and sale of new devices at Respironics facilities, with limited exceptions, according to the FDA. The decree tied the lifting of restrictions to meeting remediation and regulatory compliance requirements. The remediation plan includes providing a new or refurbished device, alongside a partial refund option for certain device types. In a separate update, Philips said registrations of U.S. ventilators eligible for remediation reached 102,000 as of September 1, 2026. Remediation had been completed for 101,000 devices in the United States in this category. Remediation in this update includes financial compensation or reworking the device, according to the company.
Alongside the Dutch ruling, French prosecutors continued to investigate allegations of aggravated fraud and failure to report safety risks, according to a Reuters report on the day of the decision. Philips lists addressing the U.S. Department of Justice investigation and other legal proceedings among its priorities ahead. These priorities also include completing the recall and demonstrating compliance with regulatory requirements to restore Respironics' business. On the investor side, the Dutch association said after the ruling that it would study the decision in greater detail. It added that it would examine all options to continue defending affected investors. Philips' investor relations calendar listed November 3 as the date for announcing third-quarter 2026 results.