(Bloomberg) — An Amsterdam court rejected requests from investors for an investigation into Royal Philips NV’s handling of a 2021 recall of its sleep apnea devices.
The Enterprise Chamber of the Amsterdam Court of Appeal found no basis to justify a probe into the course of events surrounding the recall, which sparked a sharp decline in the medical device maker’s share price, according to a ruling on Saturday.
Dutch investors’ association VEB and several institutional investors contended that shortcomings in the Amsterdam-listed company’s internal systems meant the problems with the devices were identified and addressed too late, the chamber said. They also suggested the board of directors was aware of the problems at its US subsidiary Respironics, which made the devices, much earlier than when it first disclosed these, the chamber said.
Sufficient reliable research data indicating health risks associated with the PE-PUR foam used in the devices didn’t come available until early 2021 and there are no indications the company’s executive board and supervisory board received that information too late, the chamber said.
“There is also no reason to assume that Philips ought to have intervened at Respironics earlier, or that the Supervisory Board exercised insufficient oversight,” it said, adding that it also had no good reason to rule that Philips’ communications to the investing public were “late, incorrect, or misleading.”
It didn’t rule on the questions of whether errors were made at Respironics or of liability for damages suffered by investors, the chamber said.
In 2024, Philips agreed to a $1.1 billion settlement in the US to resolve class action lawsuits related to the widespread recall of its sleep apnea and ventilator devices.
The recall, involving roughly 3.5 million breathing machines, was launched in 2021 and stemmed from the polyester-based sound dampening foam inside the machines degrading over time. That potentially allowed toxic or carcinogenic particles to be inhaled or ingested.
Philips, whose shares have fallen 6.3% this year, welcomed the decision. A spokesperson said the company remains focused on patients and customers, and on accelerating profitable growth. VEB didn’t immediately respond to a request for comment outside regular hours.
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