Koninklijke Philips N.V. is a Dutch multinational company specialized in a wide range of electronic and health technology products. Philips is listed on the the primary market of the Euronext Amsterdam and the secondary market through the New York Stock Exchange.

As reported by the FDA, starting from October 2015, Philips was notified by a customer complaint that their Continuous Positive Airway Pressure (CPAP) devices had experienced polyester polyurethane foam degradation issues. Philips was evidentially aware of this complaint as they had initated contact to discuss about the issue with their raw foam supplier on Oct. 30th, 2015, whom of which further let it be known to Philips via email that the degradation of the polyester polyurethane foam used in the devices was likely confirming the statements made by the customer complaint.

Upon receipt of this crucial information, Philips failed to proceed with the appropriate methods of risk analysis or any Corrective and Preventive Actions ("CAPA").

The following years between 2016 and 2018, Philips had continued to receive additional evidence that it's devices had issues. In an email from Aug. 24th, 2018, it is mentioned that Philips had excuted their own internal test which confirmed the issues with the devices, yet they still chose not to implement any corrective action. This internal test verified the customer complaints received for the Triology Ventilator system since it confirmed that the affected foam breaks down in high heat and high humidity enviornments (like Florida, as per the customer complaints). Nonetheless, Philips made the decision not to alter the design of the devices and to continue including the polyester polyurethane foam.

In april of 2021, Philips had introduced a new device "the DreamStation 2" which interestingly did not include the polyester polyurethan foam. Later in the month, on the 26th of April, Philips had released their 1Q 2021 financial report, for which Philips had mentioned to the market for the first time a "regulatory update" and had correspondingly set aside over EUR 250M in provisions. The stock price had fallen 5- 6% that day. Two months later, on June 14th, 2021, in a press release, Philips had formally issued a recall on "specific Philips Bi-Level Positive Airway Pressure (Bi-Level PAP), Continuous Positive Airway Pressure (CPAP), and mechanical ventilator devices to address identified potential health risks related to the polyester-based polyurethane (PE-PUR) sound abatement foam component in these devices". The title sinks an additional 3-4%. Following the press release, the FDA moves to investigate Philips from Aug. 8th, 2021 - Nov. 9th, 2021.

Upon the closing of their investigation the FDA published the form FDA-483 which highlighted a total of 8 observations:

Observation 1: "Risk analysis is inadequate";
Observation 2: "Procedures for conective and preventive action have not been adequately established";
Observation 3: "Design validation did not ensme the device conforms to defined user needs and intended uses";
Observation 4: "Procedures for design change have not been adequately established";
Observation 5: "A correction or removal, conducted to reduce a risk to health posed by a device, was not reported in writing to FDA"; Observation 6: "Management with executive responsibility has not ensured that the quality policy is understood, implemented and maintained at all levels of the organization";
Observation 7: "Procedures to ensure that all purchased or otherwise received product and services conform to specified requirements have not been adequately established";
Observation 8: "Potential consultants were not evaluated and selected based on their ability to meet specified requirements".

In response, on Nov. 14th, 2021, Philips issued a press release of the results of the FDA investigation. The document mentioned that Philips Respironics would make additional data relevant to the competent authorities after completing an assessment of the observations found. After the press release, the stock price had fallen more than 10.5%.

Several months later, on April 8th, 2022, Philips Respironics and certain US Philips' subsidiaries receive a subpoena from the Department of Justice ("DoJ") "to provide information related to events leading to the Philips Respironics recall". Later in the month, on April 25th, Philips published their 1Q 2022 report including new provisions totalling more than EUR 800 mln and further mentioned that "the relevant subsidiares are cooperating with the agency" or the DoJ. The stock price falls a further 13% that day.

After several months of contact with the DoJ, Philips Respironics and the DoJ reach a settlement agreement on Aug. 24th, 2022. It was announced that "Respironics shall pay to the United States Twenty-Two Million Six Hundred and Twenty Five Thousand dollars ($22.625.000)". On Oct. 24th, 2022, Philips announces its 3Q report, where an additional 575M EUR in provisions were set aside "in connection with the anticipated resolution of the economic loss class action on behalf of users, hospitals and private insurers in the US MDL. Important first step in addressing the litigation that started following the Respironics recall".

Our Proposal

In light of substantial evidence of misconduct, Martingale Risk is pursuing now all possible actions against Philips to claim damages on behalf of its clients in the Netherlands. More precisely, Martingale Risk is conducting the following:

Preliminary analysis on the clients data;
After the mandate, a detailed analysis on the damage suffered by each client in connection with the established wrongdoing
Negotiation and extra-judicial proceedings finalized to recover the loss amounts in the quickest possible manner;
Litigation in the Netherlands through Martingale Risk’s global network of associated law firms.

Martingale Risk proposes to file actions on behalf of investors who purchased Philips common stock during the period of October 30th, 2015 - April 24th, 2023. Martingale Risk invites all potentially harmed institutional and retail investors that have invested and experienced losses within the manipulated period to contact the below individuals for a preliminary and free claim evaluation to determine if they may be eligible for reimbursement:

CEO of Martingale Risk - Dr. Marco Delzio (marco.delzio@martingalerisk.com)

Head of Institutional Client Management - Mr. Peter Ogden (peter.ogden@martingalerisk.com)

Open Case:

Collective Action Against Koninklijke Philips N.V.