The agreement presented in U.S. District Court in Toledo, Ohio, is one of the largest for the medical device industry. It resolves an estimated 8,000 cases of patients who had to have the company's metal ball-and-socket hip implant removed or replaced. J&J pulled the implant from the market in 2010 after data showed it failed sooner than older implants.
The deal provides roughly $250,000 per patient and covers those who had their implants removed or replaced before Aug. 31 this year. The company expects to make most of the payments to patients in 2014.
J&J's DePuy unit said in a statement that the deal does not cover all lawsuits pending against the company.
"DePuy will continue to defend against remaining claims and believes its actions related to the ASR Hip System have been appropriate and responsible," the company said.
The artificial hip, known as the Articular Surface Replacement, or ASR, was sold for eight years to some 35,000 people in the U.S. and more than 90,000 people worldwide. J&J stopped making the product in 2009 and recalled it the next year.
However, internal J&J documents unsealed in the case suggest that company officials were aware of problems with the device at least as far back as 2008.
Also, according to a deposition from a J&J official, a 2011 company review of a patient registry concluded that more than one-third of the implants were expected to fail within five years of their implantation. Orthopedic hips are generally supposed to last at least 10 to 20 years.
The company's lawyers have denied that J&J acted improperly.
For! decades nearly all orthopedic hips were coated with plastic or ceramic. But a decade ago many surgeons began to favor all-metal implants based on laboratory tests suggesting the devices would be more resistant to wear and reduce the chances of dislocation.
But recent data from patient registries show the devices actually fail at a higher rate than older implants. Last year a panel of government advisers said there are few, if any, cases where metal-on-metal hip implants should be recommended.