Thursday, July 20, 2017

Some Outbreak Victims Payments Delayed to 2021


By Walter F. Roche Jr.

 Final payments to victims of a national fungal meningitis outbreak may be delayed until March of 2021, an attorney told a federal judge today.
Michael Gottfried, the attorney for the post confirmation officer in the bankruptcy of the New England Compounding Center, said the delay was necessary because the IRS has four years to challenge tax refunds granted to NECC's former owners.
He told U.S.District Judge Rya Zobel that a total of $12 million in tax refunds collected by NECC's former owners has been earmarked for a national settlement fund for outbreak victims and is now being held in an escrow account.
Calling the $12 million a significant asset, Gottfriend said, "The hope would be that the IRS would not challenge."
Though Gottfried said the delay was "not a surprise to anyone," Zobel responded "It is to me."
According to a motion filed by Gottfried in behalf Paul D. Moore, the post confirmation officer, about $180 million has been collected under the NECC bankruptcy plan for eventual distribution to creditors and outbreak victims.
The 2012 outbreak was caused by steroids contaminated with fungus that were shipped from NECC to health care providers in 20 states. The outbreak sickened 758 patients, killing 76 of them.
About $85.7 million from the settlement fund has been distributed, according to a report submitted to Zobel earlier this week.
Victims can expect to receive a second payment in 30 to 45 days, according to the report and court testimony. However, final payments totaling $12 million, cannot be released until 2021, Gottfried told the court.
During the same court session Gottfried and Thomas Sobol, who heads a committee representing plaintiffs in the NECC bankruptcy, argued over bills totaling a little over $200,000 which Moore wants paid from the national settlement fund.
Sobol argued that the money should not be released because Moore "has decided to not tell us what he is doing."
Gottfried responded stating that under the bankruptcy plan Moore does not need approval from the court or anyone else.
"We think that the court should order the trustee (of the settlement fund) not to pay the funds requested," Sobol stated.
Following further argument, Zobel said she would defer to the bankruptcy court judge who already has scheduled a hearing for early next month.
Zobel also was given a status report on civil cases filed against a Maryland clinic where many outbreak victims were injected with tainted steroids. Some of those cases are being handled in Maryland state courts, while others remain before Zobel.
Zobel set an initial Feb. 26 trial date for the first case remaining in her court.
Ben Gastel, a Nashville Tenn. lawyer, reported that efforts to mediate a settlement of cases filed against a Crossville, Tenn. were continuing.
Contact: wfrochejr999@gmail.com


Wednesday, July 19, 2017

Trustee Reports on Outbreak Victims' Payments


By Walter F. Roche Jr.

The trustee overseeing a national settlement fund for victims of a deadly fungal meningitis outbreak says 2,026 patients have now been fully or partially approved for payment.
Lynne F. Riley filed the report today in U.S. District Court in Boston, Mass. She reported that a total of $85.77 million has been approved for distribution and initial checks have been sent out for 1,711 claimants.
The settlement fund was created under the bankruptcy of the New England Compounding Center, the company blamed for the deadly 2012 fungal meningitis outbreak.
According to federal court records, 76 patients died after being injected with fungus tainted steroids shipped from MECC's Framingham, Mass. headquarters. A total of 758 patients were sickened, many of them suffering fungal meningitis.
Riley's report was filed in advance of a hearing tomorrow before U.S. District Judge Rya Zobel, who has been overseeing the hundreds of civil cases stemming from the outbreak.
Her reports states that 2,352 claims were filed with Epiq, the company hired to process claims. She said 284 claims were finally denied.
In addition to the 1,711 checks mailed to victims from the national settlement fund, Riley reported that checks were mailed for 214 victims who filed claims against the health providers who injected them with the fungus laden steroids.
Victims are expected to get a second check approximately equal to the initial payment and Riley said those second payments are expected to be issued in about 45 days.
In prior reports she also stated that a third set of payments is likely to be issued depending on anticipated tax refunds that are earmarked for the national settlement fund.
Contact: wfrochejr999@gmail.com

Monday, July 17, 2017

U.S. Attorney Appeals Cadden Sentence


By Walter F. Roche Jr.

The Acting U.S. Attorney in Boston, Mass. has filed formal notice that he is appealing the nine year sentence imposed on a pharmacist who was convicted on 57 counts of racketeering, conspiracy and mail fraud.
According to the notice filed by Acting U.S. Attorney William Weinreb, the appeal will be filed in the U.S. Court of Appeals for the First Circuit in Boston.
Cadden, the one time president of a drug compounding company, has filed notice that he will appeal his conviction.
Cadden's 10 week trial ended March 22. He was sentenced late last month. Prosecutors had asked U.S. District Judge to impose a 35 year sentence.
Cadden and 13 others connected to the now defunct New England Compounding Center, were indicted following a two year probe of a deadly fungal meningitis outbreak that sickened 758 patients, killing 76 of them.
In a related development Stearns has set new time limits for prosecutors and the defense in the upcoming trial of co-defendant Glenn Chin.
Although he said he would consider additional time "if exigencies of trial so require," his order limits prosecutors to 75 hours and the defense to 20 hours. He had previously set a 60 hour limit for the prosecution.
Like Cadden, Chin was charged with 25 counts of second degree murder, racketeering and mail fraud. Cadden was acquitted on the second degree murder charges. He is scheduled to begin serving his sentence Aug. 7.

Wednesday, July 12, 2017

Hearing Set on Conigliaro Dismissal Motion



By Walter F. Roche Jr.




A hearing is set for next week on the only charge faced by an executive and part owner of a now defunct drug compounding firm blamed for a deadly fungal meningitis outbreak,
Seeking dismissal of a charge that he conspired to defraud the U.S. Food and Drug Administration is Gregory A. Conigliaro, who was vice president and part owner of the New England Compounding Center.
The hearing Tuesday will be held before a federal judge, who already has raised questions about the conspiracy charge.
On March 13 during the 10 week  trial of Barry J. Cadden U.S. District Judge Richard G. Stearns said, "It's hard for me to see what the FDA was defrauded of."
Conigliaro's lawyer cited that comment in a nine-page motion to have the conspiracy charge tossed.
Two other defendants, Alla Stepanets and Sharon Carter, joined in the motion.
Cadden was convicted on 57 counts including racketeering and mail fraud and has been sentenced to a nine year prison term.
Federal prosecutors responded to the dismissal motion by citing the fact that Stearns already has denied similar motions on the same charge.
"Count three clearly sets forth the elements necessary to constitute the crime of conspiracy," the 17-page prosecution filing states.
All of the defendants were indicted in December of 2014 following a two year federal probe of the 2012 fungal meningitis outbreak that took the lives of 76 patients in 20 states. State and federal regulators concluded that fungus riddled steroids produced by NECC caused the outbreak.
In the motion to dismiss, Conigliaro's lawyer cited testimony by FDA officials who told a congressional committee that the FDA did not have clear legal authority over pharmacies like NECC.
"It was impossible for the FDA to be defrauded in the manner the government alleged," the motion states.
The motion concludes that the conspiracy charge is "a pure legal impossibility."
Prosecutors responded by stating, "Tricking and interfering with the FDA is not legally impossible."
The indictment charges that Conigliaro and other NECC employees falsely claimed to the FDA that NECC was not acting as a manufacturer and that it compounded drugs only with patient specific prescriptions.
It cited an Oct. 1, 2004 letter Conigliaro sent to the FDA.
 "We are a small scale, family run compounding pharmacy only, not a manufacturer," Conigliaro wrote.
Conigliaro wore multiple hats at NECC, according to the indictment. In addition to being a vice president, he was secretary, treasurer and general manager.He was also a director and part owner of NECC's sales arm, Medical Sales Management.
Stepanets, who was a licensed pharmacist, already has been cleared of a charge that she violated the federal Food, Drug and Cosmetic Act. Stearns dismissed that charge on Oct. 4 of last year.
Contact: wfrochejr999@gmail.com



Saturday, July 8, 2017

Prosecutors Seek $75.5 Million From Cadden

By Walter F. Roche Jr.

Federal prosecutors are asking a judge to order a former drug company president to forfeit $75.5 million following his conviction on racketeering and conspiracy charges.
In a filing this week in U.S. District Court in Boston, Mass. prosecutors said the $75.5 million represents the gross proceeds received by Cadden's company, the New England Compounding Center, from March 26, 2010 and October of 2012 when NECC was shutdown.
The gross proceeds, according to the motion, were computed by an accountant, Roger H. Edwards, who also testified for the prosecution during Cadden's ten week trial.
Cadden was convicted by a jury on March 22. He was sentenced to a nine year prison sentence by U.S. District Judge Richard G. Stearns last month.
In a related development this week Cadden filed notice that he is appealing both his conviction and the prison sentence.
The government forfeiture motion argues that the forfeiture should not be reduced as a result of a recent U.S. Supreme Court ruling. In that case the court ruled that a Tennessee man could not be required to forfeit money when he did not actually profit from the illegal activity.
Assistant U.S. Attorneys Amanda Strachan and George Varghese said the so-called Honeycutt ruling should not apply to the racketeering charges on which Cadden was convicted.
In the alternative, they argued, if Stearns determines the ruling does apply, then Cadden should be ordered to forfeit $13.2 million.
The $13.2 million is the amount Cadden and his wife Lisa received during the same time period, according to the government's computation. Lisa Cadden was a shareholder in NECC.
While Cadden was convicted on racketeering, conspiracy and mail fraud charges, the jury acquitted him on second degree murder charges.
Codefendant Glenn Chin is scheduled to go on trial on Sept. 19. He too is facing second degree murder charges.
The two were among 14 persons connected to NECC who were indicted following a federal probe of the 2012 fungal meningitis outbreak caused by fungus laden steroids from the drug compounding firm. Some 76 patients in 20 states died in the outbreak.
Contact: wfrochejr999@gmail.com

Friday, July 7, 2017

Judge Limits Length Of Chin Trial

By Walter F. Roche Jr.

A federal judge has issued an order sharply limiting the time prosecutors can take to present their case against the second major defendant in the criminal case stemming from a deadly 2012 fungal meningitis outbreak.
The order by U.S. District Judge Richard G, Stearns limits prosecutors to 60 hours to present their case against Glenn Chinn, who is facing second degree murder and racketeering charges. The order also would limit Chinn's lawyers to 20 hours. That would mean the trial, excluding jury deliberations, would last about four weeks.
Federal prosecutors responded by asking Stearn to amend his order and nearly double their allotted time to 100 hours to present their case in his Boston, Mass. courtroom. The time for cross examination would be included in that limit.
Chinn's lawyers responded by urging Stearns to reject the request from the U.S. Attorney William Weinreb and Assistant U.S. Attorney Amanda Strachan.
In setting the time limits, Stearns wrote,"The court will expand the times only on a showing of necessity as the trial proceeds.:
The dispute over the time limits comes in the wake of the 10 week marathon trial of co-defendant Barry J. Cadden.
Cadden, the one time president and part owner of the New England Compounding Center, was sentenced to a nine year prison term following his conviction on racketeering, conspiracy and mail fraud charges.
Cadden and Chin are two of 14 persons connected to NECC to be indicted following a two year probe of the 2012 fungal meningitis outbreak which took the lives of 76 patients across the country. State and federal regulators concluded that fungus riddled steroids from NECC caused the outbreak.
Stearns served notice shortly after the Cadden trial began that he intended to place time limits on the subsequent trial. He told both sides to submit proposals setting limits.
Prosecutors initially proposed a 75 hour or six week limit to present its case exclusive of cross examination.
In urging Stearns to reject the request from prosecutors, Stephen Weymouth, Chin's lawyer said the judge's limit "fairly balances" the considerations set out in Stearns' February order.
"As the court's present and past experience teaches, time limits focus the presentation of the attorneys to the benefit of the jurors, the court and, ultimately, the lawyers themselves," Weymouth wrote.
Transcripts of bench conferences during the Cadden trial revealed that the judge and jurors were frustrated by the pace of the trial.
Contact: wfrochejr999@gmail.com

Wednesday, July 5, 2017

Judge Blocks Testimony from FDA, Cadden et al



By Walter F. Roche Jr.




A magistrate judge today denied a motion filed in behalf of two Tennessee clinics seeking to take sworn testimony from federal health officials and defendants and witnesses in the criminal case stemming from a deadly fungal meningitis outbreak.
Magistrate Judge Jennifer Boal turned down the request to depose Barry J. Cadden, Robert Ronzio, Joseph Connolly and John Notarianni. She also rejected a request by clinic lawyers to take testimony from the U.S. Food and Drug Administration.
Lawyers for clinics in Crossville and Oak Ridge, Tenn. had asked that an existing stay barring the depositions be lifted.
The clinics are defendants in civil suits brought by victims of the 2012 fungal meningitis outbreak caused by fungus laden drugs shipped from Cadden's company, the New England Compounding Center to health facilities around the country. The suits were consolidated before a federal judge in Boston, Mass.
The clinics had argued that the stay was no longer needed because Cadden was convicted in late March on 57 felony counts including racketeering and mail fraud. He also has been sentenced to a nine year prison term.
Boal, however, said the case against Cadden has not been finally resolved and while Ronzio has entered a guilty plea to a conspiracy charge, he has not been sentenced.
Cadden was president and part owner of NECC. Ronzio was NECC's national sales director.
Joseph Connolly, a former NECC employee, was a witness at Cadden's 10 week trial and is likely to be called to testify against codefendant Glenn Chin, whose trial is scheduled for September. John Notarianni, a former salesman for an NECC affiliate, also could be called as a witness.
In her brief order, Boal noted that circumstances had changed since the original stay was issued. At that time Cadden and Chin were scheduled to be tried at the same time, but the presiding judge subsequently severed the cases.
The motion to lift the stay was filed in behalf of the Specialty Surgery Center in Crossville, Tenn. and the PCA Pain Center in Oak Ridge, Tenn.
Suits filed against a third Tennessee clinic, the Saint Thomas Outpatient Neurosurgical Center in Nashville have been resolved under the terms of a confidential settlement estimated in excess of $20 million.
The 2012 outbreak sickened 778 patients in 20 states, killing at least 76 of them. In Tennessee 153 patients were sickened and 16 of them died.
Contact: wfrochejr999@gmail.com