Tuesday, December 9, 2014

Court Date Set for Meningitis Bankruptcy Plan

By Walter F. Roche Jr.

A federal bankruptcy judge has set a Feb. 24 date for a hearing on a liquidation plan that could provide a total of $135 million to victims and creditors of a 2012 fungal meningitis outbreak.
The hear date was set this week by federal Judge Henry J. Boroff just days after a massive liquidation plan was filed by the trustee and a committee representing some of the creditors in the case of the New England Compounding, the Massachusetts firm blamed for the fatal outbreak.
The hearing will be held at 10 a.m. in the federal court building in Springfield, Mass.
The plan provides a total of about $135 million to pay victims and some of NECC's creditors, but $19.5 million of that total will be earmarked for victims who were treated at two health facilities, one in New Jersey and the other in North Carolina.
A total of $16 million will go to victims treated at the High Point Surgery Center in High Point, NC, while $3.5 million will go to victims treated at the Inspira Health Network in southern New Jersey.
Those special allotments, according to the plan filed by Trustee Paul Moore, came from mediated agreements with the two health providers.
Other health facilities where victims were treated with tainted spinal steroids, including the Saint Thomas Outpatient Neurosurgical Center in Nashville, Tenn., did not enter the mediation program. Claims by victims against those facilities have yet to be resolved.
Most of the remaining $115.5 million will go to victims on a point system based on the type of illness the victim suffered and its severity. The highest point scores go those who died following treatment with fungus infested methylprednisolne acetate shipped from NECC.
But the pot of money going directly to victims will be reduced by expenses, including reimbursements to health insurers, including the federally funded Medicare and Medicaid programs, which were billed for many of the victims.
According to the filings, there may be an attempt to work out a master agreement with the federal government on a set level of reimbursement covering all cases, otherwise each case will have to be settled individually.
According to attorneys representing victims, it is unlikely that victims will have to pay any taxes on their final awards. They will, however, be required to pay fees to their individual lawyers.
In addition the liquidation plan states that Duane Morris has incurred $3.4 million in fees representing the trustee and an additional $2 million is expected. Mesirow Financial, a financial advisor, has incurred fees of $420,00 and an additional $750,000 in fees are anticipated.
Other fees include $3.3 million to the Brown Rudnick law firm with $1.25 million more anticipated. The plan also calls for an overall eight per cent levy on the total payout for fees incurred under a so-called combined benefit fund that would go to some of the law firms closely involved in the overall settlement.

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