Sunday, March 29, 2015

Cap on Attorneys' Fees Suggested in Meningitis Outbreak Cases

By Walter F. Roche Jr.

A  key attorney representing victims of the 2012 fatal fungal meningitis outbreak has raised the issue of capping the amount of legal fees that could be levied against those victims or their survivors.
In a filing in the bankruptcy case of the New England Compounding Center, attorney Thomas Sobol, a lead attorney for plaintiffs, told the court he was considering proposing a cap, despite the fact that the majority of his colleagues don't currently agree.
Sobol noted that the issue of attorneys fees was not addressed in the massive disclosure statement filed recently by the bankruptcy trustee,  Paul D. Moore.
In the filing Sobol noted that  the presiding judge, Henry Boroff, had raised the issue previously.
At the June 17, 2014 Boroff had asked that after administrative expenses of the bankruptcy case were paid "what is the liklihood that the remaining portion will be swallowed up by that person's attorneys' fees and medical liens."
The judge noted that while the settlement might seem to be "an awfully big number," the funds recovered in the bankruptcy would have to be divvied up among hundreds of victims. The latest filings show a little over $200 million is expected to be placed in a trust fund for victims.
Sobol said that he had not yet made a final decision on filing such a motion but that he felt the matter should be addressed.
"The tort victims and the interests of justice require a full airing of the issue," Sobol wrote in the filing.
In the same filing, Sobol disputed claims by Liberty Industries that it was not liable to any of the victims. Liberty was the company that designed and built the cleanrooms where NECC produced fungus tainted methylprednisolone acetate, blamed for the outbreak.
Sobol also disputed Liberty's claim that a substantial judgment would put the firm into bankruptcy.
He charged that experts hired by the plaintiffs found "large gaps" in the ceilings of the cleanrooms and that the design for the rooms was substantially flawed.
Liberty contends that it designed and built the rooms in compliance with federal and contractual requirements and any dealings it had with NECC had ended years before the outbreak.

Sunday, March 22, 2015

Key Deposition Set In Meningitis Outbreak Suits

By Walter F. Roche Jr.

A key figure in the fungal meningitis outbreak will face questioning tomorrow as dozens of suits filed in behalf of victims inch forward.
Scheduled for a deposition by lawyers for those Nashville area victims is Dr. John Culclasure, the physician who administered injections of a spinal steroid to dozens of patients at the Saint Thomas Outpatient Neurosurgical Center in 2012.
Culclasure, who has been named as a defendant in many cases, has denied any responsibility for the fungal meningitis that many of his patients suffered.
Depositions, which are not open to the public, already have been taken from two other officials at the Nashville clinic and of officials of the Specialty Surgery Center in Crossville, where additional outbreak victims were injected.
The 2012 outbreak sickened 778 patients, killing 76 of them.
The questioning of Culclasure comes at the same time victims of the outbreak are being asked to approve a bankruptcy plan for the New England Compounding Center, the now defunct firm that shipped fungus tainted methylprednisolone acetate to health facilities across the country.
Dennis O'Brien of Jamestown, Tenn. said in an interview that he hasn't actually received a ballot yet but he was informed both by his attorney and a court notice that a ballot would soon be on the way.
O'Brien, one of the victims treated at the Nashville clinic, said he intends to vote in favor of the plan that would provide an estimated $215 million to the hundreds of victims or their survivors.
Nashville attorney Mark Chalos said that he expected his clients would be getting their ballots imminently. And while he said he believes the settlement is fair, he said it will be up to the individual victims to decide whether to approve the plan.
Other Nashville area attorneys said their clients already had received their ballots. Several victims contacted also reported their ballots had arrived.
The plan includes nearly $50 million from the owners of NECC along with payments from insurance companies for NECC and related companies. The settlement fund got a last minute boost of $30.5 million from UniFirst, a  company on contract to provide cleaning services for NECC 's sterile production facilities.
Nearly $60 million of the $215 million will be set aside for victims treated at health facilities in New Jersey, North Carolina and Virginia.
Though a settlement has been reached with those facilities where patients were injected, a settlement has not been reached with the Saint Thomas clinic.
The ballots must be submitted by May 15 at 4 p.m. A hearing on the plan will be held four days later. If the plan is approved victims could get payments by the end of the year, some three years after the outbreak.

Wednesday, March 4, 2015

Votes on Compounding Case to Be Weighted

By Walter F. Roche Jr.

Court documents spelling out a proposed liquidation plan for a bankrupt Massachusetts drug compounding firm show that victims' votes on that proposal will be weighted depending on the severity of their illness during a 2012 nationwide fungal meningitis outbreak.
The voting details were among dozens of documents filed recently in U.S. Bankruptcy Court in Springfield, Mass.
Bankruptcy Judge Henry J. Boroff issued an order Tuesday setting a 4 p.m. May 15 deadline for victims and certain creditors to vote on the liquidation plan submitted by Paul D. Moore, the bankruptcy trustee for the New England Compounding Center.
NECC has been blamed for the 2012 outbreak which sickened 778 people, killing 76 of them. An estimated $210 million will be available to satisfy claims from the victims, their survivors and certain creditors. Some of the proceeds also will go to defray costs of the bankruptcy and attorneys fees.
If the plan is approved, attorneys involved in the case say that money could be distributed later this year.
According to the court documents, the greatest weight, 120 points, will be given to claims filed in behalf of the survivors of victims who died in the outbreak. Eighty points will go to victims who contracted fungal meningitis, suffered a stroke, infection or abscess, while 10 points will go to those who suffered symptoms such as a headache, fever or neck pain.
Claimants who were simply exposed to an NECC product will get two points while claimants who suffered no direct injury but did face loss of consortium will get one point.
The plan also provides a detailed point system for the eventual award of damages. That matrix system also is based on the severity of the illness and includes other factors such as the length and number of hospitalizations, marital and family status and age.
The $215 million, according to the court filings, will be broken up into one national fund of up to $158 million from which all qualified victims will be paid. Smaller funds ranging from $3.5 million to $40 million will be set aside for victims who were injected with NECC steroids at three clinics.
Those three clinics reached settlement agreements as part of the liquidation plan.
The $40 million will be available  for victims treated by the Insight Imaging Centers in Virginia, while the $3.5 million will be set aside for victims treated at the High Point Surgery Center in North Carolina. A total of $16 million is earmarked for victims treated at the Inspira Health Network in New Jersey.
The funds generated from the bankruptcy will go into a trust fund which will be overseen by an administrator who will review the claims of the victims or their survivors.
In addition to the voting deadline, Boroff's order sets a May 5 deadline for interested parties to file specific objections to the plan. He also set a hearing on the plan for May 19 in his Springfield courtroom.


Tuesday, March 3, 2015

Judge Approves Disclosure Statement, Sets Vote

By Walter F. Roche Jr.

A federal bankruptcy judge has set a May 5 deadline for a vote on the liquidation plan for the firm blamed for a nationwide fungal meningitis outbreak that killed 76 patients across the country.
In a nine-page order issued Tuesday U.S. Bankruptcy Judge Henry Boroff approved a detailed disclosure statement filed by Paul D. Moore, the trustee for the New England Compounding Center.
Ballots will be mailed to the hundreds of victims of the 2012 outbreak later this month, according to the order.
Under the plan some $210 million could  be provided to compensate victims or their survivors and creditors of the defunct compounding firm.
In his ruling Boroff concluded that the plan was in the best interests of all parties.
Kristen Johnson, one of the attorneys for victims said Boroff's order "was another step in the right direction," adding that she was hopeful claimants could begin collecting payments before the end of the year.
Nashville attorney Mark Chalos, another plaintiffs' attorney, said he was grateful that many of the defendants stepped forward and acknowledged responsibility.
He said he was pleased Boroff had approved "an orderly process for claimants to evaluate and to vote on the plan."
The funds from the liquidation will be placed in a trust fund with the assets being distributed to victims on an elaborate point system based on a variety of factors including the age of the victim and the length and severity of illness.
The 2012 outbreak, state and federal regulators have concluded, was caused by fungus tainted steroids shipped by NECC to health care providers across the country. States that were particularly hard hit were Michigan, Indiana, Tennessee and Virginia.
Overall some 778 patients were stricken with illnesses in the outbreak.
Under the plan nearly $50 million will come from the owners of NECC, while smaller amounts will come from insurers and related companies.
Just last week an agreement was reached with UniFirst Corp, a company that provided cleaning services to NECC. The company and its insurers will provide $35.5 million to the trust fund.
In a letter to creditors filed with the court, Moore noted that some of the $210 million will go to expenses accrued over the two year since the case was filed.  The agreement also limits some of the funding to victims who were treated at a handful of clinics that agreed to a settlement.
But, he noted, that additional funding may be obtained from those that declined settlements.
Those include the Saint Thomas Outpatient Neurosurgical Center in Nashville.
Moore wrote that the "tort trustee can pursue further compensation for the benefit of creditors from third parties who have chosen not to settle NECC claims against them."
Action in the bankruptcy case comes as 14 owners and staffers of NECC are under indictment as a result of a federal probe of the outbreak. NECC cofounder and part owner Barry Cadden and chief pharmacist Glenn Chin face multiple second degree murder charges. All the defendants have entered not guilty pleas.