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.

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