Conflict of Interest Charged in Meningitis Cases

By Walter F. Roche Jr.


The proposed appointment of a trustee in the settlement of cases stemming from a nationwide fungal meningitis outbreak poses both a real and perceived conflict of interest, an attorney for victims charged Wednesday.
Thomas Sobel, representing the plaintiffs steering committee, told U.S. Judge Rya Zobel members of his panel voted unanimously to oppose the appointment of David Molton to a trustee post overseeing the distribution of some $200 million in settlement funds.
Sobel charged that the hiring of Molton, as proposed by creditors of the New England Compounding Center, not only presented a conflict of interest but could result in excessive legal fees which would reduce funds available to victims of the 2012 outbreak.
He said the proposal called for Molton to hire his own law firm, Brown Rudnick, at the rate of $625 an hour to handle legal matters for the trustee.
The charges are the latest development in a long legal battle stemming from the meningitis outbreak which took the lives of 76 patients and sickened 778 across the country. Zobel is presiding over dozens of cases filed by victims of the outbreak or their survivors.
At the Wednesday hearing lawyers also clashed over the timetable for bringing the cases to an actual trial.
Attorneys for Saint Thomas Hospital in Nashville told Zobel that bringing a case or cases to trial before the end of the year was impossible and further time was needed for the discovery of evidence.
"We've got to get some discovery, " said Marcy Greer, the Saint Thomas attorney, adding that she didn't want to "rush to trial."
"We just want to make sure it is fair," she added.
Zobel, however, disagreed.
"It shouldn't be impossible at all," she said.
Plaintffs' lawyers argued that victims have already been waiting two years to assert their claims. Cited, in particular, was the case of Diane Reed of Nashville, who died in the outbreak leaving her disabled husband without his sole caretaker.
Zobel deferred action on the appointment of a trustee, noting that she had yet to read one of the briefs filed on the issue.
Sobel said the plaintiffs'  committee recommended the appointment of Lynne Riley, also a Boston attorney experienced in bankruptcy cases.
Anne Andrews, the attorney for creditors, said Molton already was familiar with the case and had been following it even before NECC filed for bankruptcy in late 2012/
She said other candidates had been considered but Molton was chosen because he was most qualified and to bring in a new attorney would result in lengthy delays.
In addition to noting Molton already was involved in the case, Sobel said the proposed $625 an hour fee for Brown Rudnick's services represented a 50 percent increase over the amount the firm has charged thus far in the case.
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