Efforts Underway to Protect Awards to Outbreak Victims

By Walter F. Roche Jr.

Hundreds of victims of the 2012 deadly fungal meningitis outbreak have been put on notice that insurance companies and the federal government will be seeking a share of any cash awards they win from a related $200 million bankruptcy settlement.
The lien notices, in fact, have sparked a wave of anger and outrage.
Behind the scenes, however, efforts are underway to at least ease the impact of those so-called subrogation claims.
Frederic Ellis, a Boston attorney who represents victims of the outbreak, said in an interview on Monday that negotiations have been initiated with the federal agency, the Centers for Medicare and Medicaid Services, to reduce the amount of claims.
"We're trying to negotiate a settlement," Ellis said, adding that agreements for a reduced payment are common in mass tort claim cases. "We do it all the time."
"This is common in these kinds of cases," Ellis said citing a settlement reached in a case involving faulty transvaginal mesh.
He said the hope is to reach a settlement based on the type of injury suffered by victims. A similar method, utilizing a point system, has been established to determine the awards in  the bankruptcy of the New England Compounding Center, the defunct Massachusetts drug firm blamed for the outbreak.
"We're trying to simplify things and avoid extra administrative costs," Ellis said. "We're trying to come up with a formula."
He said that since the majority of victims were elderly and on Medicare, the initial negotiations are with CMS. Once an agreement is reached there, Ellis said they will turn to major insurance carriers to attempt parallel agreements.
In a court session last week in Boston Ellis disclosed that the anticipated awards for the most severe cases, those resulting in death, were expected to be in the range of $175,000 to $200,000.
He stressed that those figures were just an estimate and could change depending upon some yet to be determined factors, such as tax refunds that the former NECC owners have agreed to give up.
Ellis said in the interview that letters informing victims of expected awards from the bankruptcy could go out before the end of the year, while actual checks would be issued by early Spring.
He said the first payments will be "interim awards," set at some where between 50 and 70 percent of the anticipated final award.
The 2012 outbreak sickened 778 patients across the country, killing 76 of them. State and federal regulators concluded thousands of fungus riddled vials of methylprednisolone acetate from NECC were the cause.
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