Some Meningitis Payments Likely In July

By Walter F. Roche Jr.

A key effort to negotiate a master settlement on federal claims on a trust fund for victims of the 2012 fungal meningitis outbreak should be finally determined in the next week, a federal judge was told Thursday.
Fredric Ellis, a lawyer for some of the victims, told U.S. District Judge Rya Zobel in her Boston, Mass. courtroom that regardless of the outcome of those negotiations, some 1,200 victims should be receiving partial payments from the $200 million trust fund in July.
"Twelve hundred are ready to go," Ellis said in response to questions from Zobel.
The disclosure came in a one-hour status conference in hundreds of civil suits stemming from  the 2012 outbreak, which sickened 778 patients in more than 20 states, killing 76 of them.
Ellis said that the months long negotiations with officials of the federal Medicare and Medicaid programs over how much of the $200 million will go to reimburse those programs for victims' health care during the outbreak are coming to a head.
"We'll know in a week whether we'll have an agreement or not," Ellis said.
Without a master agreement, according to those familiar with the case, Medicare and Medicaid reimbursement claims will have to be decided on a case-by-case basis.
In other matters, the attorney for Nashville's Saint Thomas Network argued that the non-profit cannot be held liable directly or indirectly for claims against the Nashville clinic where victims of the outbreak were injected with fungus tainted spinal steroids.
Though the network is 50 per cent owner of the Saint Thomas Outpatient Neurosurgical Center, Marcy Greer said the network and related Saint Thomas entities had no control or responsibility over the purchase of drugs by the outpatient center.
She said the two key employees of the center, Dr. John Culclasure and Deborah Schamberg RN, were employees of the Howell Allen Clinic, which owns the other half of the neurosurgical center.
"There is really no basis for this (claim) whatsover," Greer said. "We cannot be held liable for anything Dr. Culclasure did."
Marc Chalos, representing Nashville victims, however, said the Saint Thomas entities had complete control and cited a provision in the operating agreement giving Saint Thomas veto power over clinic actions.
"In fact they did exercise control," Chalos said, citing deposition testimony of the former top Saint Thomas official Michael Schatzlein.
He noted that Saint Thomas ordered its non-profit entities not to use compounded drugs like those used in the clinic, but never issued the same edict to its for-profit entities.
In other developments, Keri L. Wintle, the attorney for Paul Moore, who served as trustee for the New England Compounding Center, reported that the owners of the defunct company have received tax refunds for the 2014 year, but refunds for other years are still awaited. NECC was the source of the tainted drugs causing the outbreak.
Those refunds could provide a significant boost to the amount available to victims, since they will be added to the $200 million trust fund, under the bankruptcy court settlement agreement. The amount of the 2014 refund, however, was not disclosed.
 Also discussed were the preparation for upcoming bellweather trials of three of the outbreak victims, scheduled to be held in Zobel's courtroom beginning in August. A July date start-up had been set originally for the cases filed in behalf of Jane Wray, Reba Temple and Basil McElwee. Temple died in the outbreak while Wray and McElwee survived.
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