$11.5 Million Could Go to Outbreak Victims

By Walter F. Roche Jr.


A total of $11.5 million in additional relief to victims of the 2012 fungal meningitis outbreak is being held in escrow pending possible appeals by the IRS but none of the money can be released until 2020.
Paul D. Moore, the former trustee in the bankruptcy of the New England Compounding Center said in an email response to questions that while some of the $11.5 million can be released in 2020, the bulk of the funds won't be ready for release until 2021.
The additional funding comes from a provision in the bankruptcy settlement agreement with the former owners of NECC, the now defunct firm blamed for the deadly outbreak. The owners agreed to pay a portion of any income tax refunds they received into a victims' fund.
The funds are being held in an escrow account because the IRS can still dispute the refunds and claim some or all of it back.
Additional refunds could also be added to the victims fund in the future.
The $11.5 million is in addition to some $144.6 million that has already been distributed to victims under the settlement agreement. According to an annual report filed recently in U.S. District Court in Boston, Mass. that total includes some but not all of the payments made by clinics and healthcare providers who injected victims with steroids loaded with deadly fungi.
Lynne Riley, the administrator of the national settlement fund, reported that $95.8 million has been approved for payment to qualified victims from the national settlement while an additional $48.8 million obtained from settlements with healthcare providers has been approved for payment to the victims injected at those three clinics.
The figure does not include some clinic settlements which are being administered separately. The estimated $20 million from the settlement with a Nashville, Tenn. clinic, for instance, has been distributed separately.
The $11.5 million from the IRS refunds is somewhat below initial estimates of $20 million, but that number could increase.
The national settlement fund includes some $50 million paid by NECC's owners plus settlements with insurance companies and firmsd providing testing, cleaning and other services to NECC.
Victims also have collected payments from a $40 million fund being administered by the Massachusetts Attorney General. In the latest report from that agency a total of $18 million has been distributed to victims who filed valid claims. The deadline for filing from that fund has been extended to Sept. 30.
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