Checks Mailed for 1,852 Outbreak Victims

By Walter F. Roche Jr

Only four new claims from a fungal meningitis outbreak have been partially or fully approved over the past two months, according to a report filed today in U.S. District Court in Boston, Mass.
The report from Lynne F. Riley, the court appointed overseer of outbreak settlement funds, shows claims for 2.022 victims of the 2012 outbreak have been fully or partially approved. That's an increase of four from a prior report from Riley filed in late March.
The new report shows that $81.9 million in benefit checks have been issued, compared to $77.7 million cited in the March report.
Riley is overseeing the distribution of funds secured during the bankruptcy of the New England Compounding Center, the company that shipped fungus riddled steroids to health facilities across the country. Some 778 patients were sickened in the outbreak, while 76 died, most from fungal meningitis.
According to Riley's report, the checks issued thus far represent about half of what most victims can expect to finally receive from a national settlement fund.
The checks have generally been issued to attorneys representing the victims or their survivors and not directly to the actual victims.
Of the 1,852 checks issued, Riley said 209 were from separate funds established to settle claims against clinics where victims were injected with the contaminated methylprednisolone acetate purchased from NECC.
Riley reported that a total of 2,353 claims were filed and 289 have been "fully denied."
She said 14 claims that have been fully or partially denied could still be appealed.
Riley said the exact amount of second payments to victims from the national settlement fund will be calculated after all the first payments have been made and all appeals resolved.
"The tort trustee estimates that second payments will be issued this summer," the report concludes.
The report was filed with U.S. District Judge Rya Zobel, who has been presiding over hundreds of individual suits filed in federal courts across the country.
A formal status conference before Zobel had been scheduled for this week but was canceled at the request of attorneys representing plaintiffs in the case. The next status conference is scheduled for July 20.
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Outbreak Victims' Survivors to Share $437,752

By Walter F. Roche Jr.

The two daughters of a Virginia victim of the 2012 fungal meningitis outbreak will share some $437,752 under a proposed settlement agreement filed in U.S. District Court in Boston, Mass.
According to the proposal before U.S. District Court Judge Rya W. Zobel, the settlement in the case totals some $979,345 with payments coming from the Virginia clinic where the victim was injected with fungus laden steroid and from the bankruptcy of the company that produced the tainted drugs, the New England Compounding Center.
The filing states that $836,432 will be paid by the Insight Health and other Virginia defendants, while $142,913 will be paid from a trust fund set up under the NECC bankruptcy.
From that total 40 per cent or $391,738 will go to the victim's law firm, Crandall and Katt, and $23,059 will cover costs associated with the litigation.
An additional $126,794 will go to repay the state Medicaid program and a health care provider for the victim.
The two daughters agreed to split the $437,752 remaining on a 50-50 basis. Any additional settlement payments will be split the same way, the agreement states.
Insight Health filed a motion in support of the agreement which is now subject to Zobel's approval.
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Cadden Renews Acquittal Request

By Walter F. Roche Jr.

Citing a recent appeals court ruling and repeating charges that prosecutors engaged in widespread misconduct, Barry Cadden, the prime defendant in the probe of a deadly fungal meningitis outbreak, has renewed his motion for acquittal on all remaining charges.
In a 34-page filing today, Cadden's lawyers said a ruling in a recent circuit court of appeals mandates that he be acquitted on several charges. In addition the motion charges that prosecutors presented evidence they knew or should have known was "distorted or misleading."
Cadden was convicted in late March following a 10-week trial on racketeering, conspiracy and mail fraud charges. The 12-member jury acquitted Cadden on 25 counts of second degree murder.
In the latest filing Cadden is asking U.S. District Judge Richard G. Stearns to clear him of those 57 remaining counts.
Cadden was one of 14 persons connected to the New England Compounding Center to be charged following a two-year grand jury probe of a deadly fungal meningitis outbreak that sickened 758 patients across the country. Seventy-six of those patients died.
The brief filed today cites a ruling issued by the 1st Circuit Court of Appeals earlier this month setting a new standard in fraud cases like Cadden's.
The ruling "should sound the death knell" for Cadden's mail fraud convictions," the brief states, adding that prosecutors failed to present sufficient evidence that Cadden obtained money by means of alleged fraud.
"The record is barren of such evidence," the filing states, referring specifically to drugs shipped to a Las Vegas hospital and other health facilities.
Noting that only one witness from the Nevada hospital presented limited testimony, the brief states, "It is far too slender a reed on which to base a finding that there were any misrepresentations." 
On other counts, the brief states that the government presented no "decision-making witnesses" to show that there were any misrepresentations.
Cadden's lawyers also state that prosecutors misstated the jury's verdict for acquittal on the second degree murder counts.  Prosecutors had noted that voting sheets filled out by jurors showed that a majority supported the second degree murder charges in the majority of cases. A unanimous vote was required for a conviction.
"Cadden walked out of the courtroom having been duly acquitted on 25 of 25 injudiciously brought murder charges," the brief states. Noting that Cadden had conceded that drugs from NECC caused the 25 deaths, the brief states that the government nonetheless presented "extraneous and irrelevant and repetitive testimony about the causes and means of death."
Charging that the death testimony was intended to inflame the jury, the brief says the government chose to "go after the emotional jugular."
Contending that prosecutors engaged in an "overarching pattern of misconduct," the filing states that they "surreptitiously" provided jurors with a binder of test results including only government evidence and omitting rebuttal evidence presented during the trial.
"Jurors likely believed this binder contained all the evidence," the filing continues, adding, "the government was not truthful about the binder."
Charging that the government misled the court and Cadden about whether the binder was provided to jurors, the filing concludes, "This is textbook misconduct."
The filing also repeats charges that a slide show presented to jurors during closing arguments "grossly overstated the scope of the outbreak."
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NECC June Hearing Canceled

A June 1 federal court hearing on the status of payments to victims of the 2012 fungal meningitis outbreak has been canceled.
U.S. District Judge Rya Zobel issued a brief order granting a motion to cancel the scheduled session due to scheduling and other issues. The next hearing will now be held on July 20 in Zobel's Boston, Mass. courtroom.
The cancellation was requested by a committee representing victims of the deadly outbreak. There was no opposition to the request.
Despite the cancellation reports are expected to be filed on the progress of payments being made to victims from a trust fund established under the bankruptcy of the New England Compounding Center, the now defunct company blamed for the outbreak.

Attorneys Seek to Cancel Meningitis Court Session

By Walter F. Roche Jr.

The lead attorneys for victims of a deadly 2012 fungal meningitis outbreak are moving to cancel a hearing scheduled for next week on the status of suits and resolved claims in hundreds of separate suits merged before a federal judge in Boston, Mass.
In a four-page filing today, Kristen A. Johnson asked U.S. District Judge Rya Zobel to cancel the scheduled June 1 session.
Johnson stated that several pending issues won't be resolved before that date,  They include whether suits against a Maryland pain clinic will be sent to Maryland courts or remain in federal court and whether some Tennessee clinic cases will go back to their home state.
In addition she said a mediation session that could lead to a resolution of some Tennessee cases has yet to take place.
"Further scheduling conflicts have arisen that make it difficult for an attorney from Hagens Sobol and Shapiro LLC to participate in person," Johnson, a partner in that firm, wrote.
If the motion is approved the next status conference will not take place until July 20.
According to the motion despite the anticipated cancellation, reports will be filed on or before June 1 by the  Plaintiffs' Steering Committee.
She wrote that the PSC report "will address what the court needs to do now (and later) to wind down the multi-district litigation."
She added that the trustee would be reporting on the status of the first round of payments to outbreak victims and the "anticipated timing for the second round payments."
The motion states that no objections to the proposed cancellation were filed by interested parties.
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TN Clinics Seek Cadden, Ronzio, FDA Testimony

By Walter F. Roche Jr.

Charging that the testimony is critical to their defense, Tennessee clinics being sued in the fungal meningitis outbreak are asking a judge to either clarify or amend a prior order delaying depositions of defendants and witnesses in a parallel criminal case.
In a 17-page motion filed this week, the attorney for the clinics said that there was no longer any justification for delaying the depositions of Barry Cadden, Rob Ronzio and two others, along with officials of the U.S. Food and Drug Administration.
Citing the recent completion of the criminal trial of Cadden, the motion states that the time has now come for the depositions to proceed.
"The justification for staying these depositions are largely if not completely wiped out at this juncture," the filing by Chris Tardio states.
The motion was filed in behalf of Tennessee clinics in Crossville and Oak Ridge where patients were injected with fungus laden steroids shipped by NECC to health care providers in some 20 states. The 2012 outbreak sickened 778 patients and killed 76 of them.
Noting that Cadden was convicted by a jury on March 22 and Ronzio already has entered a guilty plea, the filing argues that key testimony is needed for the clinics to assert their claim that NECC was responsible for the deadly 2012 fungal meningitis outbreak.
In addition, the motion states that depositions from FDA agents are needed to show that the government agency acted recklessly by not taking action against NECC.
Stating that the FDA's involvement with NECC "spanned 10 eventful years," the motion adds, "There is no dispute that the FDA exercised some regulatory oversight of NECC."
As for Cadden and Ronzio, the clinic's lawyer acknowledged both are likely to invoke their constitutional right against self incrimination. Nonetheless the jurors in the civil case will be able to draw their own conclusions from their refusals to answer questions, the filing states.
In addition to Ronzio and Cadden, the clinics are asking U.S. District Judge Rya Zobel to allow the depositions of a former NECC employee, Joe Connolly and a salesman for NECC's sales arm, John Notarianni.
 Connolly was a key prosecution witness in Cadden's trial, detailing how NECC's operations disregarded concerns about safety and sterility and falsified records to make it appears drugs had been properly tested when they weren't.
Though Notarianni did not testify at the Cadden trial, the motion states that the former salesman has agreed to testify "substantively" about the assurances the NECC sales force gave to customers about the company's quality assurance.
Stating that "circumstances have changed," the motion concludes that delaying the depositions is no longer justified.
Though Cadden's trial ended with a conviction on 57 counts of racketeering and conspiracy, others charged in the two year outbreak investigation have yet to go on trial. Codefendant Glenn Chin's trial is scheduled for Sept. Others are scheduled for next year
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Denial of Cadden's New Trial Motion Urged

By Walter F. Roche Jr.

Stating that a federal jury "properly considered overwhelming evidence of his guilt," federal prosecutors today asked a judge to deny Barry Cadden's motion for a new trial on racketeering and mail fraud charges.
In a 48-page motion filed in U.S. District Court in Boston, Mass. federal prosecutors charged that all the arguments for a new trial already had been considered and denied either by presiding judge or the jury.
Cadden was convicted on March 22 following a 10-week trial on charges that Cadden's New England Compounding Center operated as a criminal enterprise.
He was cleared of 25 counts of second degree murder, although a majority of the jurors voted for a guilty verdict in all but four of the murder counts. A unanimous verdict was required for a conviction.
Cadden was one of 14 persons associated with NECC to be charged following a two year investigation of a deadly fungal meningitis outbreak that sickened 778 patients and killed 76 of them.
Cadden, in his motion for a new trial or acquittal, had argued that the inclusion of the murder counts prejudiced the jury.
"A majority of the jurors found Cadden guilty of 21 of 25 murders" including eight in Michigan and seven in Tennessee. The jury's verdict confirmed that racketeering acts were properly included," the filing states.
Denying Cadden's claim of "prejudicial spillover," prosecutors Amanda Strachan and George Varghese said that evidence of murders was "largely limited and tactfully presented" with no attempt to evoke emotional appeal.
"The jury properly considered overwhelming evidence of the defendant's guilt as to each of the 57 counts," the filing continues.
The prosecutors defended the inclusion of details of Cadden's actions and inactions in the days leading up to the first public announcement of the deadly outbreak in 2012.
Repeating the details of the timeline they noted that there was a several day delay from Sept. 20, when Cadden first learned of a problem with Tennessee patients becoming ill, and Sept. 26 when he began calling clinics telling them not to use NECC's spinal steroid.
 "Cadden didn't disclose people were getting sick. These were critical moments in an evolving national disaster," the brief states.
Accusing Cadden and his lawyers of sensationalism, the prosecutors charged that allegations of government misconduct in the handling a a binder of evidence was "untethered to any factual or legal foundation."
Stating that Cadden had "intimate knowledge and understanding of NECC's fraudulent compounding operations," they charged that Cadden knowingly and repeatedly violated the industry standards for compounding sterile drugs as set by the U.S. Pharmacopeia.
Recounting the testimony of witnesses from the U.S. Centers for Disease Control and Prevention, the filing states that Cadden had been warned a decade earlier that his testing procedures were flawed and too few samples were being tested.
They also defended the charges against Cadden stemming from the fact that an unlicensed technician was working for nearly two years in one of NECC's sterile drug compounding rooms. Emails, the filing states, showed Cadden had authorized the unlicensed individual to use his (Cadden's ) identification sign on so that there would be no records.
"There is next to nothing in the motion (for a new trial) that has not already been decided by this court and/or jury," the filing states, adding that Cadden actions led "to the largest public health crisis ever caused by a pharmaceutical drug."
Sentencing in Cadden's case is scheduled for June 29 before U.S. District Judge Richard G. Stearns.
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