published Monday, December 23rd, 2013

Massachusetts deal would create meningitis victims' fund

Boston U.S. Attorney Carmen Ortiz and Michigan Attorney General Bill Schuette address the media during a news conference in Detroit on Nov. 25, 2013.
Boston U.S. Attorney Carmen Ortiz and Michigan Attorney General Bill Schuette address the media during a news conference in Detroit on Nov. 25, 2013.
Photo by Associated Press /Chattanooga Times Free Press.

BOSTON — Attorneys for creditors of a pharmacy linked to a nationwide meningitis outbreak said Monday they have reached a preliminary settlement that would set up a victim compensation fund worth more than $100 million.

Attorney William Baldiga said the agreement was reached among creditors, bankruptcy trustee Paul D. Moore and the owners and insurers of the New England Compounding Center. The deal needs approval from a bankruptcy judge and likely will be filed in the next few weeks.

The company, based in Framingham, just west of Boston, gave up its license and filed for bankruptcy protection after it was flooded with hundreds of lawsuits from people who received tainted steroid injections.

Baldiga represents the creditors' committee set up by the bankruptcy court. Most of the creditors are victims who have filed lawsuits.

About 750 people in 20 states have developed fungal meningitis, an inflammation of the lining of the brain and spinal cord, or other infections; 64 have died. Michigan, Tennessee and Indiana were hit the hardest.

A federal investigation of the company started more than a year ago but hasn't resulted in any criminal charges. The company's owners said in a press release announcing the settlement that they deny any liability or wrongdoing but want to play a major role in establishing a fund for people who died or suffered.

Victims have until Jan. 15 to file claims.

Baldiga said he expects the fund to grow significantly with contributions from others who may have been sued. He said the settlement was reached over the weekend and those involved wanted to announce it as soon as possible so victims who are considering claims know that there is substantial money available.

The initial $100 million will come from cash contributions by the owners of NECC and proceeds from insurance, tax refunds and the sale of a related business.

Baldiga called it "an important step, but a first step only."

"We expect the fund to grow considerably as we proceed in the weeks and months to come," he said.

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