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Fungal meningitis victims to receive money from $100-million fund

BusinessJustice SystemBankruptcyFinancially Distressed CompaniesU.S. Centers for Disease Control and Prevention
Fungal meningitis victims to receive compensation from Boston pharmacy that produced tainted drugs.
More than 750 people were infected with meningitis, 64 died. A $100-million fund has been established

Victims of a fungal meningitis outbreak traced to a tainted steroid produced by a Massachusetts compounding pharmacy will be compensated from a $100-million fund created as part of the legal settlement stemming from the 2012 incident.

The settlement was filed this week in federal bankruptcy court and must be approved by Judge Henry Boroff. The agreement on the size of the fund was reached by the parties including owners of the pharmacy, the New England Compounding Center, and lawyers for the plaintiffs.

More than 750 people in 20 states – especially in Tennessee, Michigan and Indiana -- were sickened with fungal meningitis and related infections, according to the Atlanta-based Centers for Disease Control and Prevention. At least 64 deaths were reported.

The pharmacy, based in Framingham, Mass., surrendered its license after the outbreak and filed for bankruptcy.

“This is a good recovery given the reality of the bankruptcy, but it isn’t nearly enough to make up for all that the victims and their loved ones have suffered,” Kristen Johnson, lead counsel for the plaintiffs’ steering committee, stated. The group representing the victims “is committed to maximizing victims’ recovery from the many others that contributed to their injuries and minimizing the costs that reduce the amount of money that actually makes its way into victims’ pockets.”

According to the settlement, the company's owners will pay $50 million into the fund, with its insurers contributing another $25 million. Another $20 million will come from tax refunds. A proposed sale of another company is expected to bring the total of the fund to more than $100 million.

Attorney Thomas Sobol, who represented victims, said he hoped the court would approve the plan by the end of the year, with distributions to victims beginning in early 2015.

No criminal charges have been filed in the case. The company's owners have denied wrongdoing.

Copyright © 2014, Los Angeles Times
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