In September 2012, the Centers for Disease Control and Prevention (CDC), in collaboration with state and local health departments and the Food and Drug Administration (FDA) , began investigating a multistate outbreak of fungal meningitis and other infections among patients who received contaminated preservative-free MPA steroid injections from the New England Compounding Center in Framingham, Massachusetts. The company operating the compounding pharmacy, known as New England Compounding Pharmacy, Inc. became deluged with lawsuits as the outbreak caused 64 deaths and approximately 700 total cases.
This company proceeded to file Chapter 11 bankruptcy at the end of 2012 as it became clear that its potential liability exposure far exceeded the size of its corporate assets. Now it has agreed to a settlement providing $100 million toward compensation for victims. The agreement, which includes money from insurers, will be implemented as part of a Chapter 11 plan, according to a filing by a trustee seeking approval of the settlement in U.S. Bankruptcy Court in Boston. The funds for the victim’s fund will come from various sources: (1) the company’s owners will contribute $47.75 million; (2) $20 million in tax refunds due the company will be redirected; (3) all insurance proceeds covering claims total $29 million; and (4) the sale of a business owned by the shareholders will provide another $10 million.
If approved by the federal bankruptcy judge, the plan would release company officers from further claims related to the tainted products. However, the confirmation of the Chapter 11 bankruptcy plan would not have the effect of stopping the pending criminal investigations about the matter so company officials could still be potentially liable if any criminal actions are filed against the company or any of its officers.
In Albuquerque, Giddens & Gatton Law, PC has attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases as well as receiverships and other remedies available to creditors. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, PC at (505) 633-6298 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, PC is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.