NECC trustee files compensation plan for 2012 meningitis outbreak victims

[December 04, 2014]  (Reuters) - The trustee overseeing the bankruptcy of a Massachusetts pharmacy linked to a 2012 meningitis outbreak that killed 64 people, filed a plan that would set aside at least $135 million to compensate victims and their families.

The plan was filed after a federal bankruptcy court in July approved a deal to settle scores of lawsuits against New England Compounding Center (NECC).

NECC shut down in October 2012 after authorities linked it to the worst outbreak of fungal meningitis in U.S. history due to drugs it shipped to health providers across the country. The company filed for bankruptcy two months later.

Owners of NECC, which produced a tainted steroid that sickened more than 700 people in 20 states, have already contributed nearly $50 million to the NECC estate for eventual distribution and are expected to contribute additional sums through tax refunds and the sale of a related business.

Other third parties, including NECC's insurers and certain clinics and health care providers that administered the tainted drugs, are expected to contribute $56.8 million.

"The filing of this plan marks a crucial step in this tragic saga to provide much needed financial relief to the victims and their families. When NECC entered bankruptcy, many people doubted that the victims would ever receive compensation through the bankruptcy process," said David Molton, a lawyer for NECC's creditors' committee.

If the plan is confirmed by U.S. Bankruptcy Court Judge Henry Boroff, the contributing parties will receive releases from NECC-related liability. The plan is expected to be confirmed at a hearing to be held in early spring.

A pharmacist who worked for NECC pleaded not guilty in September to the first criminal charges filed in the case.

(Reporting by Supriya Kurane in Bengaluru; Editing by Gopakumar Warrier)
 

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