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A settlement has been reached that could result in a more than $100 million fund for victims of a nationwide meningitis outbreak linked to a Massachusetts compounding pharmacy.
The agreement between the owners and insurers of New England Compounding Center and court-appointed bankruptcy trustee Paul Moore was filed Tuesday with a U.S. bankruptcy court.
The settlement, which must be approved by a judge, calls for NECC's owners to pay $50 million into the fund, with insurers contributing another $25 million. Lawyers said tax refunds and the sale of an affiliated company would bring the total to above $100 million.
Federal officials said the outbreak, blamed on a tainted steroid, sickened about 750 people in 20 states, with 64 deaths.
Thomas Sobol, an attorney representing victims, called the settlement an important step toward fair compensation.
Transcript of WBUR's conversation with bankruptcy trustee Paul Moore:
Bob Oakes: Tell us what this settlement is intended to do.
Paul Moore: This settlement is intended to be the first step in creating a fund to distribute to the victims of that outbreak.
How might the money be apportioned to victims? Do we know that yet or is it too early to say?
Bankruptcy law has a principle of equitable distribution so all similarly situated creditors share equally in the proceeds. So, it will be a function of how large the fund is and the number of claims.
When might it start being distributed?
Bankruptcy is a complicated process. And this case, this is the first step. We also are pursuing other parties who may be responsible and may be obligated to contribute to this fund. We will pursue those once this settlement is approved and we're hopeful that by year-end we can have a plan confirmed and begin making distributions as soon as possible thereafter.
In a bankruptcy proceeding when a creditor is owed money it might be easy to say that, OK, this person is going to get 10 cents on the dollar that they're owed.
How do you make a distinction like that, though, when you're talking about the people who are injured by these tainted steroids, and their injuries may be more severe or less severe than other people who end up in this creditor's pool hoping to get some of this money?
Well, obviously, you can't compare an economic loss to injury or death. The question you're asking is really a function of the amount of the claim. I think what would happen here in terms of trying to somehow equalize that as if you possibly could would be the amount of the claim, obviously, would be greater, you know, for a personal injury or a death, but it's not a science, obviously, and there's no way really that one can adequately ever compensate somebody for that.
All we can do is do the best we can to get as much money available as we can to help those victims and to compensate them for their losses and their medical expenses.
In terms of money, does this settle the liability faced by the owners of the New England Compounding Center?
It settles the civil liability. Obviously it doesn't settle any criminal matters that may proceed from here.