$200 Million Settlement in the NECC Fungal Meningitis Case

Last month, Judge Henry J. Boroff approved the settlement of $200 million, which was part of the bankruptcy proceedings filed by New England Compounding Center (NECC). The settlement amount is more than double of the original amount.

The NECC is currently a defunct pharmacy that has been the subject of litigation for its production of tainted steroid injections used to alleviate back and joint pain. The injection had caused the death of around 64 people and injury to more than 750 people across twenty states, including Florida. Death and injury could possibly have been a result of fungal meningitis that can lead to seizures, brain damage and death, when left untreated.

According to Kimberly A. Dougherty, a Boston attorney representing 100 victims nationwide, more than 3,400 claims were filed against NECC in its bankruptcy proceedings, of which, more than 1,000 are believed to have come from those who were seriously injured or from relatives of those who died. Dougherty also sits on a committee overseeing the settlement.

14 of the former staffers of NECC, which included the top executives, were indicted on charges coming from the injuries and death caused by the meningitis outbreak in December. The company’s co-owner and head pharmacist, Barry Cadden, and supervisory pharmacist, Glenn Chin, were charged with 25 acts of second-degree murder in seven states, plus additional crimes.

Originally, about $100 million was set aside for the victims. By December 2014, the compensation fund grew to $135 million. And finally, as per the documents filed in the Boston Federal District Court, the existing amount for settlement became possible when two companies – UniFirst and Insight Health Corp. agreed to settle a totaling $70.1 million. Both the companies did business with NECC. UniFirst, a Massachusetts company that cleaned the compounding pharmacy’s “clean room,” agreed to pay $30.1 million and Insight Health Corp., a Virginia clinic that administered the drugs to some patients, agreed for $40 million. These companies will be protected from future lawsuits.

The money will be available to compensate NECC’s creditors and those who suffered or died as the result of receiving the tainted steroid injections. This plan was approved by Judge Boroff. Accordingly, lawyers expect that victims should begin receiving payments this year. The plan comes as the center’s founders, majority shareholder and several other former employees face federal racketeering charges.