Settlement Reached Over Deadly U.S. Meningitis Outbreak

Owners and insurers of a now-bankrupt Massachusetts pharmacy linked to a deadly meningitis outbreak have agreed to pay more than $100 million to compensate victims, families of victims and creditors.

The preliminary settlement announced on Monday, which requires court approval, would resolve many claims arising from tainted steroid injections linked to New England Compounding Pharmacy Inc of Framingham, Massachusetts.

According to the Centers for Disease Control and Prevention, at least 64 people died and 751 were sickened in 20 U.S. states by injections of methylprednisolone acetate, a drug typically used to ease back pain.

The outbreak occurred after NECC shipped tainted vials of the steroid to medical facilities throughout the United States.

NECC filed for bankruptcy protection Dec. 21, 2012, two months after shutting down as the outbreak began.

Thomas Sobol, a partner at Hagens Berman Sobol Shapiro representing a plaintiffs’ steering committee, called the accord “a big step forward in getting justice for victims.”

Kristen Johnson Parker, another Hagens Berman partner, in a phone interview said, “All victims of the NECC tragedy should be able to share in the funds.”

NECC’s owners, bankruptcy trustee Paul Moore and lawyers for a committee of unsecured NECC creditors also confirmed the settlement in a joint statement. The owners denied liability or wrongdoing.

Settlement funds are expected to come from the owners, insurers, tax refunds and proceeds from the sale of a related business.

“We are pleased that a significant amount of funds will become available for distribution to victims and their families as compensation for the deaths, injuries and suffering they endured as a result of this tragic meningitis outbreak,” said Moore, a partner at Duane Morris.

The accord requires final documentation and does not cover claims against various clinics that sold the tainted steroid or various vendors used by NECC.

According to NECC’s bankruptcy filing, the company’s equity shareholders were Carla Conigliaro with a 55 percent stake, Barry Cadden and Lisa Conigliaro Cadden each with a 17.5 percent stake, and Gregory Conigliaro with a 10 percent stake.

A lawyer for the owners did not immediately respond to a request for comment.

The case is In re: New England Compounding Pharmacy Inc, U.S. Bankruptcy Court, District of Massachusetts, No. 12-19882. (Reporting by Jonathan Stempel in New York; Editing by Bill Trott)