Latest News 2013 January Pharmacy, Blamed for 39 Meningitis Deaths, Files for Bankruptcy

Pharmacy, Blamed for 39 Meningitis Deaths, Files for Bankruptcy

The Chicago Tribune and several other media sites has reported that the pharmacy company known for causing a Meningitis outbreak, that killed 39 and injured over 600 nationwide, filed for Chapter 11 bankruptcy On December 21.

Massachusetts-based New England Compounding Center, NECC, had shuttered this past October amidst claims that the methylprednisolone acetate steroid it shipped to clients to treat back pain had been contaminated.

The filing was largely expected due to the company being forced to face the cost of defending its lawsuits from victims in 19 states. The outbreak began in September.

One attorney, Fredric Ellis, representing several people in Michigan, said, "When you file for bankruptcy, that stays all litigation — stops it in its tracks — against you. Basically we're looking for other defendants that had involvement with this facility."

William Baldiga, an attorney working with Massachusetts's victims, said, "One of the things that's going to have to be resolved in the coming weeks is whether all of those types of claims should be handled by the bankruptcy court, and that's a real possibility."

Records with the U.S. Bankruptcy Court for the District of Massachusetts show NECC's debts at less than $2.34 million and assets between $1 million to $10 million.

Though equity in a company in bankruptcy usually has no value, NECC lists its shareholders as: Carla Conigliaro with a 55 percent stake, Barry Cadden with a 17.5 percent stake, Lisa Conigliaro Cadden with a 17.5 percent stake and Gregory Conigliaro with a 10 percent stake.

McKesson Drug is the largest unsecured shareholder. NECC shows that the drug company is owed $143,169.

NECC claims that the bankruptcy filing was done to allow for larger and swifter payments to its creditors, and contended that not filing would have only allowed for gradual payouts through litigation.

Keith Lowey will be the independent director, chief restructuring officer and overseer of the compensation fund, according to NECC.

Lowey said, "We want to assemble a substantial fund, and then distribute it fairly and efficiently to those who are entitled to relief… We recognize the need to compensate those affected by the meningitis outbreak fairly and appropriately."

Daniel Cohn, with Murtha Cullina LLP, is NECC's bankruptcy counsel.

Oversights in the drug mixing industry, reported by health regulators, hadn't been noted for NECC prior to the outbreak.

Beginning in 1999, after starting operations in 1998, problems with NECC – according to the hundreds of pages of documents requested and obtained under the Freedom of Information Act – began to surface.

Those records allegedly contain documentation showing that regulators could have looked into NECC; however, sanctions were not made while complaints were being lodged against NECC.

The pages were first looked into when NECC had given thousands of steroid shots across the United States.

Blank prescriptions, handed out by a company official, was one of the first problems reported. In 2006 an outside evaluation showed that NECC was inadequate in both its documentation and in its process controls involving sterilization.

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