Victims of meningitis outbreak unlikely to collect much money from compounding firm’s insurance
Victims of the deadly fungal meningitis outbreak traced to a Framingham pharmacy aren’t likely to collect much money from the company’s insurance policies, a lawyer for the bankrupt firm said at a creditors meeting in Boston Wednesday.
Daniel Cohn, a Boston attorney representing the New England Compounding Center, said he was reluctant to estimate how much the company hopes to receive from the policies to pay victims because the issue is complex and subject to negotiation. But he said personal injury lawyers who have reviewed the policies “were very disappointed.”
Paul Moore, the trustee overseeing the Chapter 11 bankruptcy case, added that the coverage “is surprisingly small.”
The company reported it had scant assets when it filed for bankruptcy last month -- $1.3 million in cash. It also reported nearly $900,000 in debt – not counting the tens or hundreds of millions of dollars it could potentially owe to victims of tainted steroid injections.
At least 45 people have died and 693 have become ill from fungal meningitis or other complications linked to steroid injections produced by the compounding pharmacy, according to the US Centers for Disease Control and Prevention.
Because of the small amount of money readily available, some creditors are also pursuing claims against the pharmacy owners and affiliated companies.
Bankruptcy records show four family members who own the company received $16 million in wages and shareholder distributions in the year leading up to the bankruptcy, while affiliated companies and other insiders received another $5 million. In some cases, creditors can recover payments that were made to insiders shortly before a bankruptcy filing.
On Monday, US Bankruptcy Court Judge Henry Boroff issued a temporary restraining order barring the owners from moving or using any of their personal assets, except for normal expenses and legal fees.Todd Wallack can be reached at email@example.com. Follow him on Twitter @twallack.