The fund to compensate patients killed and sickened by tainted drugs from New England Compounding Center grew this week to $210 million, more than double the original amount.
At least 64 people died and hundreds fell ill with fungal meningitis after taking drugs made at New England Compounding, a now-defunct and bankrupt company with operations in Framingham. Because the company was low on cash when it declared bankruptcy, lawyers pursued other businesses to recover damages for victims, a common practice in such lawsuits.
Lawyers in the case, one of the deadliest episodes involving contaminated drugs, said initial payments from the fund could start going out later this year.
“When we started this process, the view was there was so little money left to address [the victims’] grievances,” said Paul D. Moore, the trustee of the pharmacy’s Chapter 11 bankruptcy filing. “There are so many people who suffered so much.”
Originally, about $100 million was set aside for victims. In December, the compensation fund grew to $135 million .
And then this week, two companies that did business with the pharmacy agreed to settlements totaling $70.1 million, according to documents filed Tuesday in Boston Federal District Court. The companies will be protected from future lawsuits if the settlement is approved.
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 to pay $40 million. The businesses’ insurers are covering at least part of the payments, according to court documents.
An attorney for Insight Health declined to comment. Adam Soreff, a UniFirst spokesman, said his company was not responsible for the harm the drugs caused and entered the settlement to reduce the “risks and distractions” of litigation.
More than 3,400 claims have been filed against New England Compounding in its bankruptcy proceedings, and more than 1,000 of those claims are believed to have come from patients who were seriously injured or from relatives of those who died, according to Kimberly A. Dougherty, a Boston attorney who represents 100 victims nationwide and who sits on a committee overseeing the settlement.
“We hope this brings them some measure of comfort to know their waiting has been meaningful,” Dougherty said. “I think they’re all being very patient at this point.”
But even when the money is paid out, victims may still face a battle to receive it.
Dougherty said health insurance companies have placed liens on many patients, seeking access to their payouts to help cover medical bills the insurers paid. Dougherty said the federal government’s insurance programs, Medicare and Medicaid, have placed such liens.
She said lawyers are working with the government and private insurers to persuade them to back off their claims against patients.
“It’s the victims here who deserve the money, people who have been harmed,” Dougherty said.
Among those who will be standing in line are the Blatt family in Parkersburg, W.Va. More than two years after tainted steroids were injected into his spine, sparking fungal meningitis, 35-year-old Dennis Blatt battles excruciating headaches daily, said his wife, Brandy Bibbee-Blatt.
She said the family has been receiving letters from the insurance company that paid for many of her husband’s surgeries and treatments.
“If we get any money, it will be held up in court. Not only are there medical bills to cover, but insurance companies want their money,” she said.
The settlements haven’t been finalized. People who have filed claims against New England Compounding have until May to vote on the proposed settlement. Then, the plan must be approved by the court, said Moore, the court-appointed trustee who has overseen the process.
“The bankruptcy court’s order setting dates is a step toward sending out payments to victims, which, if things continue at the current pace, should go out this year,” said Kristen Johnson, lead counsel for plaintiffs in the compounding center cases.
Depending on tax issues, the $210 million available may grow, Moore said. He said the vast majority of the money will go to injured people and the relatives of those killed, with a fraction used to pay attorneys and less than $1 million likely to go to companies owed money by the compounding center.
In December, 14 former staffers of New England Compounding, including top executives, were indicted on charges stemming from the meningitis outbreak.
The company’s co-owner and head pharmacist, Barry Cadden, and its supervisory pharmacist, Glenn Chin, were charged with 25 acts of second-degree murder in seven states, plus additional crimes. Cadden and Chin pleaded not guilty in December. Prosecutors said they could face life in prison.