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Fungal meningitis victims are finally getting some financial compensation

Oct 4, 2016

Four years after the fungal meningitis outbreak that sickened more than 260 people and killed 19 in Michigan, victims are just now starting to see some compensation.

“Checks are just now starting to come out,” says Marc Lipton, a Southfield attorney who represents dozens of the fungal meningitis patients. “I mean, the very first checks are being issued. And they’re going to be on a rolling basis.”

The outbreak started when the New England Compounding Center in Framingham, Massachusetts, shipped out massive amounts of tainted pain medications. Those medications were supposed to be filled only for individual prescriptions, but NECC flagrantly violated those guidelines. On a local level, pain clinics all over the country injected those steroid injections deep into patients’ bodies, as part of regular treatments for chronic back or spinal pain.

The result was an epidemic of fungal meningitis, in which a mold that typically attacks plants caused life-threatening illnesses and spinal abscesses in hundreds of patients. The anti-fungal medications were almost as bad, causing hallucinations, intense pain, and temporary paralysis.  

Part of the long holdup in getting victims compensation, was the negotiations with insurance companies, as well as Medicare and Medicaid, about how big of a chunk those insurers should get from whatever victims receive. That's because insurers shelled out a lot of money for people’s care. But critics say if the federal government (which includes Medicare and Medicaid) had been doing a better job in regulating the New England Compounding Center, this entire outbreak could have been prevented.

Now an agreement has been reached with Medicare and Blue Cross Blue Shield of Michigan, and some other insurance companies, Lipton says.

“For most people it ranges from 10% to 22.5% [that will go to insurance],” he said.

In total here, there are currently three sources of money for victims:

1)    A federal bankruptcy judge in Massachusetts struck a deal with the New England Compounding Center, which was the pharmacy churning out massive amounts of these tainted steroid injections and shipping them throughout the country, to distribute $200 million to victims.

2)    A class action lawsuit against Michigan Pain Specialists, which injected hundreds of patients with these tainted medications, for $10.5 million.

3)    $40 million in federal funds, allocated by Congress, and administered by the Massachusetts attorney general’s office. That’s for actual out-of-pocket expenses: medical expenses, funeral costs, lost wages, etc. Victims or their survivors are eligible for up to $50,000. They’re still figuring out whether the money that will reimburse the insurance companies (and Medicare and Medicaid) will count as an “expense” that can be reimbursed under this fund.  

But nobody’s getting a windfall here, Lipton says. As the money from the NECC settlement rolls out, people who were injected, but didn’t actually get fungal meningitis, could get as little as $600 to as much as $10,000.

Those who lost a family member or were more seriously hurt, could receive somewhere between $50,000 to $250,000 from the NECC settlement, depending on their cases

“If you’re at the top end of the scale, it’s because you have suffered an injury that, first of all, is permanent,” Lipton says. “That required months and months in a hospital, multiple surgeries, years on anti-fungal medication – frankly it’s the kind of injury that, if we weren’t in bankruptcy or dealing with underfunded agencies, anybody who knew the situation would say, ‘that person’s entitled to millions and millions of dollars,’” he says.

And then victims will have to turn around and pay their insurance companies up to 22.5% of whatever they get from the NECC settlement.  

As for the Michigan settlement with local pain clinics, Lipton says victims can expect to get about a third of whatever they receive from the NECC fund.

Doing some back-of-the-envelope math, that basically means if you lost your spouse or your parent, or you’re permanently injured and in constant pain, you could be walking away – in total here – with about $300,000 total. “Yeah, most. At most,” Lipton sighs.

And out of that, victims will have to pay back  their insurance company.