Federal Judge Denies Stay Request for Fungal Meningitis Lawsuits

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November 29, 2012 – This week, a federal judge denied an attempt by the compounding pharmacy at the center of this year’s unprecedented fungal meningitis outbreak to stay civil proceedings against it. The move effectively allows individual complaints to move forward while a panel of judges decides whether to centralize the claims into a multidistrict litigation (MDL). For the past several months, the New England Compounding Center (NECC) has seen a steady influx of lawsuits filed against in courthouses around the country on behalf of individuals who were severely sickened or killed by contaminated steroids processed at the company’s plant in Framingham, Mass.

Compounding Pharmacy Recall Update 8/12/13: Texas-based compounding pharmacy Specialty Compounding, LLC, has issued a nationwide recall for all lots of medications it has processed since May 9. To date, at least 15 people have been diagnosed with a rare bacterial infection after being administered injections of calcium gluconate at a pair of Texas hospitals. In response to this and a number of other recent compounding pharmacy recalls, the FDA is asking Congress for increased oversight and authority over these operations.

Fungal Meningitis Update 1/30/13: This week, a federal judge ruled that assets of the company at the center of last year’s unprecedented fungal meningitis outbreak will be frozen indefinitely. An emergency injunction was placed on the New England Compounding Center (NECC) after the owners were accused of funneling more than $21 million out of the company’s assets before filing for bankruptcy in December.

What’s the problem?

On November 13, NECC filed the Motion to Stay in the U.S. District Court of Massachusetts, asking for the lawsuits to be put on hold pending a ruling by the Judicial Panel on Multidistrict Litigation (JPML) on whether to consolidate the complaints. The motion was filed by the company after several plaintiffs had attempted to secure an attachment against its limited assets, which may ultimately be insufficient to cover all of the claims filed against it.

Additionally, the plaintiffs have argued that they are entitled to a hearing on the pending request for an attachment, which they contend is reasonable considering the nature of the claims in the lawsuits, as well as the anticipated damages. Furthermore, the plaintiffs said that NECC and other entities involved with the litigation have refused to disclose information regarding their insurance coverage, and that other pending litigation should not delay the protection of assets.

This week, U.S. District Judge F. Dennis Saylor IV denied NECC’s Motion to Stay, indicating that he was unwilling to let the litigation sit idle for months, as well as pointing out that, in all likelihood, the company will soon be facing criminal charges. However, there may be a grand jury already convened to consider the possibility, but since grand juries are held in secret, there will be no way to know until after a final decision has been made.

So far, contaminated vials of methylprednisolone acetate processed by NECC have sickened at least 510 people and caused 33 deaths in 23 states around the country. The problem was discovered when FDA investigators reportedly found ‘foreign matter’ in an unopened vile of the steroid at the company’s processing plant in Framingham, Mass. The substance was later determined to be a black mold known as Exserohilum rostratum, an organism that has rarely been known to cause disease in humans.

Once the source of the outbreak was identified, NECC issued a recall for the steroid on September 26, and then later for all drugs processed by the pharmacy this year. The company voluntarily shut down all operations on October 3. NECC’s sister company, Ameridose of Westborough, Mass., also recalled all of its products in response to these developments.

To date, the fungal meningitis outbreak has resulted in at least 28 lawsuits filed against NECC, but the company has indicated that it expects “hundreds of additional personal injury and wrongful death lawsuits will eventually be filed.” The JPML is expected to schedule oral arguments for the next hearing, which is set to take place in Orlando on January 31, 2013.

If the lawsuits are ultimately consolidated into a multidistrict litigation, then all claims filed in federal courts throughout the country will be overseen by a single judge for pretrial proceedings. Both NECC and the plaintiffs have indicated that they are in favor of consolidation.

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