Judge approves salmonella settlements tied to Lynchburg firm

Settlement payments for the victims of a salmonella outbreak tied to Lynchburg-based Peanut Corp. of America are expected within the next few weeks, attorneys in the case said Thursday.

U.S. District Court Judge Norman Moon on Thursday approved a settlement of more than $12 million covering 122 claims in the case. The order allows for immediate payment to the 68 adults who got sick, but survived. Payments in the wrongful death and children’s cases will be authorized in separate individual orders to come, Moon wrote.

Seattle-based attorney Bruce Clark, whose law firm represented about half of the wrongful death and children’s cases, said clients have expressed a mix of relief and delight.

“They’ve gotten to the end of the road,” Clark said. “Their children or themselves are going to see the money. It has been such a long road with so many twists and turns. Some were skeptical that this would ever happen.”

The first case of salmonella tied to the outbreak was reported in September 2008, according to the Centers for Disease Control. Salmonella was found in a container of rebranded PCA peanut butter in January 2009, leading to recalls of the company’s products and those it supplied to manufacturers such as Kellogg Co. and Kanan Enterprises, which does business as “King Nut.”

PCA and its subsidiaries subsequently started filing for bankruptcy protection in February 2009.

Hartford Casualty Insurance Co., which held PCA-purchased insurance policies, agreed to pay a $12.75 million settlement last fall. Of that, $750,000 was set aside to pay the trustee and his attorney who were charged with assisting in the distribution of the remaining $12 million.

Kellogg has agreed to pay more than $2 million to the children sickened and to the families of people who died. In some cases, the company has also reached undisclosed settlements with adults who were sickened.

The largest single payment, nearly $2.4 million, will go to a West Virginia man who nearly died from his infection and who spent about a third of the first year after he got sick in a hospital. According to his lawyer, John Curry of Charleston, W.Va., the 59-year-old was so sickened by his salmonella infection that he is expected to have to pay more than $4 million in future medical bills.

A review of court records shows a wide range of payments. Some of the adult payments from the insurance settlement are as low as $3,950, not including any payments from a third-party manufacturer. Settlements in the children’s cases range from $15,000 to $395,008. Wrongful death settlements range from $98,752 to $987,520.

According to statements made by the lawyers in the case at an Aug. 13 hearing, the settlement amounts were determined according to the severity and duration of the person’s illness. Reaching agreement in some of the wrongful death cases was difficult because most of those who died were elderly and already in nursing homes and had pre-existing health problems, they said.

Minneapolis-based lawyer Brendan Flaherty, whose firm represented a variety of victims, said checks should be cut no later than Sept. 14, when the lawyer appointed to oversee the PCA’s bankruptcy returns from vacation. Flaherty said he is telling clients they should start seeing the money by the end of the month.

“The best part of my job is calling these people who have been waiting a long time in a process we have very little control over,” he said. “They’re ecstatic.”

An order issued by the judge Wednesday barring an Arlington man from recovering any money from the settlement caused confusion among some of the victims’ lawyers who prematurely announced that the settlement had been approved.

The only change in Thursday’s order to the settlements agreed to by the lawyers and victims is a limitation on attorneys’ fees to 35 percent. The order reduces anything over 35 percent — some fees were in excess of 40 percent — to one third of the total settlement per claim.