Judge recommends $12M settlement in PCA case

A West Virginia man who nearly died from a salmonella infection is likely to get the largest payout, nearly $2.4 million, from the more than $12 million settlement created after last year’s outbreak tied to Lynchburg-based Peanut Corp. of America.

“Everything that could have gone wrong with you went wrong with him,” said attorney John Curry, a Charleston, W.Va.-based lawyer who represented the 59-year-old man. “He almost died.”

A federal judge recommended approval of the 122-claim settlement Wednesday. Of those, Magistrate Judge Michael Urbanski was charged with specifically reviewing settlements for the families of nine people who died and 45 children sickened.

Individual settlements to be paid in the children’s cases range from $15,000 to $395,008, a review of court records showed. Settlements in the wrongful death cases range from $98,752 to $987,520.

Kellogg Co., which manufactured peanut butter crackers with peanut products supplied by PCA, agreed to contribute toward settlements in many of the cases reviewed by Urbanski. Kellogg will pay nearly $1.5 million to children sickened in the outbreak, and $580,000 divided between two of the wrongful death claims it has settled.

“My clients have been through a lot,” said Houston-based attorney Ron Simon, who represented two of the wrongful death claimants and 18 of the children sickened. “They have mounting medical bills … they really want closure.”

U.S. District Court Judge Norman Moon must approve Urbanski’s recommendation before payments can be made. Though the parties have two weeks to raise objections to the settlement, lawyers working on the case were preparing a letter to Moon to speed up the process, Simon said.

He said he expects payments to be made within a few weeks of Moon’s approval. Minneapolis-based lawyer Brendan Flaherty and Seattle-based lawyer Bruce Clark, who represented most of the remaining claimants, said Thursday they hope the settlements are approved by Sept. 9 or 10.

Salmonella was found in a container of PCA peanut butter in January 2009, leading to recalls of the company’s product and those it supplied to other manufacturers such as Kellogg and Kanan Enterprises, which does business as “King Nut.” PCA and its subsidiaries began filing for bankruptcy protection in February 2009.

Last fall, Hartford Casualty Insurance Co., from whom PCA purchased policies protecting it from food-borne illness claims, agreed to a $12.75 million settlement. Of that, $750,000 was set aside to pay the trustee charged with settling the bankruptcy matters.

The division of the $12 million settlement was evaluated by a Georgia attorney with a significant food-borne illness practice, and who briefly represented PCA before it filed for bankruptcy. Settlements were recommended based on the severity and length of illness.

In a hearing last week before Urbanski, Clark, Flaherty and Simon indicated most of those who died were elderly people who consumed the products in retirement or nursing homes. Three of the nine who died were living in Good Samaritan nursing homes in Brainerd, Minn., though in separate buildings.

Many of the nine had related illnesses that made treatment of the salmonella infections difficult, the lawyers said. A Louisiana man, Robert Moss, was sick for a year before dying.

Adult and children’s illnesses ranged from brief periods of illness and a single doctor’s visit to hospitalization and the development of other related infections. The illness of the West Virginia man whose case warranted the more than $2 million settlement was much more severe, his lawyer said.

According to Curry, the man has accumulated more than half a million dollars in medical bills. He was hospitalized more than 100 days in the first year after the onset of the salmonella infection and lost more than 80 pounds. The man went into a coma, has permanent kidney damage and part of his intestines had to be removed. He has become incontinent. His future medical bills are expected to be in excess of $4 million, the lawyer said.

Curry would not comment about the amount of the settlement, citing a confidentiality agreement.

Urbanski did not alter any of the settlement amounts. He suggested that attorney fees in excess of 35 percent of the total settlement should be reduced to a third of the settlement. He also noted that payments ultimately made to the children will be “more substantial sums” because they are being paid into annuity accounts set to mature when they turn 18.

Attorney Tom Bondurant, who represents PCA owner Stewart Parnell, said he had not reviewed Urbanski’s report Thursday and had no comment on the matter.

Staff writer Bryan Gentry contributed.

Key developments in nationwide salmonella outbreak

Jan. 10, 2009: King Nut recalls peanut butter made by Lynchburg-based Peanut Corp. of America because salmonella was found in an open jar in Minnesota; PCA issues recall for peanut butter made in its Blakely, Ga. plant three days later.

Jan. 20, 2009: The first salmonella-related lawsuit against PCA is filed by the family of a boy who was sickened by salmonella.

Feb. 6, 2009: More than 1,500 peanut-related products have been recalled in what has become one of the nation’s largest food recalls.

Feb. 11, 2009: PCA President Stewart Parnell appears before a congressional panel investigating the salmonella outbreak but refuses to answer questions.

Feb. 13, 2009: PCA files for Chapter 7 bankruptcy liquidation.

Oct. 1, 2009: Bankruptcy court judge in Lynchburg orders establishment of a $12 million fund to pay claims from people who were sickened or died in the salmonella outbreak.

Aug. 25, 2010: A federal judge recommends approval of a $12 million settlement to pay more than 120 personal injury claims.

Check out a chart showing approved settlement payments in the case