Settlement talks are underway in the federal multidistrict litigation over fungus-infected steroids that allegedly led to 64 deaths and 687 other reported cases of fungal meningitis.

A proposed settlement for at least $100 million is close to being reached with the New England Compounding Pharmacy and its insurers, the plaintiffs said in a status report filed on March 12.

The plaintiffs also are undertaking mediation with other defendants who have agreed to it, the plaintiffs steering committee said in their status report.

The first status conference was held last week in the MDL since Judge Rya Zobel of the District of Massachusetts was assigned to it. Zobel’s predecessor, Judge F. Dennis Saylor IV, recused himself because lawyers from his former firm are representing one of the defendants.

New England Compounding Pharmacy filed for bankruptcy Dec. 21, 2012.

The Massachusetts Department of Public Health found that NECC did not follow industry standards for sterilizing its products and that it distributed large batches of compound products instead of requiring prescriptions for individual patients as required by its state pharmacy licenses, the plaintiffs said in their status report.

The defendants that have agreed to mediation include:

  • Liberty Industries Inc., which makes and installs cleanrooms and faces claims that their cleanrooms contained defects that made them unsuitable for their intended use
  • ARL BioPharma Inc., the outside laboratory testing company that provided microbiology reports to NECC declaring that the contaminated drugs had passed tests meeting the United States Pharmacopoeia standards
  • Victory Heating and Air Conditioning Co., Inc., which installed the HVAC system utilized in the cleanrooms
  • New Jersey healthcare provider Insight.

Eric Green of Resolutions LLC is the mediator, according to court papers.

The plaintiffs also allege that dozens of healthcare providers are liable for their injuries under theories of products liability and medical negligence.

“Given the obvious, visible deficiencies in NECC’s sterility practices, coupled with its history of contamination problems and heavily discounted pricing, any reasonable due diligence by a provider purchasing supposedly sterile products from NECC for administration to patients would have revealed that NECC’s products endangered patient safety,” the plaintiffs said in their status report.

The plaintiff allege that Tennessee healthcare defendants, including St. Thomas Hospital defendants from Tennessee, participated in “NECC’s scheme to evade patient safety rules and evade detection of their violations by the state regulators.”

The plaintiffs also want the first bellwether trial to involve plaintiffs that receive treatment at St. Thomas Clinic in Nashville, Tenn.

Defendant UniFirst Corporation is another defendant that has not elected to participate in the mediation, the plaintiffs said. UniFirst provides services to industries that use cleanroom-controlled environments, and the plaintiffs allege that UniFirst is liable for their injuries because of its negligence in cleaning the NECC cleanrooms and allowing contaminants into every cleanroom where the NECC products were compounded.

Amaris Elliott-Engel is a contributing writer for