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PCA Victims Soon Will See Some Money

By Dan Flynn and Suzanna Schreck

A settlement has been reached between victims of the Peanut Corporation of America-caused Salmonella Typhimurium outbreak and the U.S. Bankruptcy Court trustee.

It will allow $12 million in personal liability insurance to be divided among the victims of the outbreak that peaked in December 2008, and will be distributed to victims based on severity of their injury.

Alan Maxwell, the attorney for the bankruptcy trustee, said Monday the money comes from an insurance policy that Lynchburg, VA-based Peanut Corporation of America (PCA) carried with Hartford Financial Services Group, Inc.

Bill Marler, the Seattle-based food safety attorney who apparently represents the largest number of PCA victims, said he was pleased by the settlement.

More than 700 people were sickened with the Salmonella Typhimurium outbreak strain that was associated with PCA peanut butter and peanut paste.  Nine people died as a result of their Salmonella infections.

PCA filed for bankruptcy after the outbreak led to the largest recall of peanut butter and peanut paste ingredients in history.

In addition to wiping PCA out financially, the recalls had an estimated $1 billion impact on the industry.

Some 123 victims filed claims with the U.S. Bankruptcy Court.  They will share in settlement, which is likely to be the first compensation they receive since the outbreak.

It won't likely be the last. Lawsuits against Kellogg Co. and King Nut Co. are still pending.

The outbreak was traced to the company's plants in Georgia and Texas, which are now shut down.

At the time of the outbreak, PCA was estimated to have about two percent of the market.

The 2008-2009 outbreak caused consumers to pull back demand for peanut butter by about 20 percent, but it quickly recovered.

Full post as published by Food Safety News on February 02, 2010 (boomark / email).