Marler Blog - Providing commentary on food poisoning outbreaks & litigation

As Dan Fitzpatrick reported for his Pittsburgh Post-Gazette story, Hepatitis waning, but costs continue to climb, the Chi Chi's hepatitis A outbreak in Beaver County is causing serious money problems for local families and businesses.

There is not one local business "where I cannot think of a person affected," said Beaver County Chamber of Commerce director Cynthia Gitnik.

The work of tabulating the financial impact of the nation's worst outbreak of hepatitis A is just beginning, and so far it is hard to predict how much it will cost.

I am representing more than 80 of the hepatitis A victims. As Fitzpatrick reported, I predict that as much as $25 million has already been spent on medical costs and lost in wages. Eventually, the costs could top $100 million, once pain and suffering charges are tacked on to damage claims in court.

"What you are looking at is a substantial economic loss to the citizens of Pennsylvania," he said.

Other attorneys involved in the case backed away from Marler's $100 million prediction. An examination of past outbreaks shows that the impact most likely will run into the millions but certainly will not dent a local economy that generates output of about $112 billion annually and total annual wages of about $37 billion.

Looking to the past as a guide, similar outbreaks in other parts of the country have varied in economic impact, averaging a cost per person of anywhere from $1,817 to $3,837. A 1996 Denver food-borne outbreak affected 43 people and cost the community $800,000, according to one study. A 1997-1998 Hepatitis A attack in Spokane, Wash., sickened 590 people and resulted in an economic impact of $2.25 million, according to another study.

But Pittsburgh's case is arguably much more severe -- and thus more expensive.

As the Associated Press reported, Chi-Chi's faces 5 lawsuits over hepatitis, and more lawsuits are likely to follow. The outbreak has killed three people and sickened more than 600. The challenge we face in getting these victims compensated is partially that the company filed for Chapter 11 bankruptcy, so all claims against the company are automatically stayed, meaning all lawsuits have to be approved by the bankruptcy court in order to proceed. The other problem is insurance.

The company has $51 million dollars worth of liability insurance, which likely won't cover the costs of compensating this many victims, especially considering the outbreak has caused deaths and liver transplants.

As the Associated Press reports:

Hundreds of people sued the Jack in the Box fast-food chain after it served hamburger tainted with E. coli in 1993 that killed three children and sickened hundreds.

The burger chain offered to pay medical bills and some lost wages. Still, the linchpin to settling the lawsuits was $100 million in liability insurance, said William Marler, a Seattle attorney who has filed three of the five Chi-Chi's lawsuits so far.

Chi-Chi's has stated in bankruptcy documents that it has $51 million in liability insurance - about half as much as Marler believes the company will need.

Marler represents some 80 people who contracted hepatitis A or received shots to prevent it after eating at the restaurant, about 25 miles northwest of Pittsburgh. The three suits Marler has filed have been put on hold by a judge to protect creditors of the Louisville, Ky.-based chain.

Some good news for those sickened by Chi Chi's hepatitis A outbreak: attorneys for the company have asked the bankruptcy court for permission to pay up to $20,000 to each victim for medical expenses, lost wages and related costs.

"We received approval from the U.S Bankruptcy Court to proceed with a plan to begin to respond to the needs of the affected customers," said Bill Zavertnik, the company's chief operating officer. "We established a toll-free number to enable all our customers and employees affected by the outbreak who are having questions or concerns about hepatitis A to contact us."

"It was an important first step," said local attorney Jerry Meyers, who with a Seattle-based law firm represents about 60 people who became ill in the outbreak. "The real challenge will be to see to it that the people who have suffered serious injuries are fairly and appropriately compensated."

Although my firm filed lawsuits against Chi Chi's before the company filed for Chapter 11 bankruptcy on October 8, all claims on the company are automatically stayed. Chi Chi's request of the bankruptcy court to allow the company to spend up to $500,000 to reimburse outbreak victims is the first step in accessing the company's $51 million in liability insurance to compensate victims.

"We didn't have a problem with a claims process being started and a claims-handling agency being engaged by [the company]," Marler said. "But we felt strongly that people shouldn't sign away their rights."

Affected people will not have to waive their rights to pursue future claims against the company to get reimbursed for their out-of-pocket expenses, he added.

I, along with local counsel, will soon be asking the bankruptcy court to lift the stay so we can file lawsuits for our clients, at least one of whom has a medical bill for more than $100,000 that is not covered by health insurance.

Pennsylvania health officials reported Tuesday that there are at least 300 confirmed cases of hepatitis A linked to the Beaver County Chi Chi's outbreak. Not all were from the Pittsburgh area. Other confirmed cases were from Ohio (31), West Virginia (8), Florida (1), and South Carolina (1).

So far, the outbreak has claimed one life. 38-year-old Jeff Cook of Aliquippa got sick after his family ate at the Chi-Chi's Restaurant in early October and died of liver failure Friday following a transplant.

On Tuesday, the University of Pittsburgh Medical reported that four people were in fair condition and two were still in critical condition from illnesses tied to the outbreak.