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Marler Blog Providing Commentary on Food Poisoning Outbreaks & Litigation

Should the States and/or the FDA (a.k.a Taxpayers) pay when food is recalled, quarantined or destroyed?

Screen shot 2010-10-31 at 8.43.29 AM.pngThe firestorm of comments on my blog that have surrounded the recall, quarantine and destruction of cheese at Estrella and Morningland got me thinking once again of the 2006 E. coli O157:H7 outbreak linked to Organic Pastures in California. I have posted about that outbreak often (some would argue too often):

Organic Pastures Dairy E. coli O157:H7 Raw Milk Product Outbreak 2006

2006 E. coli O157:H7 Outbreak Linked to Organic Pastures Raw Milk – One Victims Story

Several of the recent comments suggested the unfairness of the uncompensated destruction of the cheese – especially given that all of that cheese may or may not be contaminated with Listeria or other pathogens.

It is actually and interesting issue. Who should bear the financial burden in the recall? The company that may well have contaminated product – whether it be cheese, 550,000,000 eggs or millions of pounds of hamburger – or the public who is arguably being protected? Certainly in the past, industries – spinach and tomatoes as examples – have sought (and not received) compensation from the government (a.k.a. us taxpayers) to compensate them for being part of a recall that in hindsight may or may not have been completely necessary.  Getting paid for a recall would take a bit of the sting out of recalling your product.

At least in a raw milk case, the State of California did compensate Organic Pastures for the milk destroyed in the recall in 2006 (whether the amount paid was fair may well be another story). See Attached. Of course Organic Pastures spun the State’s payment to it as an admission that the outbreak did not occur – which was not so – see above and below:

Organic Pastures – “Where There is Smoke, There is Fire.”

We bailout AIG and GM, why not Estrella, Morningland, Wright County Egg and Cargill?  So, what are your thoughts? Should all producers, large and small, be compensated by us when a recall happens?

  • This email came from someone in Ag in CA:
    I found the link relating to McAfee’s compensation after Rich Breitmeyer, State Veterinarian, quarantined his dairy. If you go back to the records, there were copious pages of McAfee asking for product compensation. They negotiated to around $19,000, I think, and McAfee got a check.
    http://law.justia.com/california/codes/2009/fac/9591-9595.html
    At the national level, the USDA will pay indemintiy for livestock losses, I’m not sure if it applies for food. This happens when the government orders a farmer to kill all his cattle, chickens, or swine because they may be infected with a contagious disease (usually a foreign animal disease).
    This program was set-up to avoid having animal owners refuse to kill their animals because they may lose their livelihood. It helps allow the government to go onto the property and kill the animals without the owner taking them to court. It’s still a horrible thing, but at least the farmer has some compensation.
    http://www.apfo.usda.gov/FSA/newsReleases?area=newsroom&subject=landing&topic=pfs&newstype=prfactsheet&type=detail&item=pf_20090917_distr_en_lip09.html
    You might add this link in also under the USDA indemnity. The link I sent related more to natural disasters (floods, tornados, etc.), but showed how the animals are appraised. This link relates to depopulation and foreign animal diseases:
    http://www.aphis.usda.gov/publications/animal_health/content/printable_version/fs_emer_response_fmd_07.pdf

  • gabrielle meunier

    If a business produces a faulty product, it is liable. That is why we have insurance. We want Toyota to pull those unsafe cars off the market and we certainly wouldn’t bail them out, I don’t understand why we would pay for food to be recalled?

  • L.E. Peterson

    I’m actually surprised that some enterprising insurance company hasn’t come up with recall insurance. Maybe they have and I just haven’t heard about it. It’s probably not affordable for small operations like Estrella if it is available.
    Compensation for recalls is an interesting dilemma–there would definitely have to be eligibility rules. For example, if the company is found criminally negligent because they knowingly and deliberately shipped adulterated food with no regard for public health, then they don’t get compensated. The companies that are doing their best to control contamination and are taking active measures to reduce could have varying degrees of compensation dependant upon history and company size.
    Just a thought…

  • L.E. Peterson

    Thanks for the link–unfortunately, it looks like most of the very small plants I inspect couldn’t afford that $25,000 premium. :-(

    There’s got to be a happy medium somewhere but it’s increasingly difficult to see the forest for the trees in today’s politically charged environment.

  • By lumping together the reimbursement of ALL recalls, this blog muddies, rather than clarifies, the issues. And it ignores the large losses due to poorly worded “advisories” put out by the FDA or FSIS in which no food was recalled.
    The continuum runs from adulterated food knowingly put into commerce to mistakenly recalled, uncontaminated food that couldn’t harm anyone to food similar to recalled food that is mistakenly avoided by consumers due to poorly worded advisories put out by inept regulators (e.g., tomatoes that could not have been involved in the 2008 salmonella saintpaul fiasco).
    Bill Marler’s entire career is built upon holding those in the food system accountable for illnesses due to contaminated food that passed through their hands. In some cases, a business that had taken EVERY reasonable precaution still had to indemnify those who got sick. Calling for financial accountability for the screw ups of regulators is no different than what Bill Marler does every day except that the target (i.e., government) is a lot more illusive.
    This issue was raised by Sen. Kay Hagan during the mark up of S 510 in November 2009. It hasn’t gotten much traction and is not supported by any of the outspoken advocates for S 510.
    Sen. Hagan cited the case of a farm in the Piedmont of NC that had to borrow three quarters of a million dollars to survive what it lost on its tomato crop in 2008. It was the result of a tomato market crippled at the start of the season by an astonishingly poorly worded FDA ADVISORY based on very questionable epidemiological work that had found exactly what the investigators expected–tomatoes were the likely vehicle. Despite hundreds of lab tested samples from around the country, no fresh tomato nor sample of a food containing fresh tomatoes was ever found to have the implicated strain of salmonella. Neither the CDC nor the FDA even admitted the possibility of an error much less accepted responsibility. I have an e-mail from the FDA saying it only relied on the info from the CDC.
    To give the Secretary of HHS the authority for mandatory recall without a reimbursement mechanism to indemnify errors in that process is an abuse of governmental power. In addition, it is based upon the outdated idea of sovereign immunity. What crap!
    In addition, there are businesses like Bullock’s Bar-B-Que in Durham, NC which, last spring, paid a terrible price for a foodborne illness outbreak among its staff and customers even though Bullock’s had done nothing wrong, made no mistake, committed no tort AND followed EVERY FDA/CD recommendation in preparing the implicated meringue. Bullock’s had even used PASTEURIZED egg whites–as recommended by the CDC and FDA.
    But people still got sick and the oldest restaurant in Durham was almost destroyed. It probably would have been had local chefs not organized support for Bullock’s including a staged eat-in by the chefs themselves. Though the epidemiological and lab evidence clearly implicated the pasteurized egg whites as the vehicle for the SE, the fact that the 6 cartons of pasteurized egg whites had all been used up and promptly thrown away because of Bullock’s good sanitation practices. As a result, it was impossible to test actual unused product. And the lack of a lot number meant they couldn’t test other product from the same lot.
    Hopefully, Bullock’s products liability insurer will gather enough evidence to successfully subrogate its loss against the pasteurized egg white producer.
    I’ll give more heed to what self-styled “food safety” advocates say when they start taking a more holistic approach to the issue and supporting indemnification for those injured by the practices they advocate.

  • L.E. Peterson

    FDA and CDC definitely need to improve the ability to identify the source of outbreaks especially when it comes to produce. I have real problem going after a certain vegetable when there’s no definitive evidence that it’s the culprit. Multiple suppliers muddy up the process especially if their shipping/receiving records aren’t up to par. Traceback ability is the single most important tool companies and regulators can use when a recall happens.

    Restaraunts are victims in these outbreaks just as much as those that become ill. They trust their suppliers to provide a safe product. I’m sure Bullocks BBQ learned a hard lesson and now tracks all suppliers and lot numbers on incoming ingredients. They deserve to be compensated for their losses when they themselves had done nothing wrong. However, money doesn’t fix the damage to their reputation.

    Unfortunately, compensating suppliers that have to recall is a lot trickier. Large companies often have some time of insurance to cover product loss but the little guys are likely to pass up coverage due to the added expense. The government should compensate if they can’t definitively pinpoint the source of infection and a company is forced to destroy product that may be perfectly clear of pathogens but can no longer be sold due to spoilage. At the very least, maybe the government can subsidize food recall insurance like they do with flood insurance.