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Claims Against Peanut Salmonella Firm Exceed $200 Million

Jun 12, 2009 | Parker Waichman LLP Peanut Corp. of America (PCA) the company behind a Salmonella outbreak that sickened hundreds of people and sparked scores of food recalls earlier this year, has had more than $202 million in claims filed against it in U.S. Bankruptcy Court in Lynchburg, VA. According to The News & Advance, Monday is the deadline for filing claims against the Lynchburg -based company.

According to the Centers for Disease Control (CDC), peanut paste, peanut butter and other PCA products sickened more than 700 people around the country.  Because PCA supplied peanut ingredients to hundreds of other food companies, the number of  recalls related to the Salmonella outbreak came close to 4,000.

In the course of the Food & Drug Administration's (FDA) investigation of the illnesses,  it quickly became clear that oversight of the PCA Georgia plant at the center of the outbreak had been lax, at best. According to the Atlanta Constitution Journal, the Blakely, Georgia facility was inspected by the state health department on 184 occasions since 2006. But 114 of those inspections lasted less than two hours. Not surprisingly, none of these inspections found evidence of mold, cockroaches and salmonella contamination that was uncovered by the FDA when it investigated the plant in January.

A second PCA plant in Texas - which was closed because of deplorable conditions last February - had never been properly licensed. Yet, a state inspector who visited the plant on three occasions since 2005 had actually indicated in his reports that the facility was licensed correctly.

PCA is now the focus of a criminal probe being conducted by the US Justice Department.   In February, the FBI executed search warrants at the PCA Georgia plant and at its headquarters in Virginia.  Evidence has also emerged that PCA knowingly shipped products that had tested positive for Salmonella.  In February, PCA owner Stewart Parnell had been subpoenaed to testify at a  Congressional hearing into the outbreak, and although he appeared, he invoked his constitutional right not to incriminate himself.

According to The News & Advance, the claims against PCA include 8 for wrongful death.  Each of those claims is seeking damages in the  amount of $10 million.  Another 86  claims, filed by people who were sickened by PCA ingredients, seek $1 million each.  About 65 other claims filed as of  Thursday were from food companies that used PCA’s ingredients, The News & Advance said. 

According to The News & Advance, PCA held two insurance policies for product liability which could be used to compensate people who filed injury and death claims. However, Hartford Casualty Insurance Co. filed suit to determine whether it must pay claims filed by victims of the Salmonella outbreak.

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