Fund Established to Compensate Peanut Food Poisoning Claims

As part of the bankruptcy proceedings for Peanut Corporation of America, which processed and distributed millions of pounds of contaminated peanuts, peanut butter and peanut paste that sickened people throughout the United States with salmonella poisoning, a federal judge has issued an order calling for the creation of a $12 million fund from insurance proceeds to compensate victims.

William E. Anderson, the bankruptcy judge overseeing the dissolution of the Peanut Corporation of America (PCA), issued the order on October 1, requiring Hartford Insurance to create a fund that will be used to pay claims by people who contracted food poisoning and other health complications from tainted peanuts sold by the company.

Hartford was the insurance company for PCA, which declared bankruptcy in February in the aftermath of a massive nationwide recall that impacted hundreds of products made from ingredients processed at a plant in Georgia, including crackers, cookies, cereal, candy and ice cream with peanut butter.

The peanut food poisoning outbreak was linked to illnesses in more than 700 people, including at least nine deaths. The contamination was traced back to unsanitary plant conditions, and it has been alleged that PCA was aware of the problem but distributed the tainted products anyway.

Emails seized by federal agents appear to show that Stewart Parnell, President of PCA, was aware that peanut butter and ingredients they produced may be contaminated with salmonella and ordered that shipments continue to go out. As a result, the contaminated peanut ingredients were used in millions of pounds of food sold and distributed throughout the United States.

Anderson has given victims until October 31 to file a claim seeking compensation for illness-related expenses from the fund with the claim administrator, Roy Creasy, the bankruptcy trustee for Western Virginia. There are already about 175 known claims for severe illnesses or deaths. Creasy said that distribution of the fund will be determined by the extent of victim’s illnesses.

Some victims are also pursuing compensation through food poisoning lawsuits against the distributors and food manufacturers who used peanut ingredients from Peanut Corporation of America, such as Kellogg Co., whose Keebler Peanut Butter Crackers have been linked to several cases of food poisoning.