Health claims piling up against Kerr-McGee, owner of former Avoca plant

By Jennifer Learn-Andes - | February 1st, 2018 6:58 pm

More than 35,000 people from the Avoca area and other parts of the country have filed claims seeking payment for health problems blamed on Kerr-McGee Corp. sites, including a creosote wood-treatment plant that had operated in the borough for four decades, according to a new court filing.

James Haddock, a spokesperson and activist on the Avoca issue, said he worries a bankruptcy pot set aside for such claims will be sucked up by processing and administrative fees, leaving little or nothing for claimants.

“Something’s got to give here. If they don’t expedite this and get people with valid claims paid, there’s not going to be any money left,” Haddock said. “That’s the sad thing.”

Cancer, respiratory problems, heart conditions, rashes and other medical maladies have been blamed on carcinogens and chemicals used at the Kerr-McGee plant on Mill Street in Avoca, which closed in 1996, filings say.

The claimants are seeking payment from a future tort claims fund most recently valued at $25.6 million that was part of a $5.1 billion bankruptcy settlement involving Kerr-McGee and related entities.

This tort fund is for new claimants who were not among the approximately 6,000 who already received payments in past litigation or bankruptcy settlements.

The figure on the number of claims was in a status report filed by Ohio-based Garretson Resolution Group, the bankruptcy settlement trustee.

According to Garretson’s attorneys:

At the end of 2014, the trust had 880 approved asbestos claims and another 623 new claims asserting exposure to creosote, asbestos and benzene.

The trustee hired NERA Economic Consulting the following year to estimate the number and value of expected new claims, and it projected the trust would receive another 3,385 new claims from 2015 to 2050.

But the response has “dramatically” exceeded the company’s estimates, the filing said.

The number of claims totaled 35,048 through December 2017, and more continue to arrive.

Garretson said it has received some information that may “shed some light” on the quantity.

Several people have contacted the trustee, unsolicited, with reports alleging personal knowledge that family members and others have filed fraudulent claims.

The trustee also was alerted that a man in Columbus, Mississippi, was characterizing himself as an independent representative of claims and offering to prepare and file new claims for a $50 fee. Garretson had no proof the man was responsible for hundreds of claims containing identical wording on why they did not submit paperwork sooner. However, trustee attorneys sent the man a cease-and-desist letter in December.

Judge Michael E. Wiles, who is presiding over the bankruptcy case in New York City, held a status conference last month to discuss possible procedures for the efficient consideration and resolution of the large number of claims.

Garretson had asked the bankruptcy court for guidance on processing new claims in June 2016, citing ambiguous wording on the matter. The trustee had proposed granting claims only for those diagnosed with a disease or condition after the August 2009 bankruptcy deadline to file claims.

Wiles issued a decision in December 2016 allowing diagnosis before 2009 to qualify for a settlement if the victims establish a valid reason for failing to file a timely claim. The court — not the trustee — will determine if such claims are allowed, although the trustee must issue initial determination notices, his ruling said.

Garretson had issued 17,322 determination notices by the end of August, allowing 6,243 claims and rejecting 11,079. Of those rejected, 4,381 had requested reconsideration by the judge by Dec. 11.

Many claimants have maintained they were unaware of the deadline or learned they were exposed to contaminants after the deadline, court paperwork says.

Payment amounts for approved claimants will depend on the amount of money remaining and number of claims, court records said.

The latest audit filed by Garretson for 2016 indicated the new claim settlement fund has been shrinking, with no claimants paid.

The pot was valued at $25.6 million at the end of 2016 after absorbing $9.4 million for trust management and processing fees during that year, the filing said.

The entity known today as the “new” Kerr-McGee Corp. in court records did not come into existence until 2001 and can’t be held liable for the past negligence and injury alleged by the Avoca claimants, the company’s lawyers have successfully argued in court when some of the plaintiffs have tried to seek additional compensation.

James Haddock, photographed in November at the site of the Kerr-McGee Corp. creosote wood-treatment plant that had once operated in Avoca, said he is concerned about delays processing claims from people alleging health problems caused by the facility. Haddock, photographed in November at the site of the Kerr-McGee Corp. creosote wood-treatment plant that had once operated in Avoca, said he is concerned about delays processing claims from people alleging health problems caused by the facility. Aimee Dilger | Times Leader

By Jennifer Learn-Andes

Reach Jennifer Learn-Andes at 570-991-6388 or on Twitter @TLJenLearnAndes.