Abbott’s $670 million NEC settlement sounds significant. But the way that money is reportedly being allocated deserves a much closer look.
Of the $670 million total, $495 million is going to resolve the Gill family’s case following their 2024 jury verdict.
That leaves roughly $175 million for claims involving approximately 2,000 additional infants.
Do the math, and that comes out to an average of about $87,500 per infant.
In my opinion, that is a low number for a legitimate NEC case.
NEC can be catastrophic. These cases involve premature babies who suffered devastating intestinal injuries and, in some cases, death. We’ve already seen juries value individual NEC cases in the tens or hundreds of millions of dollars.
There’s another piece of the settlement structure worth paying attention to: my understanding is that there is no clawback provision. This appears to be a flat, gross, all-inclusive settlement amount.
If that understanding is correct, Abbott’s total contribution does not decrease if some of those approximately 2,000 claims ultimately fall out.
That raises a very important question about the economics of the settlement.
At SMART Reviews LLC, we’ve reviewed tens of thousands of NEC claims. Of those, we’ve historically been able to fully prove out less than 5%.
If these 2,000 claims have already been thoroughly vetted and substantiated, the average claimant payout remains the same. If some of these cases have not been proven up and there will be fallout, the average claimant payout will increase when those funds are reallocated. However, those reallocation amounts would not be known, and the remaining cases could leave plaintiffs facing significant pressure to resolve their claims around the $87,500 valuation.
At the same time, the first federal NEC bellwether against Mead Johnson is now underway in Chicago, with more than 800 cases pending in the MDL and state-court litigation continuing around the country.
The headline is $670 million.
But when you look underneath that number, the allocation, claimant count and ultimate value of legitimate NEC cases tell a much more complicated story.
And I think it’s important that we look past the headlines and consider the overall impact.
