New FSIS Policy on the "Big Six" Takes Effect Today

Between November 1992 and February 1993, the United States experienced one of the nation’s worst foodborne illness outbreaks in recent history. State health agencies, in collaboration with the Centers for Disease Control and Prevention (CDC), ultimately confirmed that more than 500 infections and 4 deaths were caused by consuming hamburgers tainted with E. coli O157:H7. This outbreak signaled the need for greater controls based on science to prevent foodborne illness and protect consumers.

The 1993 E. coli outbreak that affected hundreds of people in 4 states became the catalyst for the U.S. Department of Agriculture’s (USDA) Food Safety and Inspection Service’s (FSIS) decision to declare E. coli O157:H7, a harmful and potentially lethal strain of the bacteria, an adulterant in October 1994. Thus, under to the Federal Meat Inspection Act (FMIA), any raw ground meat that tests positive for O157 is declared adulterated and cannot be sold for human consumption.

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Multiple Occurrences in a Single E.Coli Outbreak: Double-Edged Sword for Insureds?

Marler Clark clients and the owners of the restaurant that sold MarlerClark's clients food they claim was contaminated with E.coli O111 joined forces against the restaurant's insurer. In the end, the peronsal injury plaintiffs and the restaurant insured convinced the United States District Court for the Northern District of Oklahoma  on a Rule 56 summary judgment motion that a single E.coli outbreak constituted at least two separate "occurrences" under a commercial general liability insurance policy ("CGL") issued to the restaurant. The result was another $1 million in coverage available to pay claims. A copy of the court's opinion can be linked here.

The primary policy at issue limited the amount of insurance available to $1 million per occurrence ($2 million products-completed operations aggregrate). According to the court, the policy defined an "occurrence" as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” According to court's summary of the state health department's findings, the outbreak at issue included 341 persons, 60 confirmed, and 94 probable. The "point source outbreak" was from the Country Cottage restaurant. Though 21 persons did not dine at the restaurant, they were believed to be exposed at a church tea catered by the restaurant.

The court concluded that under Oklahoma law there are "two distinct places of injury and thus, two separate occurrences." The court explained that:

Looking for “the same temporal and spatial parameters” of an occurrence, the Court finds that the undisputed facts at least establish two separate occurrences of E. coli-induced illness covered under the policies: that resulting from the negligent contamination of food prepared and served at the Country Cottage restaurant and that resulting from the negligent contamination of food prepared and served at the Church Tea. Regardless of any temporal overlap between these two occurrences, the geographical distinction between the physical location of Country Cottage restaurant in Locust Grove, Oklahoma, and that of the Free Will Baptist Church in Broken Arrow, Oklahoma where the Church Tea took place is appreciable and, appreciatively, concrete.

For MarlerClark clients and the injured plaintiffs, the end result is another $1 million available to settle their claims. But is this a good result for the restaurant owners? The answer is maybe. Insureds should understand that the result may be a double-edged sword. On the one hand, another $1 million in indemnity is available to protect the owners' personal assets. On the other hand, if the insured had a large deductible or self-insured retention ("SIR"), two occurrences could mean two deductibles or two SIRs that need to be paid by the insured.

So why would an insured ever have a high deductible or SIR? The answer is that many food manufacturers and retailers maintain a high deductible or SIR in order to control the defense and settlement of the case and not hand over control to the insurer at the outset. Often, the insured's objective is to resolve the case in a way that best protects the client’s business and brand going forward. A conflict with the insurer arises because the insurer's objective is to resolve the case for the fewest dollars possible (combined payment of defense costs plus indemnity paid to the allegedly injured consumer).

Some Take-Aways from ACI's 3rd National Forum on Food-Borne Illness Litigation

American Conference Institute (ACI) recently held its latest conference on food-borne illness litigation. The conference has been a fairly intimate gathering of the nation’s lawyers, insurers and experts involved with food-borne illness litigation.

This year, I had the privilege of moderating an in-house counsel “think tank.” The panel was composed of lawyers from a nice cross-section of food businesses: Yum Brands, Hormel, Fresh Express and SUPERVALU (though for each, food-borne illness litigation is a rare event)  A slide-deck from the panel can be found here.

Also among the presenters at this year’s conference were Center for Disease Control’s (CDC) Dr. Arthur Liang and USDA/FSIS representative Dr. Dan Engeljohn. Both presentations provided fascinating insight into changes afoot in food safety enforcement and policy at the federal level. Here are some of the take-aways:

“Outbreaks Waiting to Be Discovered” – Dr. Liang opined that, based on surveilled illnesses, most food-borne illness outbreaks are not presently discovered. He believes that recent data shows that there are perhaps 2-3 times more outbreaks nationally than what’s been uncovered over the last few years.

• Food Safety Progress Being Undone by Retail Deli Operations – FSIS says there has been a “steady increase in risky behavior at the retail level.” According to Dr. Engeljohn, budget authority is being sought to intervene with retailers, particularly smaller supermarket deli operations.

Negative Tested Product Can Be Considered Adulterated - FSIS will be issuing a policy soon that for the first time will consider a “negative tested product to be determined adulterated” under circumstances where an associated product tested positive for pathogens.

Non-0157 STECs - FSIS will be finalizing methodology to detect non-0157 Shiga Toxin-Producing Escherichia coli (STEC).

2009 Priorities for USDA in Food Safety

I just returned from ACI’s Second National Forum on Food-Borne Illness, which included several interesting presentations and discussions. One was by Dan Engeljohn, Deputy Assistant Administrator of the Office of Policy and Program Development at the Food Safety and Inspection Service (“FSIS”). Mr. Engeljohn spoke about FSIS’s priorities for “2009 and beyond.” Takeaways from this presentation include:

Non-O157 STECs

FSIS is increasingly concerned with strains of E. coli other than O157:H7. Non-O157:H7 strains such as E.coli O121:H19 and O111 are growing more prevalent in the environment. FSIS is putting additional resources into developing methodology for detection of non-O157 STECs.

As FSIS, CDC, FDA and local health departments develop this methodology, the industry can expect more reported outbreaks and more liability exposure. Most experts believe that many non- O157:H7 outbreaks go undetected. Increased focus on detection of non-O157 E. coli strains is yet another reason to examine the sufficiency of your companies' insurance limits.

Frozen, Not Ready to Eat Meals


According to Mr. Engeljohn, because of recent salmonella scares, FSIS remains concerned about “frozen, not ready to eat” meals and specifically “frozen, not ready to eat” poultry meals. He explained that “evidence is mounting that these products cannot be safely prepared unless salmonella is controlled in the source materials.” In other words, FSIS now believes that no amount of package labeling or consumer education can prevent consumers from undercooking these meals.

FSIS jurisdiction over salmonella in poultry is limited. FSIS attempts restrict the sale of “frozen, not ready to eat” meals or impose more stringent standards against salmonella in poultry may be a reach for the agency. As discussed in Supreme Beef Processors v. USDA Salmonella, "is not an adulterant per se, meaning its presence does not require the USDA to refuse to stamp such meat 'inspected and passed.'" Absent statutory reform, FSIS action in this area may be challenged.

Listeria


Mr. Engeljohn stated that FSIS is “deeply concerned” about listeria. It believes that gains made in recent years at meatpacking plants may be undone by problems at supermarket deli counters. FSIS believes that little is being done to address critical control points at the retail level, such as proper cleaning and sanitizing of meat slicers. FSIS may be exploring ways to exercise more jurisdiction to regulate supermarket delis.

FSIS to Begin Testing for Non-O157 E. Coli

Dr. Richard Raymond, Under Secretary for Food Safety at the USDA, dropped a bombshell this week. As reported in the Des Moines Register, Dr. Raymond explained at the Seattle University food law symposium that his agency will begin testing for at least six different non-O157 E. coli strains in meat, poultry, and eggs. This is an important development because currently only E. coli O157:H7 is classified as an adulterant.

The USDA’s primary enforcement mechanism (as it has no mandatory recall authority) is to pull its inspectors from food processing plants, effectively shutting the plants down (a meat processing plant cannot operate by law without USDA inspectors). The USDA has no authority to remove its inspectors unless products are adulterated, so it cannot shut down a plant if it finds non-O157 E. coli.

Dr. Raymond’s announcement, therefore, raises the question of what USDA intends to do with its testing results for non-0157 E. coli. If USDA intends to request voluntary recalls for non-0157 E. coli, this is certain to generate controversy and crisis. For example, what is a food producer to do when the USDA (or another state or federal agency) asks for a large-scale recall or destruction of a product but cannot provide a sufficient scientific basis? What if the public health agency is wrong about the public health concern, and the recall threatens the viability of a business?  As discussed previously on this blog, uncertainty prevails about the science, behavior, and public health effects of non-O157 shiga toxin-producing E. coli. Research (which by all means should be accelerated) may show that non-O157 E. coli justifies classification as an adulterant, but putting enforcement ahead of science is a risky business. How much confidence will the public or industry have in our public health officials when their decisions are made without scientific rationale?

Stay Tuned for More Non-O157 Information

Tomorrow FSIS will hold a meeting to discuss “challenges and proposed solutions in moving forward to address recalls and illnesses related to E. coli O157:H7.”  The meeting will “explore proposed next steps as a means to make progress in the challenge of addressing E. coli O157:H7 and non-O157:H7 STECs.”. FSIS is also planning a “short term study to determine the extent to which non-O157 STECs may be present in FSIS-regulated products.”

Non-O157 Shiga toxin-producing E. Coli. is an important issue for food producers and sellers. Although non-O157 bugs have been implicated in food-borne outbreaks in recent years, serious questions exist concerning the scientific basis for implicating non-O157 bugs.

As discussed last October at the USDA’s conference on non-O157 E. coli, scientific challenges abound and uncertainties prevail in identifying and dealing with non-O157 Shiga toxin-producing E. coli. Little research currently exists. Often epidemiologists assume that non-O157 bugs behave and appear like E. coli O157:H7, and microbiologists looking for PFGE or genetic links between bugs apply the same run parameters and criteria. Yet many believe that comparing O157 bugs to non-O157 bugs may be like comparing apples to oranges.

Fortunately, I will have the opportunity to question many of the participants in this Friday’s FSIS meeting at Seattle University School of Law’s food law symposium. I’m looking forward to an update on the progress of non-O157 research.