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Odwalla to Pay for Ailing Boy

Firm Blames Delay on Family's Lawyer, Insurance Company

The San Francisco Examiner

July 1, 1997

The medical bills of a 3-year-old boy who suffered severe kidney damage allegedly caused by bacteria in a bottle of Odwalla apple juice will be paid by the company's insurance company, ending a fractious public dispute.

The insurer for Odwalla of Half Moon Bay will pay $ 50,000 to reimburse the insurer for Michael Beverly of Seattle, who suffered hemolytic uremic syndrome with acute renal failure that his family's lawyer blames on E. coli bacteria contained in a bottle of unpasteurized apple juice.

The lawsuit filed by the boy's parents, one of nine filed against Odwalla, attracted considerable publicity because their lawyer, William Marler of Seattle, complained that Odwalla had not paid the boy's medical bills as promised.

Odwalla Chairman Greg Steltenpohl promised the company would pay medical bills of people sickened by the unpasteurized juice. He made the pledge shortly after news spread last year about an E. coli bacterial infection, and analysts said that had done much to restore Odwalla's image in the swirl of a public relations disaster.

As important was Odwalla's decision to begin pasteurizing its apple juice.

Odwalla has settled five of the nine cases, but not, as yet, the Beverly case. In a mediation hearing that failed last April, Marler said that he asked for $ 8 million and the attorney for Odwalla offered $ 200,000.

Marler then threatened to amend his complaint to note that Odwalla had not covered the boy's medical bills as promised. Steltenpohl had promised payment to Michael's mother, Kelly Beverly, whom he met at a Seattle hospital.

However, on Monday both sides said bills would be paid, and the boy's father, Terry Beverly, said, "I believe Mr. Steltenpohl is an honorable man."

In Half Moon Bay, company spokesman Chris Gallager said the medical bills of hundreds of people sickened by bacterial infections have now been paid. He said the delay in the Beverly case was caused by Marler, who gave the company "incomplete or erroneous information" about Michael's condition and treatment.

"It is important to clarify that this is not between Odwalla and the Beverlys. It is between insurance companies that need to reimburse one another and lawyers' fees," said Gallager.

He added, "Odwalla will continue to keep its word. It is part of our core values."

Marler, who helped arrange $ 35 million of the total $ 100 million in settlements from Food Maker, the parent of Jack-In-The-Box Family Restaurants that was responsible for an E. coli bacterial infection four years ago, said he hoped payment "will put (the Beverly) case back on track toward an amicable resolution."

Michael was hospitalized for 15 days and underwent dialysis. Marler's medical experts say he has a strong chance of developing diabetes and a 15 percent to 30 percent chance of developing renal disease that will require a transplant.

The Centers for Disease Control and Prevention identified 66 E. coli bacterial infections, and one death, associated with Odwalla apple juice.

Marler has had discussions with the families of other youngsters allegedly infected by Odwalla's product but has not filed suits on their behalf. One potential client is Brooke Hiatt of Seattle, who had medical bills of $ 12,000 that Odwalla has agreed to pay.

Marler has submitted to Odwalla medical bills in two other cases: Amanda Berman of Chicago, who has had $ 125,000 in bills, and Brian Dimock of Denver, whose bills total $ 45,000. "My hope is that these bills will be paid shortly as well," said Marler.

More on this outbreak: Odwalla Apple Juice E. coli Outbreak

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