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Foundation Food Group sues insurer, seeking payout of business losses caused by deadly nitrogen leak
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Foundation Food Group at the Memorial Drive entrance. - photo by Scott Rogers

Foundation Food Group has filed a lawsuit against its insurance company for refusing to pay out money after financial losses caused by a nitrogen leak that killed six workers in January. 

The lawsuit claims that Selective Way Insurance Company is liable for more than $2 million in property loss, business income loss and other expenses, because Foundation Food Group was not able to operate its plant for several weeks after the nitrogen leak incident. It claims these losses were covered under its plan with Selective Way, and these losses caused a “forced sale of the company.”

Gold Creek Foods announced in September that it was purchasing “substantially all of the assets of Foundation Food Group.”

Selective Way declined to comment on the pending lawsuit. 

A nitrogen leak at the Gainesville poultry plant on Jan. 28 caused six deaths and sent 12 people to the hospital. After a six-month investigation, the Occupational Safety and Health Administration ruled in July that the deaths and injuries caused by the leak were “entirely avoidable,” and Foundation Food Group would have to pay nearly $600,000 in fines. The company was cited with 26 alleged violations. It plans to appeal the ruling, along with two other companies involved in the incident who also were cited by OSHA. 

The poultry company filed the 27-page lawsuit with the U.S. District Court for the Northern District of Georgia Gainesville Division on Sept. 17. The lawsuit claims the insurer has failed to pay any amount to cover Foundation Food Group’s losses in the eight months since the incident and the loss of assets has caused a “forced sale of the company.” 

According to information released by OSHA, a freezer at the Gainesville plant malfunctioned on Jan. 28, releasing liquid nitrogen into the plant’s air and displacing the oxygen.

Three Foundation Food Group maintenance workers entered the freezer room without training on the deadly effects of nitrogen exposure, according to OSHA. Foundation Food Group and Messer, LLC, who was also cited as a result of the incident, “failed to implement any of the safety procedures necessary to prevent the nitrogen leak, or to equip workers responding to it with the knowledge and equipment that could have saved their lives.”

Foundation Food Group switched from nitrogen-based freezers to an ammonia-based freezer system in August, according to the lawsuit. 

Foundation Food Group was not able to perform most business operations after the incident until Feb. 24 and was not fully operational until April 10. It claims business losses during the shutdown should have been paid by Selective Way. 

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