Total Recall: Product recalls (and Coverage Requests) on the Rise

Partners Simon Oddy and Steve Rosenthal spoke with Property Casualty 360° about the recent increase product contamination and recall events, and the coverage requests that accompany them.

As appeared in Property Casualty 360° and Claims Magazine, July 1, 2016.

In June, Hostess announced a recall of more than 700,000 cases of Ding Dongs, Chocodiles and various doughnut products in the United States and Mexico. The reason? Certain lots of its flour contained undeclared peanut residue. It's estimated that more than 3 million people in the U.S. alone report being allergic to peanuts, tree nuts or both.

Talk about a Zinger.

The snack-cake maker, however, is hardly alone: From the auto industry to food manufacturers, product recalls have been appearing in the news with increased frequency. A quick Google News search of headlines over the last month turns up pages of results on recall announcements, the vast majority occurring in the food industry.

“The number of FDA [Food and Drug Administration] Class 1 recalls is clearly on the rise,” says David Bresnahan, client executive at The Horton Group in Orland Park, Ill. The FDA defines a Class 1 recall as “a situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.”

Simon Oddy, a partner with New York-based RGL Forensics, maintains that the 2011 passing of the Food Safety Modernization Act (FSMA) has accelerated the pace of recalls by giving the FDA added authority to trigger them. “Essentially, the FDA has increased authority over control and monitoring of the food industry—and if you’re not in compliance with some new regulations, that increased authority allows the FDA to interrupt the supply chain” with either a suggestion of a recall or a mandatory recall, he says.

For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.

*Effective December 2018, RGL Forensics joined Baker Tilly Virchow Krause, LLP. This article was published while we were RGL Forensics. The author(s) or team member(s) quoted from RGL are now employees of Baker Tilly.

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