U.S. Supreme Court Blocks Purdue Pharma Opioid Settlement

Washington, DC (WorkersCompensation.com) – Last week, the U.S. Supreme Court blocked Purdue Pharma from going forward with its bankruptcy proceedings, a move President Joe Biden said would offer the Sackler family protections from opioid-related civil claims.

The court said paused the settlement with the OxyContin manufacturer and said it would take up the case and hear arguments at the end of the year.

In October 2020, the U.S. Department of Justice announced a settlement with Perdue Pharma, owned by the Sackler family, in order to settle numerous suits filed by states and municipalities against the company and the family as a result of the opioid crisis.

As a part of the settlement, Purdue Pharma agreed to plead guilty in federal court to a three-count felony charge of conspiracy to defraud the United State and to violate the Food, Drug, and Cosmetic Act, and two counts of conspiracy to violate the Federal Anti-Kickback Statute. The company agreed to a criminal fine of $3.544 billion and an additional $2 billion in criminal forfeiture. The company also agreed to a civil settlement of $2.8 billion to resolve it civil liability. The Sackler family agreed to pay $225 million in damages to resolve its liability.

Until recently, the Sackler family controlled Purdue Pharma. Prior to filing for bankruptcy, the family pulled billions from the company. Now the family has agreed to contribute up to $6 billion to Perdue’s reorganization fund on the condition that it receives a release from civil liability.

“We are confident in the legality of our nearly universally supported Plan of Reorganization, and optimistic that the Supreme Court will agree,” Purdue Pharma said in a statement. “Even so, we are disappointed that the US Trustee, despite having no concrete interest in the outcome of this process, has been able to single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country, and overdose rescue medicines.”

The federal government has said the plan is “exceptional and unprecedented” in court papers, and that lower courts have been divided on when parties can be released from liability for actions that caused societal harm.

“The plan’s release ‘absolutely, unconditionally, irrevocably, fully, finally, forever and permanently releases’ the Sacklers from every conceivable type of opioid-related civil claim – even claims based on fraud and other forms of willful misconduct that could not be discharged if the Sacklers filed for bankruptcy in their individual capacities,” Solicitor General Elizabeth Prelogar said in court papers.

Prelogar said the liability release for the Sacklers is not authorized by the bankruptcy code and is an “abuse of the bankruptcy system.”

Between 1999 and 2014, the opioid epidemic spread across the country fueled by unbridled prescriptions for the painkiller OxyContin. In 2016, a government accounting of opioid overdose deaths found that deaths had increased by 540 percent over three years. By 2019, then President Donald Trump declared the opioid overdose epidemic a public health emergency.

States and municipalities, overwhelmed by trying to handle the response to opioid addiction and overdose deaths, filed suit against opioid manufacturers including Perdue Pharma, Johnson&Johnson, McKesson, Cardinal Health, Amerisource Bergen, Endo, Teva, and Allerga, among others.

The paused settlement was between the Sacklers and eight states and the District of Columbia. Initially agreed to in March, the settlement would have ended litigation between the states and the company that has been ongoing since 2019.

A New York appeals court approved the settlement earlier this year, a move Perdue called a “victory for Purdue’s creditors, including all 50 states, local governments and victims who overwhelmingly support the Plan of reorganization.”

“Our creditors understand the Plan is the best option to provide assistance to those who need it most, the most fair and expeditious way to resolve the litigation, and the only way to deliver billions of dollars in value specifically to fund opioid crisis abatement efforts,” Steve Miller, the chairman of Purdue Pharma’s board of directors, said.

The agreement would have cleared the way for a bankruptcy deal for Perdue Pharma. In exchange for immunity, the Sackler family would pay billions to help fight the opioid epidemic. As part of the deal, the Sackler family will allow any organization or institution to remove the family name from physical buildings, programs or scholarships, as long as the family received notification of the removal, and any public statements about the removal don’t “disparage” the family.

The Sacklers said the family’s goal was to help those harmed by the opioid epidemic.

“Our focus going forward is to deliver billions of dollars of value for victim compensation, opioid crisis abatement, and overdose rescue medicines. Our creditors understand the plan is the best option to help those who need it most, the most fair and expeditious way to resolve the litigation, and the only way to deliver billions of dollars in value specifically to fund opioid crisis abatement efforts,” a company spokesperson told CNN in May.

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