The Supreme Court has agreed to review the challenge posed by the Biden administration to a $6 billion bankruptcy settlement for Purdue Pharma. The administration is concerned about a provision in the deal that would protect the Sackler family, who own the company, from future opioid-related claims. The case will be heard in December with a decision expected in early 2024. As a result, the settlement will be put on hold until then.
Purdue Pharma, the manufacturer of OxyContin, filed for bankruptcy in 2019 in an effort to resolve around 3,000 lawsuits pertaining to its aggressive marketing of opioids. These lawsuits argued that the marketing contributed to the opioid crisis, which has caused the deaths of nearly 500,000 people over the past two decades.
The settlement plan included a provision known as a “third-party release,” which would shield the Sackler family and their associates from future lawsuits related to opioids. The U.S. Court of Appeals for the 2nd Circuit approved the settlement plan in May, but the Biden Justice Department challenged this decision, arguing that the bankruptcy court did not have the authority to release the Sackler family from liability.
In their motion to the Supreme Court, Solicitor General Elizabeth Prelogar highlighted that the Sackler family had withdrawn almost $11 billion from Purdue Pharma over a ten-year period and moved a significant portion of their wealth overseas in an attempt to evade liability. While Purdue filed for bankruptcy, the Sackler family members did not. Instead, they negotiated a deal with some plaintiffs, divested themselves of ownership, and transformed Purdue into a public-benefit company, with profits being dedicated to fighting the opioid crisis. The Sacklers would contribute approximately $6 billion over ten years but would not admit any wrongdoing and would retain a substantial part of their fortune.
Under the proposed settlement, Purdue would pay approximately $1.339 billion to creditors, with $750 million going to abatement trusts for combating the opioid crisis and $300 million being allocated to a trust for compensating personal injury victims. However, Prelogar argued that upholding the lower court’s approval of the settlement would create a precedent that enables corporations and wealthy individuals to exploit the bankruptcy system to avoid mass tort liability.
The Department of Justice revealed that under the approved fund distribution plan, an opioid victim is likely to receive between $3,500 and $48,000, with some payments stretching over a ten-year period. Purdue’s attorneys opposed the delay of the settlement, asserting that it would waste valuable time and hinder progress toward final approval, potentially jeopardizing the availability of billions of dollars for opioid abatement programs and depriving victims of their rightful compensation.
It is essential to note that this article was written and published by Nexstar Media Inc. in 2023, and all rights are reserved by the author.
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