Purdue Pharma Opioid Settlement: Supreme Court Divided

The Supreme Court Divided Over Bankruptcy Settlement for Purdue Pharma

The Supreme Court justices appeared split on Monday regarding a contentious bankruptcy settlement involving Purdue Pharma. The deal, which aims to address the opioid epidemic by providing billions of dollars, drew criticism for offering legal immunity to the wealthy Sackler family, who controlled the company. The U.S. Trustee Program challenged the agreement, arguing that it violated federal law by granting broad immunity to the Sacklers despite their non-bankruptcy status.

Questions about the Deal’s Practical Effects

The justices raised questions about the consequences of unraveling the carefully negotiated agreement and the potential release of the Sacklers from liability. They also considered the impact of the decision on similar agreements that shield third parties from legal responsibility. Justice Brett M. Kavanaugh highlighted the approval of the plan by opioid victims and their families, emphasizing that it would ensure prompt payment. Conversely, Curtis E. Gannon, the lawyer for the government, acknowledged the tension but argued that the U.S. trustee had a watchdog role and that a ruling in favor of the government would not prevent an opioid deal with the Sacklers.

Congressional Intervention and Nonconsensual Third-Party Releases

Justice Amy Coney Barrett questioned what a victory for the U.S. trustee would mean for other victims of mass torts and the inclusion of nonconsensual third-party releases. In response, Gannon suggested that Congress could pass legislation to regulate such deals. He emphasized that the government’s role was not to represent victims but rather to ensure the integrity of the process.

Divergent Views Among the Justices

The justices’ questions did not align along ideological lines, indicating that the decision could be closely divided. Justice Ketanji Brown Jackson expressed skepticism about the necessity of liability releases in compensating opioid victims. Pratik A. Shah, the lawyer for victims’ groups, argued that the releases were crucial to the agreement, as they encouraged the participation of the Sackler family. Justice Elena Kagan seemed doubtful of the U.S. trustee’s position and questioned whether the government was impeding an agreement that had overwhelming support from victims.

Concerns About Subverting the Bankruptcy Process

Justice Kagan raised concerns about whether such deals undermined the bankruptcy process by allowing wealthy individuals like the Sacklers to evade lawsuits without adequately addressing their assets. She suggested that the settlement provided the Sacklers with more favorable terms than a typical bankruptcy discharge, protecting them from claims of fraud and misconduct. Justice Jackson shared these concerns and cited frustrations expressed by the original bankruptcy judge regarding the Sacklers moving funds offshore.

Demonstrators Call for Overturning the Bankruptcy Deal

Outside the courtroom, demonstrators urged the justices to overturn the bankruptcy deal, arguing that it failed to hold the Sacklers accountable and provide sufficient support for victims’ families. The demonstrators held signs with photos of loved ones lost to drug overdoses and wore T-shirts that read “Sackler v. the people.”

Bankruptcy Court as a Venue for Mass-Injury Settlements

In recent years, bankruptcy court has become a popular forum for addressing mass-injury settlements. The Supreme Court’s decision to take the case, Harrington v. Purdue Pharma, No. 23-124, temporarily halted the deal, potentially delaying payments to plaintiffs until the ruling is issued. The government argued that the agreement allowed the Sacklers to exploit bankruptcy protections meant for those in financial distress, setting a precedent for misuse of the system.

Purdue Pharma’s Role in the Opioid Crisis

Purdue Pharma has faced numerous challenges since its painkiller OxyContin contributed to the opioid crisis. The company aggressively marketed the drug, even after its addictive qualities became evident. In 2007, Purdue’s holding company pleaded guilty to misbranding the drug and paid substantial fines. Municipalities, tribes, and families affected by the crisis sought funding to address its consequences, blaming OxyContin for the epidemic.

The Bankruptcy Plan and the Sacklers’ Offer

Purdue filed for bankruptcy protection in 2019, leading to a proposed restructuring plan that would dissolve the company and transform it into a public benefit entity dedicated to combating the opioid crisis. In return, the Sackler family agreed to contribute billions from their personal fortune to support affected states, municipalities, tribes, and others. More than 90% of the plaintiffs supported the plan. However, the U.S. Trustee Program appealed the bankruptcy court’s approval of the plan. In response, the Sacklers increased their cash offer in 2022 to settle opioid claims.

Conclusion

A decision from the Supreme Court is anticipated by June, marking the end of the court’s term. The outcome will have significant implications for future bankruptcy settlements involving liability releases and the accountability of wealthy individuals and corporations.

Read More of this Story at www.nytimes.com – 2023-12-05 02:28:36