Supreme Court to review $6 billion Purdue Pharma settlement in opioid crisis case

Ian Miles Cheong
  |   December 04, 2023   |   Be the first to comment

On Monday morning, the Supreme Court is set to deliberate on the validity of a nearly $6 billion insolvency agreement concerning Purdue Pharma, the producer of OxyContin, a drug at the heart of the fatal opioid crisis.

Owners of Purdue Pharma, the Sackler family, have proposed a $6 billion settlement to resolve numerous lawsuits accusing them of exacerbating the opioid crisis.
Should the justices approve this agreement, Purdue Pharma would be restructured into a charitable entity, allocating its substantial funds towards addiction treatment and other related initiatives, while concurrently absolving the Sackler family from any future civil lawsuits, the Washington Examiner reports.

In 2011, a bankruptcy court judge sanctioned the settlement, however, the U.S. Trustee Program, a monitoring division within the Justice Department overseeing bankruptcy cases, contested the agreement's conditions and sought to halt the deal in September of the same year.

"On the most direct level it will determine whether Chapter 11 is a viable process for settling mass torts," As detailed in an American Bar Association summary of the case by Anthony Casey, a law professor at the University of Chicago.

Despite the fact that more than 95% of voting claimants, approximately 60,000 individuals with personal injury claims, consented to the settlement plan, William Harrington, U.S. Trustee for the Department of Justice, challenged the agreement. He contended that such "nondebtor releases" necessitate the unanimous agreement of all parties being released.

Harrington has also maintained that the deal permits members of the Sackler family to dodge responsibility for "alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced in the United States," as stated in court filings.

In August, the Supreme Court halted the Stamford, Connecticut-based pharmaceutical company's bankruptcy process, marking a victory for the Biden administration. This administration supports Harrington's assessment that the agreement offers "unprecedented" shielding against future civil lawsuits.

Additionally, the prospect of the Sackler family members being exonerated from civil liability incited anger among opioid abuse victims and advocacy organizations. These groups highlight the over 280,000 fatalities in the United States due to prescription opioid overdoses between 1999 and 2021, as reported by the Centers for Disease Control and Prevention.

On Monday morning outside the Supreme Court, activists and opponents of opioid abuse will assemble to urge the Supreme Court to overturn the settlement. They argue that it does not adhere to the existing U.S. Bankruptcy Code.

Maya Fitzpatrick, a representative for a coalition of opioid abuse awareness organizations planning to rally outside the Supreme Court, made this statement. stated that the settlement shows a "stark example of privileges retained by the wealthy to leverage the legal system to their advantage."

Most lawsuits against Purdue and its owners allege that they exacerbated the opioid crisis with misleading marketing of their pain medication. Purdue has admitted to misbranding and fraud in its OxyContin promotion in 2007 and 2020.

Monday's decision not only affects thousands of opioid victims and their settlements, but also has broader implications, including the Boy Scouts of America settlement and potential future cryptocurrency legal cases.

"If the Court declares a blanket prohibition on nonconsensual nondebtor releases, it could overturn settlements in pending cases like the one involving the Boy Scouts of America and prevent global settlement in future cases," Casey wrote for the ABA's case overview.

Should the Supreme Court rule that the Bankruptcy Code permits nondebtor releases, the current situation would remain unchanged, leading to the implementation of Purdue's settlement.

Ian Miles Cheong

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Ian Miles Cheong is a freelance writer, graphic designer, journalist and videographer. He’s kind of a big deal on Twitter.

https://twitter.com/stillgray

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