WASHINGTON — The Supreme Court on Thursday blew up the massive bankruptcy recovery of opioid maker Purdue Pharma, concluding that the deal improperly included legal protections for the Sackler family, meaning billions of dollars guaranteed to victims are now threatened. .
The court, in a 5-4 vote, ruled that the bankruptcy court did not have the authority to exempt members of the Sackler family from lawsuits filed by opioid victims.
As part of the settlement, the family, which controlled the company, agreed to pay $6 billion that could be used to resolve opioid-related claims, but only in exchange for a full release from any liability in future cases.
The decision means that negotiations for a deal would have to restart, with the possibility of no deal being reached.
During oral arguments in December, a lawyer representing some of the victims told the justices that there was “no viable path” for the victims to receive compensation if the settlement, including the Sackler settlement, was not upheld.
The case drew even more attention to the lingering effects of the opioid crisis and the role that Sackler-owned Purdue played in creating it.
As part of the proposed settlement, which the Supreme Court suspended last year when it took up the case, the Sackler family agreed to pay about $6 billion that could be used to resolve opioid-related claims, but only in exchange for compensation. complete exemption from any liability in future cases.
The deal, including the assets held by Purdue, would be worth significantly more, with the reorganized company prepared to dedicate itself to combating the impact of opioid abuse.
No Sackler has had any involvement in the company since 2019.
Purdue made billions from OxyContin, a widely available painkiller that fueled the opioid epidemic. The company’s tactics in aggressively marketing the drug became increasingly scrutinized as thousands of people died from opioid overdoses.
As the company’s fortunes plummeted, it sought bankruptcy protection, but members of the Sackler family did not do so. Instead, they negotiated a separate settlement with Purdue and plaintiffs in pending lawsuits that would allow the company to reinvent itself to address the opioid crisis.
The New York-based 2nd U.S. Circuit Court of Appeals last year approved the plan over the objection of William Harrington, the U.S. government trustee who monitors the bankruptcy. The Department of Justice’s stewardship program aims to ensure that the bankruptcy system operates as required by law.
Harrington opposed releasing additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.
Purdue criticized Harrington’s role, saying groups representing thousands of plaintiffs signed the settlement, which could not have happened without the Sackler family’s input.
At the Supreme Court, several groups representing plaintiffs supported Purdue, including one that includes 1,300 cities, counties and other municipalities and another that represents 60,000 people affected by the opioid epidemic.
Canadian municipalities and Indigenous First Nations were among those who opposed the agreement.
Purdue flourished under brothers Mortimer and Raymond Sackler, who died in 2010 and 2017, respectively. The family reaped billions and spent lavishly, including on flashy charity projects.
The family told the Supreme Court they continue to support the settlement.
On a petition presented on behalf of Mortimer Sackler’s relatives, most of whom reside abroad, lawyers have warned of “significant litigation costs and risks” in trying to enforce any foreign court rulings against the family if the agreement is overturned
This story originally appeared on NBCNews.com read the full story
