By John Kruzel
WASHINGTON (Reuters) – The U.S. Supreme Court on Thursday blocked OxyContin maker Purdue Pharma’s bankruptcy deal that would have shielded wealthy Sackler family owners from lawsuits over their role in the nation’s deadly opioid epidemic. .
The 5-4 ruling reversed a lower court ruling that had upheld a plan to give Purdue owners immunity in exchange for paying up to $6 billion to settle thousands of lawsuits accusing the company of deceptive and illegal marketing. of OxyContin, a powerful painkiller launched in 1996. .
The decision represented a victory for President Joe Biden’s administration, which challenged the deal as an abuse of bankruptcy protections intended for financially distressed debtors rather than people like the Sacklers who did not file for bankruptcy.
Purdue filed for Chapter 11 bankruptcy in 2019 to pay off its debts, nearly all of which stem from thousands of lawsuits alleging that OxyContin helped spark an opioid epidemic that has caused more than half a million overdose deaths in the U.S. over two decades.
The issue in the case was whether U.S. bankruptcy law allows Purdue’s restructuring to include legal protections for members of the Sackler family, who have not filed for personal bankruptcy. These so-called “non-debtor releases” originally emerged in the context of asbestos-related litigation, but their use has been expanded by companies seeking to use these protections as bargaining chips.
The Stamford, Connecticut-based company estimates that its bankruptcy settlement, approved by a U.S. bankruptcy judge in 2021, would provide $10 billion in value to its creditors, including state and local governments, and individual victims of addiction. , hospitals and others who sued the company.
The Biden administration and eight states challenged the agreement. All states dropped their opposition after the Sacklers agreed to contribute more to the settlement fund, but the U.S. Trustee — the Justice Department’s bankruptcy watchdog — and some individual opioid claimants maintained their opposition.
A group made up of more than 60,000 people who have filed personal injury claims resulting from their exposure to opioid products Purdue told the Supreme Court it supports the settlement, including legal immunity for members of the Sackler family.
In upholding the settlement in May 2023, the Manhattan-based 2nd U.S. Circuit Court of Appeals concluded that federal bankruptcy law allows legal protections for non-bankrupt parties like the Sacklers in extraordinary circumstances. He ruled that the legal claims against Purdue were inextricably linked to the claims against its owners, and that allowing lawsuits to continue targeting the Sacklers would undermine Purdue’s efforts to reach a bankruptcy settlement.
The Supreme Court in August 2023 stayed bankruptcy proceedings regarding Purdue and its affiliates when they agreed to accept management’s appeal of the 2nd Circuit’s ruling.
During arguments in December, a Justice Department lawyer said Sackler family members took billions from Purdue before agreeing to contribute up to $6 billion to the opioid settlement, and argued that the settlement effectively “allows the Sacklers decide how much you’re going to spend.” contribute.”
Lawsuits against Purdue and Sackler family members have accused them of fueling the opioid epidemic through deceptive marketing of their painkillers. The company pleaded guilty to misbranding and fraud charges related to the marketing of OxyContin in 2007 and 2020.
Members of the Sackler family denied any wrongdoing but lamented that OxyContin “unexpectedly became part of an opioid crisis.” They said in May 2023 that the bankruptcy settlement would provide “substantial resources to people and communities in need.”
Purdue accused the U.S. administrator of managing to “singlehandedly delay billions of dollars in value that should be used for victim compensation, opioid crisis relief for communities across the country, and overdose rescue medications.”
(Reporting by Andrew Chung; Editing by Will Dunham)
