by Katelynn Richardson
The Supreme Court on Thursday blocked opioid maker Purdue Pharma’s bankruptcy settlement which would have provided immunity to the Sackler family from facing lawsuits over their role in the opioid crisis.
Under the settlement, the Sacklers agreed to provide $6 billion to address the opioid crisis as part of a deal that granted them what the U.S. Bankruptcy Trustee argued was “exceptional and unprecedented” immunity from future lawsuits. In Harrington v. Purdue Pharma, the justices held 5-4 that “the bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants.”
“In this case, the Sacklers have not filed for bankruptcy or placed all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge. No provision of the code authorizes that kind of relief,” the majority held.
After Purdue Pharma was hit with thousands of lawsuits over its deceptive marketing downplaying the addictiveness of its drug, OxyContin, the company filed for bankruptcy in 2019. Purdue Pharma pleaded guilty to criminal charges related to its misleading marketing in 2007 and again in 2020.
As the crisis grew in the 11 years before filing for bankruptcy, the Sackler family withdrew nearly $11 billion from the company, according to court documents.
The U.S. Trustee, the DOJ office that oversees bankruptcy cases, argued the settlement “allows the Sacklers to shield billions of dollars of their fortune while extinguishing, without payment, claims alleging trillions of dollars in damages.” Additionally, it releases them “from claims based on fraud and other forms of willful misconduct that could not be discharged if the Sacklers themselves had filed for bankruptcy.”
However, 95% of the victims who voted support the settlement. In an amicus brief, a group of victims noted this overwhelming majority came about because the plan was “the only viable mechanism for affording victims the aid they need—and need now.”
The justices heard oral arguments on the plan in December.
In May 2023, the Second Circuit Court of Appeals upheld the plan as approved earlier by the bankruptcy court, noting bankruptcy “is inherently a creature of competing interests, compromises, and less-than-perfect outcomes.”
A Daily Caller News Foundation review of grants found in 2017 that no Sackler affiliated charities awarded donations to organizations focused on fighting the opioid crisis, though they offered considerable funds to the arts, humanities and sciences.
The DCNF also reviewed dozens of opioid addiction treatment centers and did not find any mention of the name “Sackler,” except in blog posts or information pages when citing the family’s association with Purdue, OxyContin and the epidemic.
– – –
Katelynn Richardson is a reporter at Daily Caller News Foundation.
Photo “Purdue Pharmacy Headquarters” by John9474. CC BY-SA 4.0.
