US Supreme Court rejects opioid settlement that protects Sackler family

The U.S. Supreme Court on Thursday rejected Purdue Pharma’s $6 billion settlement in an opioid case, shielding the Sackler family, which controlled the drugmaker, from future lawsuits.

In a 5-4 ruling, the justices agreed with the Justice Department, which argued that the Sacklers, who made tens of billions of dollars by flooding the country with highly addictive opioids, should not receive comprehensive legal protections in the controversial deal.

The court held that “the bankruptcy law does not permit such orders,” with the majority opinion authored by Neil Gorsuch, joined by Clarence Thomas, Samuel Alito, Amy Coney Barrett and Ketanji Brown Jackson.

Brett Kavanaugh, Chief Justice John Roberts, Sonia Sotomayor and Elena Kagan dissented, in a case where the justices ignored the divide between conservatives and liberals.

“The Sacklers have not agreed to forfeit even close to their entire fortune to opioid victims,” Gorsuch wrote.

“Yet they seek an injunction that would quash virtually all claims against them for fraud, malicious injury, and even wrongful death, all without the consent of those who have filed and seek to file such claims.”

“If the past is any indication,” Gorsuch quoted the Justice Department as saying, “there may be a better deal ahead.”

– Is a flawed deal better than no deal? –

In a scathing protest, Kavanaugh said, “Today’s decision is legally flawed and devastating for more than 100,000 victims of opioid use disorder and their families.”

“The plan was a brilliant example of how the bankruptcy system works,” he continued.

“It is therefore not surprising that virtually all of the victims of the opioid scandal and creditors in this case strongly support the approval of Purdue’s bankruptcy reorganization plan,” Kavanaugh said, while only a “small group” opposed it, including some creditors in Canada.

Moreover, he added, Thursday’s decision could have implications for cases such as those involving abuse allegations against the Catholic Church, which relied on similar deals.

The 2022 deal with Purdue, which has been on hold since August of last year, is the culmination of years of negotiations involving officials from all 50 U.S. states.

$6 billion was set aside for victims of the opioid epidemic from the 2019 bankruptcy of Purdue, which made prescription painkillers such as OxyContin.

This settlement shielded the families of Raymond Sackler and Mortimer Sackler from any future civil claims. It also shielded their remaining assets from opioid-related lawsuits.

The Justice Department, which oversees bankruptcy proceedings and is known as the US Trustee, accused the Sacklers of taking $11 billion from Purdue Pharma in the decade before the company filed for bankruptcy protection.

– Free-flowing regulations –

In December, Deputy Attorney General Curtis Gannon argued against the Biden administration’s objections to the deal.

“It gives the Sacklers the ability to decide how much they’re going to contribute,” Gannon said. “It gives the Sacklers the functional equivalent of a layoff.”

However, Purdue Pharma said rejecting the settlement could lead to years of litigation and that victims would receive no compensation at all.

“Today’s ruling is heartbreaking,” Purdue said in a statement. “However, it does not detract from our dual goals: to use the settlement money to reduce opioid use and to transform the company into an engine for good.”

Purdue’s bankruptcy filing was a direct result of the massive, nationwide lawsuit against Purdue and other major pharmaceutical and pharmacy companies for knowingly fueling the addiction crisis.

Under the March 2022 settlement, the Sacklers were released “absolutely, unconditionally, irrevocably, completely, finally, forever and permanently” from further legal liability.

According to authorities, the opioid epidemic in the United States has led to more than 500,000 overdose deaths over the past two decades.

Purdue and other opioid makers have been accused of using aggressive marketing tactics to encourage prescriptions of their products while concealing how addictive the drugs are.

Purdue faced a flood of lawsuits and in 2021 pleaded guilty to three criminal charges related to its marketing of OxyContin.

ia/bfm