Supreme Court rejects controversial Purdue Pharma bankruptcy deal (2024)

Supreme Court rejects controversial Purdue Pharma bankruptcy deal (1)

Kathleen Scarpone, left, of Kingston, N.H., and Cheryl Juaire, second from left, of Marlborough, Mass., attend a 2019 protest in front of the Arthur M. Sackler Museum, at Harvard University in Cambridge, Mass. Scarpone, who lost her son to OxyContin addiction, and Juarie addressed three Sackler family members during a virtual U.S. Bankruptcy Court hearing in March 2022. Josh Reynolds/AP hide caption

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Josh Reynolds/AP

The U.S. Supreme Court on Thursday invalidated a controversial bankruptcy deal involving Purdue Pharma, maker of the highly addictive painkiller Oxycontin, and members of the Sackler family who owned the scandal-plagued drug firm.

By a vote of 5-4, the justices threw out the bankruptcy settlement, which has been valued at between $6 billion and $10 billion.

Writing for the court majority, Justice Neil Gorsuch saidU.S. bankruptcy law doesn't afford bankruptcy courts the kind of power needed to block lawsuits against parties who haven't filed for bankruptcy. "The bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge claims against a non-debtor without the consent of affected claimants," he wrote.

Gorsuch added that if Congress intended to grant this level of power to bankruptcy courts, it might have done so.

"Had Congress meant to reshape traditional practice so profoundly in the present bankruptcy code, extending to courts the capacious new power the plan proponents claim, one might have expected it to say so expressly," he wrote.

Writing for the dissenters, Justice Brett Kavanugh said the ruling disrupts a deal that would have funneled money to communities and victims of the opioid crisis. "Today's decision is wrong on the law and devastating for more than 100,000 opioid victims and their families," Kavanaugh wrote.

But Melissa Jacoby, who teaches bankruptcy law at the University of North Carolina, said the opinion wasn't a surprise.

"Ultimately what the majority of the court did does follow the rule of law and what's actually in the bankruptcy code," Jacoby said.

That view was shared by Jonathan Lipson, a critic of the Purdue bankruptcy settlement, who teaches law at Temple University.

"The result is simply based on the language of the law," Lipson said. "You see a strong dissent from Justice Kavanaugh which reflects how emotional and difficult this case has been for hundreds of thousands of people."

Opioid victims will have to wait

Supreme Court rejects controversial Purdue Pharma bankruptcy deal (2)

Ryan Hampton spoke to reporters after making a statement during a Purdue Pharma bankruptcy hearing in New York, in March 2022. Seth Wenig/AP hide caption

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Seth Wenig/AP

The bankruptcy deal would have provided roughly $8 billion to state and local governments for dealing with the consequences of opioid addiction; it also would have provided a total of $750 million in individual compensation to victims.

Ryan Hampton, who was addicted to Oxycontin and is now in recovery supported the bankruptcy plan.

He told NPR he understands the desire of many opioid victims to sue the Sacklers. But he worries that legal chaos following this ruling could delay payouts for years.

"I do have a fear that it could be another year or two," Hampton said. "It is important for everyone to get to the table and negotiate something that puts victims first very quickly."

Most of the settlement would have been funded by members of the Sackler family who owned and ran Purdue Pharma, and agreed to pay $6 billion into the compensation pot.

In exchange, the Sacklers would have been shielded from personal liability even though six Sackler family members served on the company’s the board — including Chairman Richard Sackler, who closely directed the firm’s aggressive and deceptive marketing strategy for Oxycontin as a painkiller that was not addictive.

Sackler family says they'll keep negotiating

Supreme Court rejects controversial Purdue Pharma bankruptcy deal (3)

Kathe Sackler, a member of the family that owns Purdue Pharma testified via video to a House Oversight Committee hearing in December 2020. Members of the family that owns OxyContin maker Purdue Pharma have acknowledged the drug had a role in the opioid crisis but have stopped short of apologizing or admitting wrongdoing. House Television via AP/House Television hide caption

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House Television via AP/House Television

In a statement sent to NPR members of the Sackler family, who have denied any wrongdoing in management of Purdue Pharma, voiced disappointment.

"The Sackler families remain hopeful about reaching a resolution that provides substantial resources to help combat a complex public health crisis," the Sackler family statement said. "The unfortunate reality is that the alternative is costly and chaotic legal proceedings in courtrooms across the country."

Family members said negotiations toward a settlement will continue.

Purdue Pharma also issued a statement voicing dismay over the opinion. "Today’s ruling is heart-crushing because it invalidates a settlement supported by nearly all of our creditors," the statement read.

It is accurate that 95% of the victims who voted as part of the Purdue Pharma bankruptcy process ultimately agreed to the settlement. But in the majority opinion, Gorsuch noted that only 20% of Oxcyontin victims cast votes. Also, the remaining 5% objected, contending the bankruptcy court exceeded its authority in allowing the Sacklers to hold on to half their wealth and escape further liability.

A major precedent for U.S. bankruptcy law

The deal was also opposed by the U.S. Justice Department's bankruptcy watchdog agency, which argued the deal would have violated victims' constitutional rights to due process.

On Thursday the Supreme Court validated the DOJ position.

Experts say the decision will have far-reaching implications for an overdose crisis that still kills more than 100,000 people in the U.S. every year.

"This is absolutely going to put the brakes on so-called parasitic bankruptcies, where a non-bankrupt entity like the Sackler family tries to piggy-back on a bankruptcy," said Adam Levitin, who teaches law at Georgetown University.

Other legal experts, however, predicted that corporations and wealthy individuals will continue to develop complex bankruptcy maneuvers that might curb their liability.

"It will I think probably slow the trend down a little bit, but it certainly won't stop it," said Lipson at Temple University.

In a statement sent to NPR, Jason Amala, an attorney who represents survivors of child sexual abuse, said the opinion would have an immediate impact on bankruptcy cases involving the Boy Scouts of America and some Roman Catholic dioceses.

"The Supreme Court’s decision means bankruptcy courts do not have the authority to force injured plaintiffs to settle their claims against parties who have not filed for bankruptcy," Amala said.

Many of the legal experts interviewed by NPR said this ruling by the Supreme Court highlights the need for congressional action to further clarify how complicated lawsuits involving large numbers of victims should be resolved.

But Levitin at Georgetown University said it's unlikely polarized lawmakers will take that kind of action, especially in an election year.

"Nothing's going to happen," Levitin said. "This is not on the congressional radar as something to fix."

Supreme Court rejects controversial Purdue Pharma bankruptcy deal (2024)

FAQs

Supreme Court rejects controversial Purdue Pharma bankruptcy deal? ›

Supreme Court rejects controversial Purdue Pharma bankruptcy deal In a 5-4 decision, the justices ruled that the multibillion opioid settlement inappropriately protected the Sackler family.

What was the Supreme Court decision on Purdue Pharma? ›

Supreme Court overturns opioid settlement with Purdue Pharma that shielded Sacklers : Shots - Health News : NPR.

How much will individuals get from Purdue Pharma settlement? ›

But the Purdue Pharma settlement would have been only the second so far to include direct payments to victims from a $750 million pool. Payouts would have ranged from about $3,500 to $48,000.

Is OxyContin still legal? ›

OxyContin, a trade name for the narcotic oxycodone hydrochloride, is a painkiller available in the United States only by prescription. OxyContin is legitimately prescribed for relief of moderate to severe pain resulting from injuries, bursitis, neuralgia, arthritis, and cancer.

Can I file a claim against Purdue Pharma? ›

You may file your claim electronically at PurduePharmaClaims.com via the link entitled “Submit a Claim.” For questions regarding this Proof of Claim Form, please call Prime Clerk at (844) 217-0912 or visit PurduePharmaClaims.com. Read the instructions at the end of this document before filling out this form.

Is OxyContin still available? ›

Oxycodone is only available on prescription. It comes as slow-release tablets, standard tablets and capsules, and a liquid that you swallow.

What did Purdue Pharma do that was illegal? ›

After Purdue earned billions of dollars in sales on the drug, in 2007 one of its affiliates pleaded guilty to a federal felony for misbranding OxyContin as a less-addic- tive, less-abusable alternative to other pain medications. Thousands of lawsuits followed.

Who got money from the opioid settlement? ›

State and local governments are receiving billions of dollars in settlements from companies that made, sold, or distributed prescription painkillers and were accused of fueling the opioid crisis. More than a dozen companies will pay the money over nearly two decades.

What is the status of the Purdue opioid settlement? ›

The Supreme Court on Thursday rejected a controversial settlement that would have sent billions of dollars to treatment programs and victims of the nation's opioid epidemic but also shielded the Sackler family from future lawsuits despite the fact that it made its fortune selling prescription opioids.

Did Purdue Pharma pay doctors? ›

Purdue also admitted it conspired to violate the federal Anti-Kickback Statute. Between June 2009 and March 2017, Purdue made payments to two doctors through Purdue's doctor speaker program to induce those doctors to write more prescriptions of Purdue's opioid products.

Where is Richard Sackler now? ›

He currently lives in Austin, Texas. In 2022, Sackler and his son David attended a virtual hearing as part of Purdue's ongoing bankruptcy proceedings, and were required to listen to a series of two dozen statements given by people whose lives had been personally affected by the opioid crisis that the company started.

Is oxycodone stronger than hydrocodone? ›

One key difference is that oxycodone is more potent than hydrocodone. This means that it takes less oxycodone to produce the same effects as hydrocodone. Oxycodone is also more likely to be abused than hydrocodone because it produces stronger effects. This also means that oxycodone has a higher risk of overdose.

Is Raymond Sackler still alive? ›

How much money will I get from a Purdue Pharma lawsuit? ›

Payouts are expected to range from about $3,500 to $48,000. Sackler family members no longer are on the company's board, and they have not received payouts from it since before Purdue Pharma entered bankruptcy.

Is Edie Flowers in painkiller real? ›

“The world of Edie Flowers, who is a fictitious person — but is a composite of a number of investigators, runs alongside the very real Richard Sackler. Having those points of intersection where the two worlds come together was incredibly impactful and powerful.”

How rich is the Sackler family? ›

The Sackler family has an estimated collective net worth of $10.8 Billion in 2024. Arthur Sackler Sr.: Deceased, amassed a significant fortune from medical advertising and trade publications. At the time of his death, Arthur's estate was estimated to be worth $140 million.

What punishments did Purdue Pharma receive? ›

The department and Purdue Pharma forged a plea bargain in a criminal and civil case. The deal included $8.3 billion in penalties and forfeitures, but the company would pay the federal government only $225 million so long as it executed the settlement plan.

Is Purdue Pharma still in business? ›

As of August, 2023, Purdue Pharma remains in chapter 11 bankruptcy, pending a Department of Justice appeal to the United States Supreme Court, of a 2nd U.S. Circuit Court Of Appeals ruling that the bankruptcy proceedings may continue.

What is the Sacklers ruling? ›

The Supreme Court said on Thursday that members of the Sackler family cannot be shielded from liability for civil claims related to the opioid epidemic, jeopardizing a bankruptcy plan that would have offered such protection in exchange for channeling billions of dollars toward addressing the crisis.

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