Supreme Court to decide legality of Sackler family’s $6B opioid settlement
The Supreme Court to Decide on $6 Billion Bankruptcy Settlement Involving Purdue Pharma
The Supreme Court is set to hear arguments on Monday morning regarding the legality of a nearly $6 billion bankruptcy settlement involving Purdue Pharma, the manufacturer of the highly controversial medication OxyContin, which has been linked to the deadly opioid epidemic.
The settlement, offered by the Sackler family members who own Purdue Pharma, aims to resolve thousands of lawsuits accusing them of fueling the opioid crisis. If approved, the deal would transform Purdue into a nonprofit organization and allocate its billions of dollars towards addiction and other treatment efforts, while also releasing the Sackler family from future civil liability.
A bankruptcy judge initially approved the settlement in 2011, but the U.S. Trustee Program, a watchdog within the Justice Department, objected to the terms and moved to block the deal in September of that year.
“On the most direct level, it will determine whether Chapter 11 is a viable process for settling mass torts,”
Although the settlement plan received approval from over 95% of the voting claimants, approximately 60,000 individuals who filed personal injury claims, U.S. Trustee for the DOJ William Harrington appealed, arguing that unanimous consent from the released parties is required for such “nondebtor releases.”
Harrington has also contended that the agreement allows the Sackler family to evade accountability for their alleged role in perpetuating one of the most severe public health crises in U.S. history.
In August, the Supreme Court halted Purdue’s bankruptcy proceedings, siding with the Biden administration and supporting Harrington’s findings that the deal provides unprecedented protection from future civil suits.
The possibility of absolving the Sackler family from civil liability has sparked outrage among victims of opioid abuse and advocacy groups. The Centers for Disease Control and Prevention reports that over 280,000 people have died in the U.S. from prescription opioid overdoses between 1999 and 2021.
Outside the Supreme Court, organizers and advocates against opioid abuse will gather to call for the rejection of the settlement, arguing that it fails to comply with the current U.S. Bankruptcy Code.
“The settlement exemplifies the privileges retained by the wealthy to manipulate the legal system in their favor,” said Maya Fitzpatrick, a spokesperson for a coalition of opioid abuse awareness groups.
Most lawsuits against Purdue and its owners accuse them of fueling the opioid epidemic through deceptive marketing of OxyContin. The company has previously pleaded guilty to misbranding and fraud charges related to its marketing practices.
While the fate of thousands of opioid abuse victims and their settlements hangs in the balance, the implications of this case extend beyond this specific issue. It could impact ongoing disputes, such as the Boy Scouts of America settlement, and potentially future lawsuits involving cryptocurrency.
“If the Court declares a blanket prohibition on nonconsensual nondebtor releases, it could overturn settlements in pending cases like the one involving the Boy Scouts of America and prevent global settlement in future cases,”
Oral arguments are scheduled for 10 a.m., and a decision is expected before the end of June.
Why did the Supreme Court block the Purdue Pharma settlement?
Amna, this controversial bankruptcy plan was stalled because the U.S. Justice Department argued that shielding the Sacklers from all future lawsuits was an abuse of the bankruptcy system. The Sacklers themselves did not declare bankruptcy. R their role in the opioid epidemic, as it absolves them from future civil liability. He argues that the bankruptcy process should not shield wealthy individuals from the consequences of their actions, especially when those actions have had devastating impacts on public health.
On the other hand, proponents of the settlement argue that it provides a way to allocate funds and resources towards addressing the opioid crisis. By transforming Purdue into a nonprofit organization and directing its billions of dollars towards addiction treatment efforts, they believe it will help those affected by the epidemic and prevent further harm.
The Supreme Court’s decision on this matter holds significant implications. It will not only determine the fate of Purdue Pharma and its bankruptcy settlement but also shape the future of bankruptcy law in relation to mass torts. If the court upholds the settlement, it would establish a precedent for using the bankruptcy process to resolve similar cases in the future. However, if the court sides with the U.S. Trustee Program and rejects the settlement, it would raise questions about the viability and fairness of using bankruptcy as a mechanism for resolving mass torts.
Furthermore, the Supreme Court’s ruling will also have broader implications for the accountability of wealthy individuals and corporations. If the settlement is approved, it would send a message that those responsible for major public health crises can escape civil liability by filing for bankruptcy. On the other hand, if the court rejects the settlement, it would signal that even in bankruptcy, individuals and corporations must be held accountable for their actions and contribute to addressing the harm they have caused.
The opioid epidemic has had a devastating impact on communities across the United States, resulting in countless deaths and inflicting immeasurable pain and suffering on individuals and their loved ones. The Supreme Court’s decision in this case will determine not only the fate of the Purdue Pharma bankruptcy settlement but also play a crucial role in shaping the future of accountability and justice for those affected by the opioid crisis.
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