The Supreme Court on Monday wrestled with a nationwide settlement with OxyContin maker Purdue Pharma that would shield members of the Sackler family who own the company from civil lawsuits over the toll of opioids.
Quick Read
- Supreme Court deliberates Purdue Pharma settlement: The U.S. Supreme Court is considering a settlement involving OxyContin maker Purdue Pharma, which would shield the Sackler family, owners of the company, from civil lawsuits linked to the opioid crisis.
- Details of the agreement: The settlement, negotiated with state and local governments and victims, would direct billions of dollars towards addressing the opioid epidemic. The Sacklers would contribute up to $6 billion and relinquish company ownership but keep a substantial portion of their wealth. Purdue Pharma would emerge from bankruptcy as a restructured entity, using its profits for treatment and prevention efforts.
- Settlement on hold: The agreement was put on hold by the court during the summer following objections from the Biden administration.
- Justices’ concerns: Justice Elena Kagan voiced concerns over federal government interference against a majority of claimants. However, she also noted that in bankruptcy cases, lawsuit protection comes with a cost, suggesting the Sacklers hadn’t fully met this requirement.
- Courtroom atmosphere: The arguments occurred in a courtroom mourning the passing of retired Justice Sandra Day O’Connor. Protests outside the court opposed the agreement, highlighting the public’s discontent.
- Legal issue at hand: The key legal question is whether bankruptcy protection can extend to non-bankrupt individuals like the Sacklers. Lower courts have been divided on this issue, which has broader implications for other major lawsuits settled through bankruptcy.
- Justice Department’s position: The U.S. Bankruptcy Trustee, part of the Justice Department, argues that bankruptcy law doesn’t allow for protecting the Sacklers from lawsuits. This stance differed from the Trump administration’s support of the settlement.
- Arguments from both sides: Justice Department lawyer Curtis Gannon suggested that negating the current deal could lead to a better agreement. Proponents of the plan argue that third-party releases are sometimes essential for reaching settlements and are not prohibited by federal law.
- Impact on victims and the opioid crisis: Lawyers representing over 60,000 victims supporting the settlement view it as significant in addressing the opioid crisis, despite acknowledging that no amount of money could fully compensate for the damage caused by OxyContin’s misleading marketing.
- Opposition to the settlement: Some victims oppose the settlement, with a lawyer describing it as giving “special protection for billionaires.” Justice Ketanji Brown Jackson appeared sympathetic to this view, highlighting the Sacklers’ demand for lawsuit immunity as problematic.
- Potential outcomes: The justices’ opinions varied, with Justice Brett Kavanaugh seemingly in favor of the settlement, emphasizing its immediate benefits over theoretical future gains from suing the Sacklers.
- Background of Purdue Pharma and OxyContin: Purdue Pharma’s aggressive marketing of OxyContin since 1996 is often cited as a major factor in the opioid epidemic. The majority of opioid prescriptions, however, have been for generic drugs.
- Opioid epidemic’s toll: Opioid-related overdose deaths, primarily from fentanyl and other synthetics, have continued to rise, reaching about 80,000 in recent years.
- Magnitude of the settlement: The Purdue Pharma settlement is among the largest reached by entities involved in the opioid epidemic, totaling over $50 billion. It includes direct payments to victims from a $750 million pool.
- Sackler family’s financial history: The Sackler family, no longer on Purdue Pharma’s board and having received no payouts since the company’s bankruptcy, had withdrawn over $10 billion in the decade prior, half of which they claim went to taxes.
- Anticipated decision timeline: A decision in the case (Harrington v. Purdue Pharma, 22-859) is expected by early summer.
The Associated Press has the story:
US Supreme Court torn over Purdue Pharma bankruptcy settlement
Newslooks- WASHINGTON (AP)
The Supreme Court on Monday wrestled with a nationwide settlement with OxyContin maker Purdue Pharma that would shield members of the Sackler family who own the company from civil lawsuits over the toll of opioids.
The justices seemed by turns reluctant to break up an exhaustively negotiated agreement, but also leery of somehow rewarding the Sacklers.
The agreement hammered out with state and local governments and victims would provide billions of dollars to combat the opioid epidemic. The Sacklers would contribute up to $6 billion and give up ownership of the company, but retain billions more. The company would emerge from bankruptcy as a different entity, with its profits used for treatment and prevention.
The high court put the settlement on hold during the summer, in response to objections from the Biden administration.
Justice Elena Kagan seemed to sum up the questions that were nagging at some of the justices.
“It seems as though the federal government is standing in the way of that as against the huge, huge, huge majority of claimants,” Kagan said.
But later, she also said that in bankruptcies, protection against lawsuits has a price.
“You get a discharge when you put all your assets on the table,” she said. “The Sacklers didn’t come anywhere close to doing that.”
Arguments lasted nearly two hours in a packed courtroom, its doors draped in black in memoriam to retired Justice Sandra Day O’Connor, who died Friday. Chief Justice John Roberts offered a remembrance of the first woman to serve on the court. “She changed the world,” Roberts said.
Outside the court, a small but vocal group of protesters opposed the Purdue Pharma agreement. “Shame on Sackler,” one banner read. “No Sackler immunity at any $$,” read another.
The issue for the justices is whether the legal shield that bankruptcy provides can be extended to people such as the Sacklers, who have not declared bankruptcy themselves. Lower courts have issued conflicting decisions over that issue, which also has implications for other major product liability lawsuits settled through the bankruptcy system.
The U.S. Bankruptcy Trustee, an arm of the Justice Department, contends that the bankruptcy law does not permit protecting the Sackler family from being sued. During the Trump administration, the government supported the settlement.
Justice Department lawyer Curtis Gannon told the court Monday that negotiations could resume, and perhaps lead to a better deal, if the court were to stop the current agreement.
Proponents of the plan said third-party releases are sometimes necessary to forge an agreement, and federal law imposes no prohibition against them.
“Forget a better deal,” lawyer Pratik Shah, representing victims and other creditors in the bankruptcy, told the justices. “There is no other deal.”
Lawyers for more than 60,000 victims who support the settlement called it “a watershed moment in the opioid crisis,” while recognizing that “no amount of money could fully compensate” victims for the damage caused by the misleading marketing of OxyContin, a powerful prescription painkiller.
A lawyer for a victim who opposes the settlement calls the provision dealing with the Sacklers “special protection for billionaires.”
Justice Ketanji Brown Jackson seemed more inclined toward the opponents, saying the Sacklers’ insistence on a shield against all lawsuits is “causing this problem.”
By contrast, Justice Brett Kavanaugh sounded like a vote to allow the deal to proceed. He said the government was seeking to prevent payment to victims and their families, as well as money for prevention programs “in exchange really for this somewhat theoretical idea that they’ll be able to recover money down the road from the Sacklers themselves.”
OxyContin first hit the market in 1996, and Purdue Pharma’s aggressive marketing of it is often cited as a catalyst of the nationwide opioid epidemic, persuading doctors to prescribe painkillers with less regard for addiction dangers.
The drug and the Stamford, Connecticut-based company became synonymous with the crisis, even though the majority of pills being prescribed and used were generic drugs. Opioid-related overdose deaths have continued to climb, hitting 80,000 in recent years. Most of those are from fentanyl and other synthetic drugs.
The Purdue Pharma settlement would be among the largest reached by drug companies, wholesalers and pharmacies to resolve epidemic-related lawsuits filed by state, local and Native American tribal governments and others. Those settlements have totaled more than $50 billion.
But the Purdue Pharma settlement would be one of only two so far that include direct payments to victims from a $750 million pool. 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. In the decade before that, though, they were paid more than $10 billion, about half of which family members said went to pay taxes.
A decision in Harrington v. Purdue Pharma, 22-859, is expected by early summer.
