The Supreme Court on Thursday blocked Purdue Pharma from a bankruptcy settlement because it would have immunized the Sackler family from future opioid-related lawsuits.
The Biden Administration had called the terms of the bankruptcy reorganization deal for the OxyContin manufacturer “unprecedented.”
In a brief order with no dissenting votes noted, the Justices blocked an appeals court decision to allow the bankruptcy settlement, which would have given the Sacklers completely release from liability in any future cases in exchange for $6 billion to settle currently pending opioid-related claims.
Until recently, the Sackler family controlled Purdue Pharma. The family members withdrew roughly $11 billion from the company before it filed for bankruptcy.
Solicitor General Elizabeth Prelogar asked the Supreme Court to intervene, arguing that the $11 billion withdrawal was done so to shield Sacklers from liability.
When Purdue filed for bankruptcy the Sackler family members negotiated a separate deal with pharmaceutical company and some plaintiffs that would allow the company to reinvent itself in an effort to combat the opioid crisis.
Prelogar called releasing the Sacklers from any liability amid “willful misconduct” an “abuse of the bankruptcy system.”
In 2020 Purdue Pharma pleaded guilty in federal court to conspiracies to defraud the U.S. and violate the anti-kickback statute. In its plea, the company “admitted that it marketed and sold its dangerous opioid products to healthcare providers, even though it had reason to believe those providers were diverting them to abusers,” according to the Department of Justice.
In May, the New York-based 2nd Circuit Court of Appeals had approved Purdue’s bankruptcy deal, which was also opposed by eight states and the District of Columbia as well as the Biden Administration.
However, those states eventually signed on to a renegotiated agreement and did not join the Biden Administration in its appeal to the Supreme Court.
A group representing some 60,000 people seeking compensation from Purdue filed a brief with the Supreme Court backing the Purdue plan.
“Personal injury victims recognized that the third-party releases are necessary to a global settlement that delivers critical value to all opioid-affected communities in America through direct payments to those injured and billions of dollars of abatement funds to prevent further injuries,” their brief said.