US Supreme Court torn over Purdue Pharma bankruptcy settlement

December 5, 2023 11:38 am

[Source: Reuters]

U.S. Supreme Court justices struggled over whether to approve OxyContin maker Purdue Pharma’s bankruptcy settlement, voicing concern the deal would shield its wealthy Sackler family owners from lawsuits over their role in a deadly opioid epidemic while also worrying that scuttling it could harm victims.

The court heard arguments in an appeal by President Joe Biden’s administration of a lower court’s ruling upholding the settlement for the Stamford, Connecticut-based company.

Purdue’s owners under the deal would receive immunity in exchange for paying up to $6 billion to settle thousands of lawsuits filed by states, hospitals, people who had become addicted and others who have sued the company over allegedly misleading marketing of its powerful pain medication OxyContin

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At issue in the case is whether U.S. bankruptcy law allows Purdue’s restructuring to include legal protections for the members of the Sackler family, who have not filed for personal bankruptcy.

Some justices seemed to convey skepticism toward the Biden’s administration stance.

“Bankruptcy courts for 30 years have been approving plans like this,” conservative Justice Brett Kavanaugh told Justice Department lawyer Curtis Gannon, while asking why the Supreme Court should decide such plans are “categorically inappropriate.”

But some justices also seemed wary of extending protections to the Sacklers under bankruptcy law when the family members themselves were not debtors under the plan.

“In some ways, they’re getting a better deal than the usual bankruptcy discharge,” liberal Justice Elena Kagan told Gregory Garre, a lawyer representing Purdue, adding that the Sacklers under the deal would be “protected from claims of fraud and willful misconduct,” which does not happen in a typical bankruptcy proceeding.

The justices in August paused bankruptcy proceedings concerning Purdue and its affiliates when they agreed to take up the administration’s appeal of a ruling by the Manhattan-based 2nd U.S. Circuit of Appeals upholding the settlement.

Outside the court, about 50 people protested the settlement, including family members of opioid victims. “Sacklers lie, people die,” some of the demonstrators chanted. Some held signs in memory of people who died from opioids. Another sign read, “Deadliest white collar criminals – the Sackler cartel.”