The Supreme Court has blocked a nationwide settlement with Purdue Pharma, the maker of OxyContin, that would have protected the Sackler family, who own the company, from civil lawsuits related to the opioid crisis. The Biden administration had requested the court to put a stop to the agreement, which was reached last year with state and local governments. The court will also hear arguments later this year on whether the settlement can proceed.
Under the proposed deal, Purdue Pharma would emerge from bankruptcy as a new entity, using its profits to combat the opioid epidemic. The Sackler family, who are not seeking individual bankruptcy protection, would contribute up to $6 billion. However, a crucial element of the agreement is that the family would be shielded from legal liability, a provision opposed by the U.S. Bankruptcy Trustee represented by the Justice Department.
The Supreme Court has directed the parties involved to address whether bankruptcy law allows for a blanket shield from lawsuits filed by all victims of the opioid crisis. Previously, the 2nd U.S. Circuit Court of Appeals had permitted the reorganization plan to move forward.
Solicitor General Elizabeth Prelogar argued in a filing with the Supreme Court that upholding the lower court’s decision would set a dangerous precedent. She expressed concerns about wealthy corporations and individuals misusing the bankruptcy system to evade mass tort liability, stating that this goes against the intentions of Congress when enacting the Bankruptcy Code.
Lawyers for Purdue and other parties to the agreement urged the Supreme Court to stay out of the case, asserting that a delay would harm victims and impede the distribution of billions of dollars to address the opioid crisis. On the other hand, Ed Neiger, a lawyer representing individual victims of the opioid crisis, commented that while it is disappointing to wait longer for compensation, the court’s willingness to expedite the case reflects the urgency of the matter.
Not everyone supports the proposed settlement, with a group of mostly parents who lost children to opioid overdoses calling for it to be rejected. The opioid crisis has resulted in over 70,000 fatal overdoses in the U.S. annually, primarily involving fentanyl and other synthetic drugs. However, the crisis expanded in the early 2000s with the proliferation of powerful prescription painkillers like OxyContin.
