As high court weighs Purdue bankruptcy, opioid settlement divides victims
Families that have lost relatives to overdoses share plenty of outrage at Purdue Pharma, the bankrupt maker of OxyContin that has been accused in lawsuits of helping ignite the nation's opioid crisis.
But they are split over a legal challenge that could upend Purdue's agreement to settle thousands of lawsuits and provide billions of dollars that underwrite state campaigns fighting addiction and that offer compensation to victims. The Supreme Court is scheduled to hear arguments Monday about a controversial aspect of the company's bankruptcy plan that shields Purdue owners the Sackler family from future lawsuits in exchange for the family's contributing up to $6 billion and relinquishing control of the company.
Gary Carter's son, Bryant, overdosed on fentanyl in 2018 after years of battling an addiction that started with prescription painkillers stolen from his grandparents. Carter doubts he will get much, if any, settlement money but thinks the promised billions are needed to help states expand addiction treatment.
"If it gets blown up, nobody gets anything," Carter, of Maynard, Mass., said of the settlement. "And still nothing is going to happen to the Sacklers."
Ed Bisch, who lost his 18-year-old son, Eddie, to an overdose in 2001, opposes the settlement because he said the Sacklers will still keep billions of dollars of wealth accumulated over the years. He pointed out that the $6 billion payout would be stretched out over 18 years, and that more than $50 billion has already been allocated to states through settlements with other pharmaceutical companies, drug distribution companies and pharmacy chains.
"Right now, today, the states have money. No amount of money is worth giving the architects of the opioid epidemic civil immunity for what they have done," said Bisch, founder of a group called Relatives Against Purdue Pharma.
Several representatives of the Sackler family did not respond to multiple requests for comment.
The issue for Supreme Court justices Monday is not what is best for either side but the legality of a key provision of the plan. They will consider whether bankruptcy courts have authority to approve a reorganization plan that strips the rights of victims to sue those who are not directly part of the bankruptcy proceedings.
Monday's hearing comes as the nation continues to wrestle with the consequences of the flood of prescription pain pills that hooked patients and fed the black market for opioids. State governments and others suing Purdue allege that the public health crisis was fueled in part by the company's aggressive marketing to doctors of OxyContin - which was introduced in the mid-1990s - even as evidence mounted that the drug was highly addictive.
According to statistics from the Centers for Disease Control and Prevention, more than 300,000 people since 2000 have died in the United States of prescription opioid overdoses. Those include pills manufactured by many companies. Today, prescription pain pills have been eclipsed by illicitly manufactured fentanyl as the catalyst for overdose deaths. More than 110,000 people died of overdoses in 2022, two-thirds succumbing to fentanyl and other synthetic opioids, according to CDC estimates.
Although most pain pills flooding the nation were made by generics companies, Purdue and the Sacklers came to be seen by many as symbolizing corporations profiting from the country's addiction to opioids. Some museums and universities have severed ties with the family, removing its name from galleries and buildings. The family has been the focus of public protests, books, documentaries and fictionalized series such as the recently released Netflix show "Painkiller."
Sackler family members have denied wrongdoing or personal responsibility, although two branches of the family in an earlier statement to the bankruptcy court expressed regret that "OxyContin, a prescription medicine that continues to help people suffering from chronic pain, unexpectedly became part of an opioid crisis that has brought grief and loss to far too many families and communities."
Facing thousands of lawsuits, Purdue filed for Chapter 11 bankruptcy in 2019, although members of the Sackler family did not. The settlement, reached after two years of complex negotiations between a cadre of lawyers representing governments, victims and the company, initially called for the Sacklers to contribute more than $4 billion while shielding them from future claims.
In 2021, a New York bankruptcy judge approved the deal, drawing objections from the Justice Department, and some states, which argued that the family had received more than $10 billion from the company. The Sacklers have countered that nearly half of that money went to taxes. Later that year, a U.S. District Court judge overturned the deal, ruling that the family members who are not part of the bankruptcy proceedings cannot be exempted from future claims.
The states that previously objected later dropped their objections after the Sacklers agreed to increase their payout toward the settlement to as much as $6 billion. Purdue estimates that the settlement overall is worth up to $10 billion, boosted by the additional value of addiction treatment and overdose reversal drugs that the company plans to distribute. The settlement also calls for the company to be reorganized into a new business, Knoa Pharma, focused on easing the opioid crisis.
At issue is what is known as third-party, or non-debtor, releases used as part of settlements in bankruptcy cases. Judges have been divided on the legality of shielding people or entities from future lawsuits when they have not filed for bankruptcy.
Proponents describe the releases as a crucial tool in settling complicated bankruptcy litigation involving thousands of lawsuits and note that they are used only when the majority of creditors support a settlement. In Purdue's case, 95 percent of creditors who voted approved the deal.
In May, the U.S. Court of Appeals for the 2nd Circuit reversed the district judge and approved the bankruptcy plan, saying the shielding of the Sacklers from lawsuits was needed to "ensure the fair distribution" of the settlement money.
The appeals court majority cited two provisions of the bankruptcy code, including one stating that a bankruptcy court "may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of" the law. Judge Richard C. Wesley of the 2nd Circuit, although reluctantly agreeing with the majority, nevertheless said his colleagues found "a power that is nothing short of extraordinary" from what is effectively "silence" in the law.
In a statement after the ruling, members of the Sackler family said they "believe the long-awaited implementation of this resolution is critical to providing substantial resources for people and communities in need."
The Office of the U.S. Trustee, a branch of the Justice Department, is challenging the decision. The Supreme Court in August paused the Purdue settlement and agreed to hear the case - whose outcome has broader ramifications for bankruptcy law. Such releases have become legal flash points in other high-profile settlements, including one reached with thousands of plaintiffs who sued the Boy Scouts of America claiming they had been sexually abused.
Solicitor General Elizabeth B. Prelogar, representing the trustee, said the law cannot terminate the rights of alleged victims to sue the Sacklers without the consent of those who say they were wronged. She said the plan allows the Sacklers to "shield billions of dollars of their fortune while extinguishing, without payment, claims alleging trillions of dollars in damages."
She also disputed Purdue's claims of widespread enthusiasm by claimants for the settlement, saying fewer than 20 percent of the more than 618,000 people eligible to vote on the plan actually did.
Michael S. Quinn, a lawyer representing a woman whose son died of an overdose and who opposes the deal, said Purdue is now a "zombie" company and that its reincarnation for "public good" is merely a way to justify the releases for the Sacklers. In a brief to the court, Quinn urged justices to side with the federal government because "the justice system owes us more than a forced settlement."
"The Sacklers got special protection because they're billionaires," wrote Quinn, who represents Ellen Isaacs. "That fact is so ugly that people sometimes deny it."
In its brief to the court, Purdue insists that legal precedent allows for such a plan as long as it does not conflict with existing bankruptcy code. D.C. lawyer Gregory G. Garre, who is representing Purdue, noted that the Justice Department's position would allow a single objector to derail the plan despite what he said was overwhelming support for it from victims, states and local governments.
"Countless lives will be helped - and literally saved - by the billions of dollars that will flow to communities nationwide under the plan," Garre wrote.
Under the Trump administration, the Justice Department resolved a civil and criminal probe into Purdue, which pleaded guilty in 2020 to three felonies; the company will pay $225 million to the government if the bankruptcy settlement goes through. Separately, the Sackler family agreed to pay $225 million in civil damages to the Justice Department.
Supporters of the Purdue bankruptcy settlement point out that the immunity provision pertains only to future civil lawsuits, not criminal prosecution - and many on both sides of the settlement debate hold out hope the Justice Department will still pursue such a case. "If the DOJ really wanted to stand up for victims, they would prosecute the Sacklers criminally," said Edward Neiger, a New York bankruptcy attorney who represents more than 60,000 victims supporting the deal.
The Justice Department declined to comment on the possibility of criminal charges. The Sacklers, in the earlier statement to the bankruptcy court, said "the families have acted lawfully in all respects."
To Ryan Hampton, who overcame a decade-long addiction and served as co-chair of a committee that helped negotiate the deal on behalf of victims, the settlement money is needed by state and local governments to ease an overdose crisis that has spiraled beyond Purdue and the Sacklers. He worries that thousands of families still struggling to rebuild their lives will ultimately see none of the up to $750 million allocated to them under the deal, payments that could range from $3,500 to $48,000.
"There are no winners in the Purdue bankruptcy case," Hampton said. "My concern is that if this plan is undone or remanded, those payments disappear overnight."
He said that if the deal unravels, victims wanting to press ahead would face tough odds proving in court that individual Sackler board members were at fault for an overdose. He also pointed to the fragility of opioid settlement deals. In the case of generics drugmaker Mallinckrodt Pharmaceuticals - one of the largest producers of prescription pain pills in the United States - the company entered bankruptcy and agreed to a $1.7 billion settlement that included about $160 million for victims of the opioid crisis. But this year, the company entered a second bankruptcy, striking a deal with creditors to slash about $1 billion from the settlement.
"What happened with Mallinckrodt is a cautionary tale," Hampton said.
Bisch, of Relatives Against Purdue Pharma, said he plans to arrive at the Supreme Court at 5 a.m., hoping to get a seat to watch the arguments. Outside the court, other opponents of the settlement plan to rally.
"It's history in the making. I've been involved in this for 22 years. Eddie died in February of 2001," Bisch said. "It's important to me."
Fred Pauzar, whose son Chris became addicted to OxyContin and fatally overdosed in 2003, said he will remain in Florida, where he lives. He isn't sure he will listen to the arguments online. Pauzar has been a longtime critic of Purdue but remains wary of what he says is a broken regulatory system that allowed OxyContin to proliferate and the Sacklers to earn billions. He said he believes the Sacklers should not be allowed protection from lawsuits.
He said he also feels like Don Quixote "tilting at windmills."
"I'm hopeful the Supreme Court will do the right thing," Pauzar said. "Am I optimistic they will? No, I am not."
Kara Trainor, 42, who supports the settlement and also served on a committee helping to negotiate the deal, plans to attend court. Her story follows a tragically familiar arc. She was prescribed OxyContin by her primary care physician for back pain shortly before her 21st birthday. After a year and a half of being hooked, Trainor said she couldn't get a prescription quickly when the doctor left the state. Pills on the streets were too expensive, opioid withdrawals too painful. "So I moved to heroin," Trainor said.
In 2010, while on the prescription opioid treatment drug methadone, she gave birth to a baby, Riley, who as a newborn suffered from agonizing withdrawal. He had to take methadone for the first year of his life, she said.
Trainor said she hopes the Purdue settlement can help states pay to bolster organizations that work to reduce the harms of drugs and support housing for people in recovery. And for families struggling to raise children left orphaned by overdoses, even a couple thousand dollars in settlement money helps, Trainor said.
"This was the best settlement that we were ever going to reach," she said. "And it was like a miracle, in my eyes, that we even reached it."
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