[A federal appeals court had signed off on a deal that would
shield members of the wealthy Sackler family from lawsuits in exchange
for billions for those harmed by the opioid epidemic.]
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WHAT THE SUPREME COURT’S DECISION TO HEAR THE PURDUE PHARMA CASE
MEANS  
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Abbie VanSickle, Jan Hoffman
August 11, 2023
New York Times
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_ A federal appeals court had signed off on a deal that would shield
members of the wealthy Sackler family from lawsuits in exchange for
billions for those harmed by the opioid epidemic. _

Purdue Pharma was the maker of the highly addictive painkiller
OxyContin., George Frey/Reuters

 

The Supreme Court announced
[[link removed]] on
Thursday that it would pause a bankruptcy deal for Purdue Pharma that
would give billions of dollars to those harmed by the opioid epidemic
in exchange for shielding members of the wealthy Sackler family from
additional opioid-related lawsuits.

The settlement involving Purdue, the maker of the prescription
painkiller OxyContin, touches on one of the country’s largest
public health crises
[[link removed]]. The court put the
case on its docket and is slated to hear oral arguments in December.
Experts say the decision may also have important consequences for
other cases that use the bankruptcy system to settle claims of mass
injuries.

Here’s what you need to know about the court’s decision:

Why did the Supreme Court decide to weigh in?

It’s rare for the Supreme Court to agree to hear a bankruptcy court
dispute, experts say, especially one dealing with a settlement
agreement in a mass-injury case.

One of the main reasons few such cases make it to the court is that
all parties are under pressure to settle. Litigating all the way to
the highest court in the nation is a costly and time-consuming
proposition. In the Purdue case, it was the U.S. Trustee Program
[[link removed]], a watchdog office within the Justice
Department, that petitioned
[[link removed]] the
Supreme Court to review the deal.

Several other aspects of the case made it more likely that the Supreme
Court would grant review, legal experts said. For one thing, the
opioid crisis is an issue of national importance. And such agreements
allowing third parties — in this case, the Sacklers, who controlled
the company — to be shielded from most liability without declaring
bankruptcy themselves are increasingly popular and have divided lower
courts.

What are the broader implications for mass-injury cases?

If approved, the deal presents a road map for other businesses and
plaintiffs who are more frequently turning to the bankruptcy courts as
a tool to resolve mass-injury cases.

On the other hand, a decision by the Supreme Court to block the use of
so-called nonconsensual third-party releases — a mechanism that
allows the Sackler family to be shielded from civil lawsuits — would
most likely jeopardize the entire Purdue Pharma bankruptcy settlement
deal, years in the making.

Experts said they would be watching a number of cases, including
the Revlon bankruptcy
[[link removed]],
as the Purdue case proceeds. A decision against the use of third-party
releases could throw those deals into doubt.

How is the Supreme Court likely to view this case?

Legal experts say it’s unclear how the court will view the dispute.
On one hand, the court’s conservative majority tends to look
favorably on business interests. However, several conservative
justices, including Chief Justice John G. Roberts Jr. and Justice
Clarence Thomas, have been wary of aggressive litigation tactics.
Overall, this court has shown skepticism of lower courts acting
without express authorization from Congress.

Nor is it clear how the liberal justices will vote, experts say. Court
watchers say this could be the type of procedural case that ends in a
split vote, but not necessarily along political or ideological lines.

Why is only the Justice Department objecting to the Purdue plan?

A battle between money and principle is at the heart of the Purdue
litigation.

Thousands of Purdue plaintiffs, which include states, local
governments, tribes and individuals, have waited years for settlement
funds, the value of which erodes as litigation costs mount and time
passes. As the Sacklers inched up their offers, even the last handful
of states that had held up the deal relented. Bankruptcy court is
ultimately a marketplace of blunt pragmatism.

By the time the U.S. Court of Appeals for the Second Circuit heard the
appeal, $6 billion from the Sacklers was on the table and the only
major party still opposed was the U.S. Trustee Program.

Its objection was that if the deal were approved, the Sacklers would
get the benefits of bankruptcy, such as foreclosing all Purdue
opioid-related lawsuits, without its costs, like handing over their
fortune for scrutiny. People who might still want to pursue the
individual family members in civil court would be barred from doing
so, without having an opportunity to weigh in. The U.S. Trustee argued
that their constitutional due process rights would be summarily
extinguished.

At this point in the Purdue litigation, only the Justice Department
can afford to keep pressing these principles. Tribes, states, local
governments and people suffering from the opioid crisis have urgent
costs to address.

What does the plan offer states, local governments and tribes?

Under the deal, Purdue would pay $1.2 billion toward the settlement
immediately upon emerging from bankruptcy, with millions more expected
in the years to come. The Sacklers would pay up to $6 billion over 18
years, with almost $4.5 billion due in the first nine years.

According to an agreement with tribal plaintiffs, all 574 federally
recognized Native American tribes are eligible for payouts from a
trust worth about $161 million.

Each state has worked up a formula with its local governments for
distributing the Purdue money. But all must follow the guidance for
use of the money: that it be largely applied to initiatives intended
to ease the opioid crisis, including addiction treatment and
prevention.

What about individual victims?

According to the current plan, a trust of $700 million to $750 million
would be set up for individual victims and families of people who
became addicted to OxyContin or died from overdoses.

About 138,000 plaintiffs filed claims; payments are expected to range
from about $3,500 to $48,000. Guardians of about 6,550 children who
experienced withdrawal symptoms from drug exposure in the womb may
each receive about $7,000. Though the payouts are small, the Purdue
plan is one of only a very few opioid settlements across the nation
that sets aside money for individuals.

If the plan is approved, what happens to Purdue?

Purdue Pharma, which introduced OxyContin in the late 1990s and
aggressively marketed it, would cease to exist. It assets would be
transferred to a new company called Knoa Pharma. That company, which
would be owned by creditors, would manufacture addiction treatment and
opioid reversal medicines at no profit. Knoa would continue to make
opioids like OxyContin as well as non-opioid drugs, with profits going
toward the settlement funds.

Purdue, which no longer markets the opioids it produces, is being
supervised by an independent monitor. The Sacklers have been off its
board since 2018.

_Abbie VanSickle [[link removed]] covers
the ​Supreme Court with a focus on the world of the court, including
its role in politics and the lives of the justices.​ She is a
Pulitzer Prize-winning reporter and a graduate of the U.C. Berkeley
School of Law. _

_Jan Hoffman [[link removed]] writes about
behavioral health and health law. Her wide-ranging subjects include
opioids, tribes, reproductive rights, adolescent mental health and
vaccine hesitancy. _

* oxycontin
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* Purdue Pharma
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* Sackler family
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* Supreme Court
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* bankruptcy
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* addiction
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* Health Care
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