Activists are celebrating a US supreme court decision to review Purdue Pharma’s controversial $6bn settlement of opioid lawsuits for bringing “a sense of optimism to an otherwise bleak situation”.
“We’ve been saying that this is a misuse of the bankruptcy court, and that the Sacklers have been using it as defense because they were the ones that put Purdue into bankruptcy,” says Mike Quinn, a New York lawyer who represents Prescription Addiction Intervention Now (Pain), an organization that has questioned if some members of the Sackler family could be liable for the prescription opioid crisis that ramped up in the US in the early 2000s.
“It’s premature to say this a victory but it opens a window for a resolution to an issue we’ve been fighting for years,” Quinn told the Guardian, adding: “The decision has brought a sense of optimism to what was otherwise a bleak situation.”
Quinn was among several commentators who cast the court’s announcement as a potential victory for the US government and activists opposing an unusual legal shield granting family members immunity from civil claims via the OxyContin maker’s bankruptcy proceedings.
He said the new twist in the case “has the potential to reconcile the issue of non-debtor third party releases, and allow the judicial system to finally decide whether non-bankrupt parties can get discharges from their liability for wrongdoing”.
The challenge to the Purdue bankruptcy settlement agreement, which had been agreed to by a lower court, was brought by the US bankruptcy trustee, represented by the US justice department, which opposes the use of the bankruptcy court to release certain billionaire members of the Sackler family, who are not seeking bankruptcy protection as individuals, from all opioid-related claims.
According to the office of the US trustee, bankruptcy courts have no authority to force creditors to sign away their legal rights if they do not like the settlement terms. But the Sacklers have demanded that release as a condition of paying the $6bn settlement.
Last year, the attorney general, Merrick Garland, said the “bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family”.
The supreme court justices said they would allow the case to be argued in a December argument session. The justices also directed the parties to address whether bankruptcy law authorizes a blanket shield from lawsuits filed by all opioid victims.
Lawyers for Purdue had previously urged the justices to stay out of the case. In a statement after the memo was issued, the company said it was “confident in the legality of our nearly universally supported plan of reorganization, and optimistic that the supreme court will agree.
“Even so, we are disappointed that the US trustee, despite having no concrete interest in the outcome of this process, has been able to single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country, and overdose rescue medicines.”
When Purdue Pharma introduced the slow-release painkiller OxyContin in 1996 it had aggressively marketed it as “non-addictive” and played down the risks of abuse and overdose.
A 2006 justice department memo leaked to the Guardian two years ago showed that prosecutors had recommended wire fraud and money-laundering charges against the company, and cited more than 200,000 deaths in the US tied directly to prescription opioids between 1999 and 2016.
The memo suggests that had the government accepted prosecutors’ recommendations and brought a criminal prosecution, Purdue might have been put out of business, its senior executives jailed and perhaps tens of thousands of opioid-related deaths avoided.
Instead, the government agreed to limit Purdue’s exposure to claims of deceptive marketing to six years, from 1996, when the drug was introduced with first-year sales of $48m, to 2001, when sales had already reached $1.1bn. Over that period, the government estimated $2.8bn in revenue from OxyContin sales.
In 2007, three non-Sackler executives, including its president and its top lawyer, pleaded guilty as individuals to misbranding, a criminal violation. They agreed to pay a total of $34.5m in fines and were given probation.
The justice department has not indicated whether – dependent on a favorable supreme court ruling – it would reverse its 2006 decision. “Going to the supreme court certainly puts more attention on the case and begs the question why aren’t individuals being held criminally accountable,” Quinn said.
At a minimum, the court’s acceptance of the case will bring further discomfort to members of the Sackler family, which have seen their name taken off several art institutions they had supported over the years with millions of dollars in grants.
A ruling favorable to the US trustee, and by extension activists, could also shed light on decisions made by former judge Robert Drain, who oversaw the bankruptcy case. In April, Drain joined Skadden Arps, a top-tier New York law firm that was earlier fined for failure to disclose a joint-defense agreement with the Sacklers in the bankruptcy case.
December’s arguments before the court may include a brief by Ellen Isaacs who has fought to bring Purdue, its owners and executives, to just account since losing her son Ryan to an opioid overdose in 2018. Isaacs is one of just two individuals holding out against the controversial bankruptcy settlement.
“I want my day in court,” Isaacs told the Guardian last year. “Purdue and the Sacklers caused a genocide; they weaponized the medicine cabinets of the US. I will turn the court on its head. This company has made billions of dollars – the blood money of our children. And I stand for everybody who has been harmed.
“The Sacklers need to be indicted,” she added. “No swanky prison, no TVs … Put an ankle monitor on them and put them out in the community to help clear up the mess.”
This article was amended on 12 August 2023 to note that Skadden Apps was fined before – rather than shortly after – Robert Drain joined.
