On June 27, 2024, the Supreme Court threw a wrench into efforts to resolve the national opioid crisis by rejecting Purdue Pharma’s bankruptcy settlement. The controversial deal, which had been approved by a lower court, offered billions of dollars for addiction treatment and prevention programs but also shielded members of the Sackler family, Purdue’s owners, from any future lawsuits related to the opioid crisis. The 5-4 decision, with a conservative majority siding against the settlement, leaves open questions about how Purdue will proceed with its bankruptcy case and how the Sacklers will be held accountable for their alleged role in the crisis.
Purdue Pharma, the manufacturer of OxyContin, a powerful opioid painkiller, filed for bankruptcy in 2019 facing a mountain of lawsuits from states, municipalities, and individuals who accused the company of aggressively marketing OxyContin while downplaying its addictive properties. The proposed settlement, valued at up to $6 billion, would have seen the Sacklers contribute a significant portion of the funds while giving up ownership of Purdue. However, a key aspect of the deal was the inclusion of a broad release of liability, which would have prevented future lawsuits against the Sackler family.
This provision sparked outrage from many critics who argued that the Sacklers, accused of prioritizing profits over public safety, were escaping accountability with a slap on the wrist.
The majority opinion, authored by Justice Neil Gorsuch, did not address the specifics of the Sackler family’s actions. Instead, the Court focused on the legality of the broad release granted under the settlement. Gorsuch wrote, “The Code empowers bankruptcy courts to discharge a debtor’s debts, not to extinguish the claims of creditors against third parties.” He argued that the bankruptcy code was not intended to provide such sweeping legal protection to non-debtors like the Sacklers.
The decision has significant implications for future bankruptcy cases, particularly those involving large corporations with potential third-party liability. Legal experts believe it could impact other ongoing bankruptcy proceedings, including the $2.4 billion plan for the Boy Scouts of America, which also includes a release of liability for sexual abuse claims.
This ruling leaves Purdue’s future uncertain. The company could pursue any number of new legal avenues taking additional years to work through the legal system. That means the distribution of funds for things like addiction treatment programs will almost certainly be delayed.
This ruling also paves the way for individual lawsuits against the Sackler (who have distanced themselves from operations with Purdue) family to proceed. These lawsuits could delve deeper into the family’s alleged role in Purdue’s marketing practices and potentially expose them to significant financial penalties. However, such litigation can be lengthy and complex, and again, make years of legal wrangling almost inevitable.
The Supreme Court’s decision comes at a critical juncture in the fight against the opioid crisis. According to the Centers for Disease Control and Prevention, over 500,000 people in the United States have died from opioid overdoses since 1999. The crisis continues to claim thousands of lives each year, devastating families and communities across the country.
The rejected settlement offered a potential source of funding for addiction treatment and prevention programs. With that option now off the table, the onus falls on federal and state governments to increase their own funding for these critical resources.
The Supreme Court’s decision may have thrown a curveball, but the fight against the opioid crisis is far from over. The coming months will likely see renewed efforts to hold Purdue Pharma and the Sackler family accountable, while the search for solutions to this devastating public health emergency continues.
Sources:
https://www.yahoo.com/news/supreme-court-rejects-nationwide-settlement-182142638.html
https://apnews.com/article/supreme-court-purdue-pharma-opioid-crisis-bankruptcy-9859e83721f74f726ec16b6e07101c7c
https://www.supremecourt.gov/opinions/23pdf/23-124_8nk0.pdf
https://apnews.com/article/supreme-court-purdue-pharma-opioid-crisis-bankruptcy-9859e83721f74f726ec16b6e07101c7c