Supreme Court blocks Purdue Pharma opioid settlement, threatening victims with billions of dollars

WASHINGTON — The Supreme Court on Thursday rejected the massive restructuring of opioid maker Purdue Pharma, finding that the settlement inappropriately included legal protections for the Sackler family, meaning billions of dollars guaranteed to victims are now at risk.

The court, by a vote of 5-4 on non-ideological grounds, ruled that the bankruptcy court did not have the authority to release members of the Sackler family from lawsuits brought by opioid victims.

As part of the deal, the family, which controlled the company, agreed to pay $6 billion that could be used to settle opioid-related claims, but only in exchange for a complete release of any liability in future cases.

Justice Neil Gorsuch, writing for the majority, said the Sacklers could have filed for bankruptcy, but instead sought to rely on the company’s own bankruptcy proceedings to try to resolve pending legal claims.

“They achieved all of this without obtaining the consent of those affected or putting on the table for their creditors anything approaching their entire assets,” Gorsuch wrote.

“Nothing in current law authorizes the removal of Sackler,” he added.

Justice Brett Kavanaugh dissented, citing the ruling’s impact on those who would benefit from the settlement.

“Today’s decision is legally wrong and devastating for more than 100,000 opioid victims and their families,” he wrote.

As a result of this decision, “opioid victims are now deprived of the significant monetary compensation they fought for and finally obtained after years of litigation,” he added.

The move means settlement negotiations are expected to resume, with the possibility that no deal will be reached.

Purdue Pharma called the decision “heartbreaking” because of its impact on victims, but pledged to continue its efforts to negotiate a new settlement.

“The decision does not deter us from achieving the dual goals of using settlement dollars to reduce opioids and making the company a force for good,” the statement said.

During oral arguments in December, an attorney representing some of the victims told the justices there was “no viable path” for the victims to receive compensation if the agreement including the Sackler deal was not upheld.

The case brought more attention to the lingering effects of the opioid crisis and the role Sackler-owned Purdue played in creating it.

Under the proposed deal, which the Supreme Court suspended last year when it took up the case, the Sackler family agreed to pay about $6 billion that could be used to settle claims opioid-related claims, but only in exchange for a complete release of liability in future cases.

The settlement, including assets held by Purdue, would be worth significantly more, with the reorganized company poised to focus on combating the impact of opioid abuse.

No Sacklers have been involved with the company since 2019.

Purdue made billions from OxyContin, a widely available painkiller that fueled the opioid epidemic. The company’s tactics to aggressively market the drug have come under increasing scrutiny as thousands of people have died from opioid overdoses.

As the company’s fortunes plummeted, it filed for bankruptcy protection, but not members of the Sackler family. Instead, they negotiated a separate settlement with Purdue and plaintiffs in ongoing lawsuits that would allow the company to reinvent itself to address the opioid crisis.

Last year, the New York-based U.S. Court of Appeals for the Second Circuit approved the plan over the objection of William Harrington, the U.S. government administrator overseeing the bankruptcy. The Department of Justice’s trustee program aims to ensure that the bankruptcy system operates according to the law.

Harrington opposed dropping additional claims against the Sacklers, saying it would be unfair to potential future plaintiffs.

Purdue criticized Harrington’s role, saying groups representing thousands of plaintiffs signed on to the settlement, which could not have happened without the Sackler family’s input.

At the Supreme Court, various groups representing plaintiffs have supported Purdue, including one that includes 1,300 cities, counties and other municipalities and another representing 60,000 people affected by the opioid epidemic.

Canadian municipalities and Indigenous First Nations were among those opposing the regulation.

Purdue prospered under the leadership of brothers Mortimer and Raymond Sackler, who died in 2010 and 2017 respectively. The family raised billions and spent lavishly, including on spectacular charitable projects.

The family told the Supreme Court they continued to support the deal.

In a brief filed on behalf of Mortimer Sackler’s relatives, most of whom are based abroad, lawyers warned of “significant litigation costs and risks” in seeking to enforce any court judgment stranger against the family if the settlement is rejected.