The U.S. Supreme Court on Thursday rejected the validity of a roughly $6 billion settlement in the opioid crisis on the grounds that it exempted the Sackler family, owners of the Purdue lab, from any future lawsuits from victims.
The court ruled by a 5-4 majority. The Justice Department criticized the settlement, reached in 2022 with all 50 states, local governments and individual victims and upheld by a federal appeals court, as shielding the Sackler family from any future lawsuits, including from victims who did not consent.
“The Bankruptcy Code does not authorize … immunity from prosecution without the consent of affected plaintiffs,” wrote Neil Gorsuch, a majority judge joined by three other conservative justices and one progressive.
The Sacklers are accused of having aggressively promoted their pain medication OxyContin for years while being aware of its highly addictive nature. The sale of this product brought them tens of billions of dollars.
The overprescription of this opiate is generally considered to be the trigger of the crisis which has claimed more than half a million victims in 20 years in the United States.
Billions “siphoned”
Targeted by an avalanche of lawsuits, the Purdue pharmaceutical laboratory declared bankruptcy in 2019 and has since negotiated a plan, the latest version of which provides for its closure by 2024 in the United States for the benefit of a new entity and the payment of ‘at least $5.5 billion over 18 years.
The Supreme Court had suspended this agreement in August at the request of the government.
During the November hearing, the nine justices appeared unusually torn, swinging between the risk of jeopardizing compensation for victims and recognizing the right of a court in a bankruptcy case to immunize the Sacklers from future lawsuits.
If the Justice Department’s bankruptcy trustee, who is challenging the deal, “wins, the billions of dollars earmarked for opioid prevention and compensation will evaporate and creditors and victims will be left with nothing,” the lab’s lawyer, Gregory Garre, argued.
His colleague representing the victims who signed the agreement, Pratik Shah, also considered it “irresponsible for the bankruptcy trustee to suggest that there is some sort of secret alternative to obtain compensation”, affirming that “without the “exemption, the plan will disintegrate.”
“We say there are other opioid victims who have also suffered tragic harm who say they do not consent to having their rights forcibly extinguished,” government attorney Curtis Gannon responded.
The Justice Department said the Sacklers “siphoned” some $11 billion from the company in the years before it declared bankruptcy in 2019.