WASHINGTON (CN) — A $6 billion opioid settlement was on thin ice at the Supreme Court on Monday as the justices balked at choosing between helping opioid victims or greenlighting an immunity shield allowing the Sackler family to avoid future lawsuits.
The deal seemed to fall victim to what Justice Elena Kagan referred to as the “one nutcase holdout.” The Barack Obama appointee grappled with the idea of allowing the government to blow up the deal approved by opioid victims that would provide desperately needed assistance to those harmed by the epidemic based on “hifalutin principles of bankruptcy law.”
“It's overwhelming, the support for this deal, and among people who have no love for the Sacklers, among people who think that the Sacklers are pretty much the worst people on earth, they've negotiated a deal which they think is the best that they can get,” Kagan said.
However, Kagan also said the Sacklers shouldn’t be able to skirt fundamental principles of bankruptcy settlements, where one party gets immunity by actually declaring bankruptcy.
“The question is why should they get the discharge that usually goes to a bankrupt person once they've put all their assets on the table without having put all their assets on the table,” Kagan said.
Justice Ketanji Brown Jackson placed all of the blame for the justices’ predicament on the Sacklers. She said the family pulled billions of dollars out of OxyContin-maker Purdue Pharma before the company declared bankruptcy.
“It's not the holdouts,” the Joe Biden appointee said. “It's the Sacklers' insistence on getting releases from every single person that's causing this problem.”
The Sacklers argue that half of those funds went toward taxes, but Justice Amy Coney Barrett noted that nearly all of the money in the settlement was removed from Purdue originally.
“I take your point about 40% of the money that they took from the corporation going to the payment of taxes, but, as Justice Jackson rightly points out, 97% of the money after tax that they're contributing is all money that they took out of the corporation,” the Donald Trump appointee said.
The lethal public health crisis fueled by Purdue Pharma’s development and marketing of OxyContin has killed 700,000 Americans — 300,000 from prescription opioid overdoses. Led by the Raymond and Mortimer Sackler families, Purdue pushed OxyContin on patients without regard for addiction concerns.
When Purdue’s role in the epidemic began to emerge, the Sacklers moved $11 billion of the company’s profits into trusts and holding companies in what the government says was a “milking” scheme to shield profits. The company says 40% of these funds make up mandatory taxes.
Individual victims of opioid overdoses, Native American tribes, local governments, and several states were responsible for just some of the lawsuits against Purdue and the Sacklers claiming their liability for the opioid epidemic.
By 2019, there were almost 3,000 actions against Purdue and 400 against the Sacklers amounting to over $40 trillion in claims. This led Purdue to file for Chapter 11 bankruptcy, blocking all litigation against the company.
The Sacklers, however, did not file for bankruptcy, opting to negotiate a settlement instead. Under the deal, Purdue would become a public-benefit company focused on opioid abatement, and all of its remaining assets would go toward trusts to compensate opioid victims and communities impacted by the epidemic.
Without filing for bankruptcy themselves, the Sacklers agreed to pay $6 billion into the trust for opioid abatement in exchange for immunity from future lawsuits. Individual victims and families would receive anywhere between $3,500 and $48,000 and tribes, cities, and states would get billions, but anyone who did not approve of the deal would not be able to bring a separate suit against the family in the future.
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