The Supreme Court ruled Thursday that the bankruptcy code cannot shield the Sackler family — who is behind the highly addictive pain medication OxyContin — from lawsuits without the consent of all the affected victims.
The 5-4 ruling divided the justices over how a debtor can discharge its debts.
Purdue Pharma, which produced the drug, filed for bankruptcy after facing litigation over the opioid epidemic.
The Sackler family, who owned Purdue, did not declare bankruptcy and instead attempted to shield themselves from future claims in a release agreement worked into the bankruptcy deal.
The high court said the bankruptcy code does not authorize such a scheme.
“They obtained all this without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors,” Justice Neil M. Gorsuch wrote for the court.
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The bankruptcy deal involved more than $6 billion in a settlement that would have shielded the Sackler family from civil liability.
The deal, as approved by lower courts, would have protected the Sackler family, which made $11 billion from creating and distributing the opioid OxyContin.
The U.S. Trustee for the federal government had opposed the settlement, saying that releasing the Sacklers from liability without the consent of all parties would violate the bankruptcy code. The high court granted the Trustee’s request to review the issue.
Victims, families, hospitals and state governments filed thousands of lawsuits against Purdue Pharma over its aggressive marketing of OxyContin, the highly addictive pain medication cited as the starting point of the opioid epidemic, which has claimed hundreds of thousands of lives since 2000.
Purdue Pharma filed for bankruptcy in 2019 to deal with all the lawsuits and cover its losses.
Under the now-rejected deal, the Sacklers would have provided up to $6 billion for victims’ compensation, helped abate the opioid epidemic and made company documents public.
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It would have released the Sackler family from third-party civil claims without the consent of potential claimants.
The Sacklers owned Purdue for decades. The company manufactured and distributed OxyContin, a version of oxycodone it patented in 1996. It’s estimated that nearly 250,000 people died from opioid overdoses from 1999 through 2019, according to the federal government.