The Supreme Court’s Thursday decision blocking bankruptcy proceedings aimed at discharging the family that owns Purdue Pharma has sent the case back to lower courts in uncertainty. The only immediate consequence of the ruling is that financial settlements will take longer to reach victims of the opioid epidemic.
Bankruptcy legislation approved last year would have absolved the Sackler family, who once controlled Purdue Pharma, and many of their associates from future liability in opioid litigation. The Biden administration had argued that bankruptcy courts could not absolve the Sacklers from litigation.
Justice Neil Gorsuch, writing for a 5-4 split majority on Thursday, said federal law does not allow the Sacklers to be immune from liability for contributing up to $6 billion in settlement funds because they did not themselves file for bankruptcy.
“The majority is simply saying that the bankruptcy code doesn’t allow for this and offers little in the way of solutions,” Carl Tobias, dean of the University of Richmond’s Williams School of Law, told The Hill.
“I think the only thing that’s clear is that the Sacklers will not be exonerated. It’s unclear what will happen with the funds that they said they would contribute. It’s unclear what will happen next.”
Purdue Pharma and the plaintiffs agreed Thursday’s ruling signals further negotiations for the future. In a statement, the drugmaker called the ruling “heartbreaking.”
“We will immediately reengage with the same creditors who have already demonstrated their ability to come together to settle in the public interest to pursue a new solution that will deliver billions of dollars of value to curbing opioid addiction and enable the company to emerge from bankruptcy as a public benefit company,” the company said.
North Carolina Attorney General Josh Stein, a Democrat, said in a statement: “The court’s decision means we must return to the negotiating table. Purdue and the Sacklers must pay restitution so we can save lives and help people break addiction. If they don’t pay, we will face them in court.”
“Today’s sentence will allow us to redouble our efforts to hold those responsible for the harm caused to our state, and we will explore new ways to close this case,” West Virginia Attorney General Patrick Morrisey, a Republican, said after the verdict.
Starting the plan over again removes certainty that states will receive the settlement money they were hoping for, said Sarah Whaley, a senior practice associate at the Johns Hopkins Bloomberg School of Public Health.
“The state cannot count on funds it does not have, and there is no longer any guarantee it will receive funding from Purdue,” Whaley said.
Tobias reiterated that the ruling “potentially delays resolution for hundreds of thousands of individuals, cities, counties and others.”
“A lot of energy and resources have been poured into this short-term conclusion, and nobody is happy with it,” he added.
But Whaley noted that the proposed bankruptcy agreement is not the only opioid epidemic settlement issued in the U.S. Billions of dollars have already been committed from other settlements, and new doubts about the Purdue Pharma deal are putting pressure on existing funds to be properly distributed.
“Without the promise of additional funding from the Purdue settlement, it is even more important that states maximize the impact of the resources they have through thoughtful planning and investment,” Whaley said.
