Family behind major opioid maker may be sued by victims for compensation, Supreme Court rules

Supreme Court said the Sackler family cannot use a Chapter 11 reorganization plan to protect themselves from civil liability

Supreme Court rejected a multi-billionan dollar bankruptcy plan that protected the Sackler family from civil liability (EPA)

The Supreme Court rejected a multi-billion dollar bankruptcy plan that protects the Sackler family – the former owners of the pharmaceutical giant Purdue Pharma which is responsible for marketing and selling the opioid OxyContin – from civil lawsuits.

In a 5 to 4 decision, justices said that bankruptcy code does not permit a type of Chapter 11 reorganization plan that protects those who do not declare bankruptcy themselves.

This means the bankruptcy plan, which initially had a $6 billion settlement for victims of OxyContin, will have to be remanded – something Justice Kavanaugh pointed to in his dissent as an unfortunate result for victims waiting for compensation.

Boy Scouts of America and the Catholic Church used similar bankruptcy reorganization plans to protect individuals from civil lawsuits.

Campaigners and family members of those who have died of opioids gather outside the US Supreme Court, Washington, DC, USA, 04 December 2023 (EPA)

For years, victims of the drug have been unable to receive compensation due to a legal back-and-forth the Sacklers and Purdue Pharma were engaged with.

In 2019, Purdue Pharma filed for Chapter 11 bankruptcy while facing a wall of lawsuits over OxyContin.

At the same time, the Sacklers withdrew $11 billion from Purdue Pharma and transferred it overseas with more than 40% of that going toward the company’s taxes. The family also began removing themselves from the company board – distancing themselves.

In its proposed plan for reorganization, Purdue Pharma agreed to pay $1.2 billion administrative expenses and distribution to opioid victims. About 138,000 plaintiffs could receive anywhere between $3,500 and $48,000 over the next 10 years.

A campaigner holds a pill container whilst outside the US Supreme Court, Washington, DC, USA, 04 December 2023. The US Supreme Court is hearing oral arguments in a bankruptcy case against Purdue Pharma, the makers of OxyContin (EPA)

In addition, the Sackler family agreed to contribute $6 billion to the plan but in return would be free from opioid-related claims.

The government intervened, claiming the type of protections the Sacklers obtained in their plan were not warranted because the family was not in “financial distress.” They claimed the plan imposed on victims’ right to due process.

During oral arguments, Curtis Gannon the deputy solicitor general suggested the Supreme Court should ask Congress to narrow the scope of the protections to prevent these types of bankruptcy protections from continuing.

Attorney for Purdue Pharma argued that without the protections victims would not get the amount they’re owed because of the overwhelming number of lawsuits the Sackler family would be subject to.

Millions of people in the U.S. have been impacted by the opioid epidemic.

Between 1999 and 2021, over 280,000 people died of overdoses involving prescription opioids, according to the CDC. In 2021 alone, the number of deaths involving prescription opioids was five times the number it was in 1999.

Harrington v Purdue Pharma is a bankruptcy case with implications for victims of the opioid crisis who wanted to sue the Sackler family for their part in falsely advertising Oxycontin.

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