Supreme Court to Hear Case on Purdue Pharma’s Role in Opioid Crisis
Purdue Pharma, the maker of the prescription painkiller OxyContin, has been in the spotlight for its involvement in the opioid crisis for years. A landmark settlement reached last year was thought to bring an end to thousands of cases against the company, but the Supreme Court will now hear arguments over whether the agreement violates federal law.
The settlement has garnered attention as it funneled billions of dollars towards fighting the opioid epidemic in exchange for exempting the billionaire Sackler family, former owners of Purdue Pharma, from civil lawsuits. This case could have major implications, not just for Purdue, but for organizations that turn to bankruptcy court to resolve claims of mass injury.
Legal experts have described this case as one of the most important in bankruptcy court before the Supreme Court in decades. The central question in this case is whether a legal maneuver in the settlement agreement can give the Sackler family immunity from civil lawsuits related to the public health crisis.
The tactic used in the Purdue Pharma deal, known as third-party nonconsensual releases, has raised questions about the validity of similar agreements. This case could potentially upend similar agreements in other lawsuits involving claims of mass injury.
The U.S. Trustee Program, a watchdog group in the Justice Department, has argued that the Purdue Pharma deal exceeded the bounds of the bankruptcy code and allowed the Sackler family to shield themselves from liability while “extinguishing, without payment, claims alleging trillions of dollars in damages.”
The case has divided opinions, with companies facing similar lawsuits arguing that without such protections they would face never-ending litigation. They claim that the agreements offer a chance to fairly compensate survivors while ensuring the longevity of the organizations.
The Supreme Court’s decision in this case would be of significant interest to bankruptcy courts and corporate bankruptcy cases. The case rests on the amount of leeway given to bankruptcy courts without explicit authorization from Congress, a scenario that the conservative majority of the court tends to view skeptically.
This case is significant, and its decision will have far-reaching implications for organizations that turn to the bankruptcy system to deal with mass-injury lawsuits. The outcome could set a precedent for similar cases in the future, as companies look to find ways to navigate through legal challenges.