Fed judge overturns massive settlement with OxyContin maker, opens door for thousands of lawsuits

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A federal judge has rejected a $4.5 billion settlement offer to thousands of plaintiffs by Purdue Pharma, maker of OxyContin, including those affected by the nationwide opioid crisis and local, state, and Native governments over a clause that would have shielded the Sackler family from personal litigation.

U.S. District Judge Colleen McMahon ruled that a bankruptcy court that initially agreed to the settlement didn’t have the legal authority to protect the family from liability.

Attorney General Merrick Garland, in response to the ruling, said he was “pleased” with McMahon’s decision.

“The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family,” Garland noted, according to DailyMail.com.

In a company statement, Purdue said that the decision won’t hurt operations but will take resources away from the company’s and the Sackler family’s efforts to battle the opioid crisis in communities around the country.

“It will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis,” Steve Miller, chairman of the Purdue board of directors, said.

“These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis,” Miller added.

In response to McMahon’s ruling, Connecticut Attorney General William Tong, one of a few state officials who pressed to have the original deal overturned, called McMahon’s ruling “a seismic victory for justice and accountability.”

He added that the ruling now will “reopen the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused.”

DailyMail.com noted:

Purdue sought bankruptcy protection in 2019 as it faced thousands of lawsuits claiming the company pushed doctors to prescribe OxyContin, helping spark an opioid crisis that has been linked to more than 500,000 deaths in the U.S. over the last two decades.

Through the bankruptcy court, it worked out a deal with its creditors. Members of the Sackler family would give up ownership of the company, which would transform into a different kind of entity that would still sell opioids — but with profits being used to fight the crisis. It would also develop new anti-addiction and anti-overdose drugs and provide them at little or no cost.

Sackler family members also would contribute $4.5 billion in cash and charitable assets as part of an overall deal that could be worth $10 billion, including the value of the new drugs, if they’re brought to market.  

In addition, businesses and government entities agreed that any money received would be utilized to fight the opioid epidemic. Also, the settlement provided for millions of Purdue documents to be released to the public, including communications with lawyers.

In exchange, the Sackler family would be shielded from personal liability lawsuits that currently numbered around 860 but could expand into the thousands over time.

New York Attorney General Letitia James and several others who initially sued the Sackler family opposed the settlement deal at the outset but eventually agreed to it. However, James vowed to continue the lawsuit in the event the agreement did not hold up.

“Purdue Pharma and the Sackler family remain named defendants in our ongoing litigation and we will hold them accountable for their unlawful behavior, one way or another,” she said in a statement.

The bankruptcy court approved the settlement in September. It would not have protected the Sackler family from criminal liability, but DailyMail.com reported that no such charges are forthcoming or appear to be forthcoming.

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