Federal Judge Overturns Purdue Pharma’s $4.5 Opioid Settlement Over Sackler Family’s Liability Shield

A federal judge on Thursday overturned a settlement between Purdue Pharma and thousands of state, local, and tribal governments over a liability shield for the company’s owners, The New York Times reports.

Purdue Pharma, the maker of OxyContin, agreed to pay $4.5 billion to settle thousands of lawsuits over its role in fueling the opioid epidemic. But the agreement included immunity for the billionaire Sackler family, the company’s owners.

Federal Judge Colleen McMahon on Thursday said that the settlement, which was approved in September by a bankruptcy judge, should not go forward.

Although the Sacklers did not file for bankruptcy, they made their immunity an absolute requirement of the deal. But bankruptcy law does not allow a judge to grant such deals, McMahon said.

Lawyers for a group of states that appealed the settlement praised the decision.

“This is a seismic victory for justice and accountability that will re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused,” said Connecticut Attorney General William Tong.

Judge asks appellate court to weigh in:

McMahon in her ruling invited the Court of Appeals for the Second Circuit to weigh in on the case, noting that different courts have disagreed on the matter and “the lower courts desperately need a clear answer.”

Purdue vowed to appeal the ruling, arguing that the decision “will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis.”

“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,” said Steve Miller, chairman of the company’s board of directors.

Judge alarmed at Sackler scheme:

McMahon said she was troubled by the fact that the Sacklers withdrew more than $10 billion from Purdue between 2008 and 2018 amid the opioid epidemic and deposited most of the money in offshore accounts and trust out of reach of American authorities.

The withdrawals escalated after three company executives agreed to plead guilty in 2007 on charges related to aggressively marketing opioids.

“Concerned about how their personal financial situation might be affected, the family began what one member described as an ‘aggressive’ program of withdrawing money from Purdue almost as soon as the ink was dry on the 2007 papers,” McMahon said.


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