The United States Supreme Court blocked a $6 billion settlement over the opioid controversy with Purdue Pharma that would have granted the company's wealthy Sackler family immunity from lawsuits.
The decision on Thursday to freeze the settlement deal was made to consider the government's challenge of the company's bankruptcy filing. The court's ruling suggests that it has sided with the Justice Department, which had requested that the settlement be put on hold while considering a review of the agreement.
Supreme Court Freezes Purdue Pharma Settlement
The United States government has argued that the Sackler family should not be allowed to take advantage of legal protections meant for debtors in "financial distress," behind the company that makes the prescription painkiller OxyContin.
However, the court's order, which was not signed, did not give out reasons for the decision and had no public dissents. It also adds to the uncertainty surrounding the plan to compensate states, local governments, tribes, and individuals that were harmed by the opioid crisis while also offering protection for the Sackler family, as per the New York Times.
The Supreme Court's decision to challenge Purdue Pharma's bankruptcy agreements is the latest development in the yearslong legal battle over compensation for victims of the prescription drug crisis.
The U.S. Court of Appeals for the Second Circuit in May approved the settlement plan as part of a court review of bankruptcy restructuring for the company. It filed for bankruptcy protection in September 2019, and at the time, it and members of the Sackler family were facing several lawsuits concerning the opioid crisis.
While it is common for companies looking to receive bankruptcy protection to be shielded from legal claims, the thing that was unusual about the agreement is that it extended that liability protection to the owners of the company themselves.
In a statement, Purdue Pharma officials said that they are confident in the legality of their nearly universally supported Plan of Reorganization. According to CNN, they were also optimistic that the Supreme Court would agree with their stance.
Triggering an Opioid Crisis
On the other hand, court documents showed that the government has called the plan "exceptional and unprecedented." It noted that lower courts have divided on when parties can be released from liability for actions that resulted in societal harm.
Solicitor General Elizabeth Prelogar also argued in court papers that the plan's release "absolutely, unconditionally, irrevocably, fully, finally, forever, and permanently releases" the Sackler family from any form of opioid-related civil claim. This includes the ones based on fraud and other forms of willful misconduct.
The company is accused of kickstarting an opioid epidemic that has resulted in more than overdose deaths in the United States over the last two decades because of its OxyContin product.
While the Sackler family has repeatedly denied any wrongdoing, they expressed regret that their company's product "unexpectedly became part of an opioid crisis." In May, they noted that the bankruptcy settlement would hand out resources for people and communities that badly need it, said Reuters.
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