Uncertainty follows court's rejection of Purdue opioids deal

A federal judge's decision to reject a multibillion dollar opioid settlement involving OxyContin maker Purdue Pharma is being hailed as a step toward justice by advocates who have long called for greater accountability for the family that owns the company.

But not everyone involved in the arduous settlement process is celebrating, including some advocates who have lost loved ones to the nation's ongoing — and growing — addiction crisis. The ruling Thursday from New York-based U.S. District Court Judge Colleen McMahon is a blow to those who sought to use billions of dollars from Purdue and from the Sackler family members involved with the company to fight the epidemic.

“It could be dragged out for months, if not years,” said Cheryl Juaire of Massachusetts who has lost two grown sons to opioid overdoses.

Juaire founded an organization for grieving parents and was a voice for victims on a committee during the Purdue bankruptcy proceedings that led to the settlement vacated this week.

“Every day, 265 people are dying. The attorneys are getting richer because they’ve still got a job to do, and lives are being lost,” she said. "When is somebody going to say, ‘This is all about the lives?’”

Avi Israel also lost a son to opioid addiction, but sees this week's ruling differently. Like Juaire, he has dedicated his life to fighting addiction, starting Save the Michaels of the World a group that has helped get 1,200 people in western New York into addiction treatment this year.

He said Thursday's decision was the right one.

“You could give me all the money in the world; that’s not going to bring my son back,” said Israel, who also sits on a state board that helps distribute money New York brings in from opioid litigation.

Allowing lawsuits to move forward against Sackler family members could have a more long-lasting effect by deterring corporate executives from pushing medications they know could cause harm.

“I want them to know what it feels like for millions of us in this holiday season, when you sit at the table and you stare at an empty chair and you know that all of that could have been avoided," he said.

The contrasting views of justice in the Purdue Pharma bankruptcy reflect a complicated case at the center of multiple lawsuits seeking to hold players in the drug industry accountable for the nationwide epidemic of addiction and overdoses. Combined, prescription and illicit versions of the drugs have been linked to more than 500,000 deaths in the U.S. over the past two decades, and it's gotten worse during the coronavirus pandemic. Federal officials say there were 100,000 overdose deaths in the 12 months that ended in April, the majority of them from opioids.

The Purdue case is the highest-profile, but it's not the largest opioid settlement in the works. The drug distribution companies AmerisourceBergen, Cardinal Health and McKesson, plus drugmaker Johnson & Johnson, have agreed to a settlement worth $26 billion over time. The deal relies on having a critical mass of local governments surrender their right to sue and sign on.

Facing thousands of lawsuits from state and local governments, unions, hospitals and others, Purdue filed for bankruptcy protection in 2019 as part of an effort to settle the cases. After negotiations and mediation, it reached a deal supported by the overwhelming majority of state and local governments, as well as individuals with claims who voted on it.

The plan calls for Sackler family members to give up ownership of Purdue. The transformed company would continue to make OxyContin, but with profits going to fight the opioid crisis. It also would try to develop low- or no-cost drugs to reverse overdoses and treat addictions. Sackler family members would contribute $4.5 billion over time in cash and charitable assets.

Most of the money would flow to government entities, which would be obligated to use it to fight the crisis and not just to fill their budgets.

“The most important thing to me is that in the plan, every single penny has to be used for the epidemic,” Juaire said.

Because of the advocacy of Juaire and other representatives of victims, a portion of the settlement — $750 million — would go to individual victims and their families. Payments were expected to range from $3,500 to $48,000. That set the Purdue deal apart from other large opioid settlements, where money for individual victims is not included.

But the deal came with one catch that angered many advocates, state attorneys general and others: The Sacklers would be protected from all current and future civil lawsuits over the toll of opioids.

Under a 2020 settlement with the U.S. Department of Justice, the company pleaded guilty to criminal charges in a deal that would waive most of their $8.3 billion in penalties and forfeitures as long as it entered a settlement that would use money to fight the opioid crisis. Members of the Sackler family agreed separately to pay $225 million to settle federal civil claims. There are no indications that criminal charges could emerge against family members, though some activists are pressing officials to file them.

Eight states and the U.S. Bankruptcy Trustee, a part of the Department of Justice, objected to the bankruptcy settlement and appealed after a U.S. Bankruptcy Court judge accepted the deal in September.

Their arguments swayed Judge McMahon. In her ruling, she said bankruptcy law does not give judges the power to accept deals that protect people who are not themselves filing for bankruptcy protection if some parties in the case don't agree.

The decision “puts a fine point on the idea that there cannot be two systems of justice in this country,” one for the wealthy and one for everyone else," Washington state Attorney General Bob Ferguson said in an interview Friday.

Purdue said it would appeal but that it also would keep trying to find a settlement all parties would accept.

McMahon anticipated an appeal in her ruling: “This opinion will not be the last word on the subject, nor should it be.” She said the issue of third-party releases has hovered over bankruptcy law for decades, with federal circuit courts disagreeing about whether they can be granted.

The appeal will go to the New York-based U.S. 2nd Circuit Court of Appeals. It's expected that whichever side loses will ask the U.S. Supreme Court to weigh in.

Congress also has considered legislation that would prohibit the kind of protections granted to Sackler family members, but the bill has stalled.

Representatives of the Sackler family have said in court, depositions and congressional hearings that they have not done anything improper and are not responsible for the opioid epidemic. They have not commented on Thursday's ruling.

The Department of Justice, under different leadership than it was 13 months ago when Purdue pleaded guilty, praised 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," U.S. Attorney General Merrick Garland said in a statement.

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Mulvihill reported from Cherry Hill, New Jersey.