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Supreme Court tosses out bankruptcy plan for Purdue Pharma and Sackler family

ARI SHAPIRO, HOST:

As of today, billions of dollars of opioid relief and compensation are in question. In a 5-4 vote, the Supreme Court struck down a bankruptcy plan for Purdue Pharma, the maker of maker of Oxycontin, and members of the Sackler family who own the drug company. NPR addiction correspondent Brian Mann joins us now. Hey, Brian.

BRIAN MANN, BYLINE: Hi, Ari.

SHAPIRO: Justice Neil Gorsuch wrote this opinion. How did he explain the court's decision?

MANN: Well, Gorsuch wrote that U.S. bankruptcy law simply doesn't give courts this kind of power to force people to give up lawsuits against people like the Sacklers who aren't, in fact, bankrupt. He said this deal overreaches the authority given to courts by Congress. I spoke about this with Melissa Jacoby. She's a bankruptcy expert at the University of North Carolina. She said she wasn't surprised justices struck down this plan.

MELISSA JACOBY: Families who have been affected by opioids are going to have mixed opinions about what happened. But ultimately, what the majority of the court did does follow the rule of law and what's actually in the bankruptcy code.

MANN: And, Ari, in his opinion, Gorsuch also accepted the really scathing argument of some critics of this deal, including the U.S. Justice Department, who said members of the Sackler family were effectively gaming the bankruptcy system, trying to use its power without actually filing for bankruptcy. Gorsuch described the Sacklers as milking their private company, Purdue Pharma, of billions of dollars in opioid and Oxycontin profits. They transferred that wealth into their private accounts before pushing Purdue Pharma into bankruptcy. Then they tried to effectively buy immunity from all these lawsuits.

SHAPIRO: To go back to what Melissa Jacoby told you, explain why families hurt by Purdue Pharma and Oxycontin would be divided over this ruling.

MANN: Yeah. It's a good question. Most people hurt by Oxycontin and opioid addiction say they do want the Sacklers held accountable. But a lot of families worry, Ari, that by throwing out this deal, there's going to be legal chaos, years of delay in anyone being compensated. More than $8 billion in payouts are now on hold indefinitely. I spoke about this with Ryan Hampton, who was addicted to Oxycontin for years. He's now in recovery. He says it's really back to the drawing board to look for any compensation.

RYAN HAMPTON: And I think a lot of us who have been most impacted by the greed and crimes of the Sackler family and Purdue Pharma believe that victims should be first and foremost.

MANN: And in his dissenting opinion, Justice Brett Kavanaugh also voiced concern about the impact of this ruling on victims. He argued by limiting the power of bankruptcy courts in this way, the Supreme Court's taking away an important tool that helps resolve complex lawsuits and quickly get compensation to families. Kavanaugh's dissent was really passionate. You described this as a devastating outcome for opioid victims.

SHAPIRO: And beyond this case, what does the opinion mean for other big bankruptcy filings?

MANN: Experts say it's huge. Wealthy corporations, individuals and nonprofits, ranging from Johnson & Johnson all the way to the Boy Scouts of America and the Roman Catholic Church, they've all been trying to use similar bankruptcy maneuvers to force people into settlements against their will. Adam Levitin, who teaches at Georgetown University, he says this opinion is going to make it a lot harder to use the bankruptcy system in this way.

ADAM LEVITIN: This is going to really put the brakes on so-called parasitic bankruptcies, where a nonbankrupt entity like the Sackler family tries to piggyback on the bankruptcy of a company.

MANN: So it's back to the drawing board for the Sacklers and Purdue Pharma, but also for a lot of other companies and organizations trying to use bankruptcy courts in this way.

SHAPIRO: Any reaction today from the Sacklers or Purdue Pharma?

MANN: Yeah. Members of the Sackler family have denied any wrongdoing and sent a statement to NPR today. Purdue Pharma also sent a statement voicing disappointment. They say negotiations towards some kind of new resolution will begin again.

It's important to say, though, that this deal invalidated by the court took more than five years to hash out. Tens of thousands of lawsuits from across the country were folded into this deal. We know from documents made public during the process members of the Sackler family were central to the aggressive sale of opioids. So they're going to face a lot of legal peril now as this case is set aside and negotiations resume again.

SHAPIRO: Brian Mann is NPR's addiction correspondent. Thanks, Brian.

MANN: Thank you, Ari. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Brian Mann
Brian Mann is NPR's first national addiction correspondent. He also covers breaking news in the U.S. and around the world.
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