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A durable medical equipment and supply company with a long history in the Tri-Cities has filed for chapter 11 protection, the Tri-City Business Journal reported. But Washington Medical Supplies Inc., known as Densow’s Medical Supplies, remains open for business and in fact has tripled its revenue in recent years, its co-owner said. “I’m hopeful for the future. I have an amazing team and we work as hard as we can every single day to ensure the success of the business,” co-owner Lisa Lewis said. “I’m looking forward to, in the next year, this being in the rear view. It will be a little blip as we move forward.” Lewis said that she and her business partner filed for bankruptcy as costs piled up dealing with billing errors made by the business’ former owners as well as ongoing litigation with those former owners. The COVID-19 pandemic also played a role, she said. Lewis and Paul Protzman bought Densow’s Medical Supplies at 1019 Wright Ave. in Richland in 2018. In making the purchase, “we brought some money to the table for the initial closing,” she said. In a move typical with those types of deals, “we did a holdback because we knew there were going to be some invoices that should have been paid by them that we’d have to pay on their behalf, and things like that. So then, at the one-year mark, we would work out what the difference is,” she said. But then they discovered billing errors, including patients without prescriptions on file, Lewis said. They hired auditors and had to pay back “tens of thousands” of dollars to Medicare, she said. In 2019, former owners Jonathan and Joelle Reynolds sued Lewis and Protzman in Benton County Superior Court, saying they still were owed $90,160 for the business, plus a 5% late fee and interest. They eventually were awarded more than $488,000 including those costs and attorney fees. Lewis and Protzman filed their own suit in 2022, alleging breach of contract, negligent misrepresentation and fraud. That case was dismissed; Lewis said it was because of legal errors, and they plan to re-file. In that case, the Reynoldses were awarded about $39,000 in attorney fees and interest.

After years of litigation to hold the pharmaceutical industry accountable for the deadly abuse of prescription painkillers, payments from what could amount to more than $50 billion in court settlements have started to flow to states and communities to address the nation’s continuing opioid crisis. But though the payments come with stacks of guidance outlining core strategies for drug prevention and addiction treatment, the first wave of awards is setting off heated debates over the best use of the money, including the role that law enforcement should play in grappling with a public health disaster, the New York Times reported. States and local governments are designating millions of dollars for overdose reversal drugs, addiction treatment medication, and wound care vans for people with infections from injecting drugs. But law enforcement departments are receiving opioid settlement money for policing resources like new cruisers, overtime pay for narcotics investigators, phone-hacking equipment, body scanners to detect drugs on inmates and restraint devices. “I have a great deal of ambivalence towards the use of the opioid money for that purpose,” said Chester Cedars, chairman of Louisiana’s advisory opioid task force and president of St. Martin Parish. The state’s directives say only “law enforcement expenditures related to the opioid epidemic,” added Mr. Cedars, a retired prosecutor. “That is wide open as to what that exactly means.” On Monday, 133 addiction medicine specialists, legal aid groups, street outreach groups and other organizations released a list of suggested priorities for the funds. Their recommendations include housing for people in recovery and expanding access to syringe exchange programs, personal use testing strips for fentanyl and xylazine, and medication that treats addiction. Groups that monitor opioid settlements use various criteria to estimate the total payout. But even employing the most conservative tabulation, the final amount could be well north of $50 billion when pending lawsuits are resolved, notably the multibillion-dollar Purdue bankruptcy plan, which the Supreme Court temporarily paused last week. At first glance, that looks like a trove of money. In reality, it will be parceled out over 18 years and is already dwarfed by the behemoth dimensions of the opioid crisis, now dominated by illicit fentanyl and other drugs.

Two big opioid cases suggest the U.S. bankruptcy process is unjustly providing relief for some while inflicting pain unnecessarily on others, according to a Reuters commentary. The first involves Mallinckrodt Pharmaceuticals, which may be headed for insolvency a second time. Between 2006 and 2014, it manufactured roughly 30 billion opioid pills. When states, Native American tribal governments and thousands of localities started suing all involved in the addictive medicine’s supply chain, from Johnson & Johnson to CVS Health, creditors decided the drugmaker would be better off resuscitated than sold off for parts. It emerged from chapter 11 in June 2022, agreeing to pay plaintiffs some $1.7 billion over eight years and warrants equal to a 20% stake in the company while sheltering executives including former CEO Mark Trudeau from legal liability. More notoriously, as recounted in multiple media outlets, books and TV series, closely held Purdue Pharma became a leader in the opioid market. Its attempt to climb out of bankruptcy has been stalled multiple times, most recently on Thursday by the U.S. Supreme Court. It agreed to let the Department of Justice make its case against attempts to grant protections to members of the Sackler family, who owned the company. As a result, the $6 billion they are contributing to a settlement is on hold.
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*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Manhattan federal district court Judge Lewis Kaplan revoked the bail of FTX founder Sam Bankman-Fried just months before his scheduled trial, a decision that placed the former crypto exchange executive in handcuffs on Friday, YahooFinance.com reported. Federal prosecutors had alleged Bankman-Fried violated his bail agreement by communicating with a New York Times reporter about his former girlfriend and primary witness for the prosecution, Caroline Ellison. A gag order is not “a workable solution longer term particularly with someone who has shown a willingness and a desire to risk crossing the line in an effort to get right up to it no matter where the line is,” Judge Kaplan said. Ellison previously served as CEO of Alameda Research, an FTX-affiliated hedge fund, which prosecutors claim Bankman-Fried used to misappropriate FTX customer funds. Ellison has plead guilty to multiple fraud charges and entered a plea deal to testify against Bankman-Fried. "Mr. Bankman-Fried’s contact with the New York Times reporter was not an attempt to intimidate Ms. Ellison or taint the jury pool," the fallen crypto executive's lawyers wrote in a letter to Judge Kaplan. "It was a proper exercise of his rights to make fair comment on an article already in progress, for which the reporter already had alternate sources."

The Supreme Court will examine Purdue Pharma’s $6 billion settlement of opioid lawsuits against its Sackler family owners, agreeing to hear the Justice Department’s claim that the drugmaker’s bankruptcy plan improperly wipes out potential liability to additional parties for allegedly fueling the opioid addiction crisis, WSJ Pro Bankruptcy reported. The justices, by taking up the case and preventing Purdue from carrying out the settlement during the appeal, ensured that a sizable chunk of tens of billions of dollars pledged by the pharmaceutical industry to combat the opioid crisis will be delayed — or not paid at all. But the move eventually could open the door for parties who balked at the deal to win additional compensation. The court’s review also will extend the litigation alleging that drug manufacturers, distributors and pharmacies oversupplied painkillers as opioid addiction grew into an epidemic. The legal uncertainty also will continue for the Sacklers, who sought to use Purdue’s chapter 11 proceedings to resolve opioid lawsuits aimed at holding them responsible for the costs of addiction and clawing back distributions they received from the closely held manufacturer before its bankruptcy. The case hinges on whether the nation’s bankruptcy courts have the jurisdiction to approve settlements between a bankrupt company’s creditors and third parties, such as insiders like Purdue’s owners, who wouldn’t otherwise be protected from liability. The court’s decision on the proposed deal, which Purdue needs to leave bankruptcy, is expected before July 2024. Read more.

Click here for the Supreme Court’s order.

Barry Silbert and Digital Currency Group asked a U.S. court to throw out a lawsuit by the Winklevoss twins’ crypto exchange Gemini Trust Inc. that accuses the company and its leader of fraud, Bloomberg News reported. DCG and Silbert filed a motion to dismiss in Manhattan federal court Thursday, claiming Gemini fails to properly claim fraud and accusing the company and founders Cameron and Tyler Winklevoss of engaging in a “character assassination campaign” against DCG and Silbert. Gemini sued DCG and Silbert last month in New York, alleging they engaged in “fraud and deception.” The dispute stems from DCG crypto lending unit Genesis Global Holdco’s decision in November to freeze withdrawals, which left hundreds of millions of dollars worth of Gemini customer assets trapped. Through the Gemini Earn program, its clients could earn interest on their crypto deposits by lending them out through Genesis Global. When Genesis filed for bankruptcy in January, Gemini became one of its biggest creditors. After months of trying to negotiate a settlement with Genesis and DCG, Gemini filed its lawsuit in state court in July. The case has since been moved to federal court.

Legacy Cares Inc., the non-profit owner of a bankrupt Phoenix-area sports complex, won a court fight to keep the venue’s planned sale on track after an Arizona judge rejected a federal monitor’s plea to appoint a trustee for the site, Bloomberg News reported. The decision is a victory as well for holders of $280 million in municipal bonds, unsecured creditors and the landlord of the 320-acre complex. The trustee for Vanguard Group, AllianceBernstein Holding LP and other bondholders and other creditors opposed the federal monitor’s request. Judge Daniel Collins of the U.S. Bankruptcy Court for the District of Arizona ruled that naming a trustee for the complex would “gravely jeopardize” the sale of the facility and it’s ability to continue as a going concern. Legacy Cares asked the court to set a Sept. 18 deadline for bids on the venue and to complete the sale in early October. “All parties appear to agree on one thing — this estate is losing money at an alarming rate and the estate’s assets must be sold sooner than later,” Judge Collins wrote in an order on Wednesday.

Opioid overdose victims say the stringent documentation requirements effectively lock them out of making claims against Purdue, especially if their loved ones died a number of years ago, Bloomberg News reported. Some states require pharmacy records to be destroyed after a certain period of time for privacy reasons. Relatives face even more barriers in obtaining records of someone who died. Those who acquired opioids illegally wouldn’t generate any pharmacy paperwork at all. And physicians are only required to hold medical records for a certain number of years, varying by state. Taylor Wall of Andrews & Thornton, an attorney representing opioid victims in the Purdue bankruptcy, said Purdue’s trust distribution procedures are more complicated than those of Mallinckrodt Pharmaceuticals, a generic drug company that filed for bankruptcy in 2020, though they impose similar qualifications on proving the use of a qualified opioid. “The height of the opioid epidemic was at least somewhere between 2000 to 2010, depending on what state you may have lived in where the opioid epidemic really rose, so that makes obtaining records for a lot of individuals very difficult,” Wall said. According to the Centers for Disease Control, over 564,000 people died from opioid overdoses since 1999, including prescription and illicit opioids. Around 135,000 individuals filed personal injury claims against Purdue for their loss of loved ones and opioid addiction treatment expenses by the July 2020 deadline. People who had access to information necessary to fill out a claim weren’t initially required to submit medical records, said Cynthia Munger, a member of the Purdue Bankruptcy Ad Hoc Committee that sought to hold Purdue accountable during the bankrputcy on Accountability. During the early stages of the bankruptcy process, the notion of potential rejection due to lack of prescription proof was “not properly articulated up front, and later buried in pages of legalese,” she added.

Ryan Salame, the former co-chief executive of FTX Digital Markets, is in negotiations with federal prosecutors to plead guilty to criminal charges following the implosion of the cryptocurrency exchange, Bloomberg News reported. The Republican megadonor may enter a plea as soon as next month to offenses including campaign finance law violations, according to the people, who asked not to be identified because the discussions aren’t public. It is unclear whether he will enter into a cooperation agreement with prosecutors and testify against FTX co-founder Sam Bankman-Fried. Salame’s former colleagues, Gary Wang, Caroline Ellison and Nishad Singh, have already pleaded guilty to playing a role in the alleged multibillion dollar fraud at the now-bankrupt crypto empire and will be key witnesses in the government’s case against Bankman-Fried.

Oxycontin maker Purdue Pharma on Friday asked the U.S. Supreme Court to reject the U.S. Department of Justice's request to delay its multi-billion-dollar bankruptcy settlement resolving thousands of lawsuits against it over the opioid epidemic, Reuters reported.The department's bankruptcy watchdog last week asked the Supreme Court to pause the settlement, which would shield the company's Sackler family owners from opioid lawsuits in exchange for a $6 billion contribution to a broader settlement with states, local governments and victims of addiction. The Department of Justice (DOJ) asked the high court to put the deal on hold after a federal appeals court rejected a proposed delay. Purdue on Friday argued that a delay would be destructive, imperiling a settlement that has the support of all major stakeholders, including state attorneys general and people affected by the opioid crisis. The DOJ's position would "take billions of dollars out of opioid abatement programs that are sorely needed" and potentially "deprive victims of any meaningful recovery" if the deal falls apart, Purdue's lawyers wrote. That position was echoed by a group representing 60,000 people who have filed personal injury opioid claims in Purdue's bankruptcy.