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Some attorneys general are vowing to keep fighting the chapter 11 reorganization plan of Purdue Pharma LP and a $4.5 billion settlement with the family that owns the maker of OxyContin, which could force an influential federal appeals court to consider the scope of bankruptcy judges’ power to end lawsuits over defective or dangerous products, WSJ Pro Bankruptcy reported. Attorneys general for Washington state and Connecticut as well as the attorney general for Washington, D.C. said they would appeal Wednesday’s decision by Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y. approving Purdue’s chapter 11 plan and the settlement, which shields Sackler family members from opioid lawsuits. The judge’s ruling also allows family-owned Purdue to exit chapter 11 after nearly two years as a public benefit company with a new name: Knoa Pharma. Knoa Pharma will have no ties under the bankruptcy reorganization plan with the Sacklers, who were named alongside Purdue in lawsuits accusing the company of fueling the opioid crisis. The Sacklers have denied wrongdoing and said their settlement offer is the best way to get opioid-abatement funds to communities quickly. Additional states that opposed the settlement could also appeal, as could the U.S. Trustee, the U.S. Justice Department unit overseeing federal bankruptcy courts. These authorities say Judge Drain lacked the power to approve the settlement and that the deal strips states of their right to police wrongdoers. Some Congressional Democrats including Sen. Elizabeth Warren have urged the Justice Department to challenge Judge Drain’s ruling.

OxyContin maker Purdue Pharma LP won court approval of a $4.5 billion bankruptcy settlement that shields its owners, members of the Sackler family, from lawsuits accusing them of contributing to the nation’s opioid epidemic in exchange for providing funding to combat the crisis, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said yesterday that he will confirm a restructuring plan that will transform Purdue into a public benefit company and settle civil lawsuits filed by governments and opioid victims against the drugmaker and its owners. The ruling can be appealed by the handful of federal and state authorities that opposed Purdue’s bankruptcy-exit plan and argued at trial that the settlement structure is unconstitutional and the Sacklers aren’t contributing enough of their wealth. Purdue’s family owners collected more than $10 billion from the company between 2008 and 2017, about half of which went to taxes or was reinvested in the business. The bankruptcy plan’s approval means those family members can put behind them numerous lawsuits and investigations from state regulators and private litigants over their stewardship of Purdue. The Sacklers who own Purdue and sat on its board are getting broad releases that extinguish civil litigation currently pending against them as well as lawsuits that could be brought in the future. The order approving the chapter 11 plan is contingent on Purdue lawyers making relatively minor changes that Judge Drain described Wednesday. He said he wished the Sacklers had contributed more but that he couldn’t force any particular outcome.

Senior living nonprofit Covenant Living has entered into a purchase agreement to buy a CCRC in New Hampshire that recently filed for chapter 11 protection, SeniorHousingNews.com reported. The organization behind the continuing care retirement community (CCRC), The Prospect-Woodward Home, filed for chapter 11 protection in New Hampshire, where the community is located. Covenant is seeking to become a stalking-horse bidder in the community and participate in a court-supervised auction that could result in higher bids or offers, according to a press release from the Skokie, Ill.-based operator. Covenant is one of the largest senior living nonprofits in the United States with a portfolio of 18 communities in nine states. Covenant would pay $33 million for the community under the agreement, court documents show. The 222-unit CCRC, Hillside Village, came under financial duress last year amid restrictions to protect against the COVID-19 pandemic.

A U.S. judge is expected to rule today on OxyContin maker Purdue Pharma’s request to approve its bankruptcy reorganization plan that would shield the company’s Sackler family owners from future litigation over the opioid crisis, Reuters reported. If U.S. Bankruptcy Judge Robert Drain approves the deal, which Purdue values at more than $10 billion, it would clear a path to resolve thousands of opioid lawsuits. The plan would dissolve the drugmaker and shift assets to a new company owned by a trust rather than the Sackler family members. The new company would be run to combat the opioid epidemic in U.S. communities that alleged Purdue and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks. The plan includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed. The Sacklers have denied allegations, raised in lawsuits and elsewhere, that they bear responsibility for the U.S. opioid epidemic. They have said they acted ethically and lawfully while serving on Purdue’s board. The Purdue bankruptcy plan includes a $4.5 billion contribution from Sackler family members. The contribution is in the form of cash that would be paid over roughly a decade and also includes $175 million in value from relinquishing control of charitable institutions. Read more. 

In related news, Purdue Pharma launched a behind-the-scenes effort in recent days aimed at discouraging the Justice Department from appealing a pending multibillion-dollar bankruptcy settlement for the OxyContin-maker, NPR reported. NPR acquired an early draft of a letter distributed by the drug company to groups supportive of the bankruptcy deal. The letter is framed as a direct appeal to DOJ officials and purports to be written by those injured by the company and members of the Sackler family. "We collectively speak for the overwhelming majority of the state and local governments, organizations, and individuals harmed by Purdue and the Sacklers," the letter states. There is no mention in the document of the company's role launching the effort or crafting the message. The letter warns that any Justice Department appeal would "jeopardize the delivery of billions of dollars" to communities struggling with high rates of addiction, overdose and death. The document's language suggests that Purdue Pharma hoped it would eventually be signed by state attorneys general, local government officials, hospitals and a group representing individual victims of the company's opioid products. The Justice Department hasn't said conclusively whether it will challenge the settlement in court and declined NPR's request for comment. During a two-week bankruptcy trial that concluded Friday, attorneys for two different branches of the DOJ indicated an appeal is possible. They argued the liability releases demanded by the Sacklers are unlawful and would violate the constitutional rights of those with potential claims against the family. Read more.

The judge overseeing Purdue Pharma’s bankruptcy on Friday urged opponents of the OxyContin maker’s reorganization plan, which would resolve widespread opioid litigation, to settle quickly with the company’s Sackler family owners because it would save time and money on appeals later, Reuters reported. U.S. Bankruptcy Judge Robert Drain made his remark during a hearing on Friday morning, five days before he is set to rule on the plan. The deal, if approved, would clear a path to resolve thousands of opioid lawsuits and shield the Sackler family owners from future litigation. Opponents of the deal have said the releases are too broad. “I think, having heard the lawyers from both sides — they are very talented lawyers, they know the risks they face —I would hope their clients would also be realistic about those risks,” Judge Drain said. Purdue has said the deal, which directs funding toward opioid abatement programs, is worth more than $10 billion. The Sacklers have agreed to contribute approximately $4.5 billion.

A U.S. judge said yesterday that he now anticipates a ruling on OxyContin maker Purdue Pharma LP’s bankruptcy reorganization plan on Wednesday of next week instead of this week because he needs more oral argument on certain issues, Reuters reported. U.S. Bankruptcy Judge Robert Drain was originally expected to rule on Friday, Aug. 27. Judge Drain did not specify the issues on which he needs to hear more. If Judge Drain approves the deal, it would clear a path to resolve thousands of opioid lawsuits and shield the company’s wealthy Sackler family owners from future litigation. The plan, which Purdue values at more than $10 billion, would dissolve the drugmaker and shift assets to a new company not controlled by Sackler family members. The new company would be owned by a trust run to combat the opioid epidemic in U.S. communities that alleged the company and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks. The plan also includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed. Congressional Democrats in recent weeks circulated legislation to block such legal releases and urged the Justice Department to appeal the plan, efforts that failed to gain traction.

U.S. Attorney David C. Weiss announced today that Connections Community Support Programs, Inc. (“CCSP”) has agreed to the entry of consent judgments totaling over $15,300,000 to resolve two lawsuits brought by the federal government alleging health care fraud arising under the federal False Claims Act and violations of the Controlled Substances Act, according to a DOJ press release. Prior to the sale of its assets in bankruptcy, CCSP provided a variety of mental health and addiction treatment services at numerous locations throughout Delaware. CCSP has agreed to the entry of a judgment in the amount of $13,757,520.60, plus interest, to resolve claims that CCSP violated the False Claims Act by billing for mental health services performed by individuals whose professional qualifications did not allow them to bill Medicare or Medicaid for reimbursement and by billing Medicaid for mental health services using incorrect procedure codes for the person performing the service, resulting in higher payments than were permitted. CCSP has also agreed to the entry of a judgment in the amount of $1,621,571, plus interest, to resolve claims that it violated the federal Controlled Substances Act by negligently failing to keep proper records of its use of controlled substances, including methadone and buprenorphine, in its treatment of patients with substance use disorders and by transferring controlled substances between locations without proper documentation.

During the final day of argument in Purdue Pharma’s bankruptcy trial, lawyers for the OxyContin maker said its proposed $10 billion settlement of opioid claims is by far the best deal for creditors, Bloomberg News reported. Seeking to convince U.S. Bankruptcy Judge Robert Drain that Purdue’s proposal is better than a liquidation of the business and free-for-all litigation stampede against itself and its owners, Marshall Huebner of Davis Polk & Wardwell, said the plan would deliver at least $5.5 billion of cash to creditors. The fact that most U.S. states now support the deal rather than pushing to continue their own “speculative” lawsuits shows the deal is sufficient, he added. Still, about 10 state attorneys general are challenging the deal, arguing in large part that they should be able to sue Purdue’s owners, members of the billionaire Sackler family, regardless of the settlement. Purdue has said that wouldn’t work, because its owners are requiring broad legal immunity from opioid lawsuits in exchange for more than $4 billion of their own cash, and allowing some states to go forward would cause the entire settlement to unravel. Members of the Sackler family have previously denied any wrongdoing. Reuters reported that Judge Drain expects to rule on Friday on the OxyContin maker’s request to approve its settlement of opioid-related litigation.

A group of cancer victims blaming Johnson & Johnson’s talc-based baby powder for the disease asked a Missouri court to block the company from taking steps to place its talc liabilities into chapter 11, while a bankruptcy judge in Delaware expressed doubts about a nearly identical request pending there, WSJ Pro Bankruptcy reported. Personal-injury claimants asked the Missouri court yesterday for an injunction preventing J&J from splitting its core assets from its liabilities to tens of thousands of individuals who allege they developed ovarian cancer, asbestos cancer and other diseases after exposure to the company’s talc-based baby powder. J&J declined to comment on the Missouri request, which escalates a confrontation between injury claimants and the company about its intentions for dealing with roughly 34,600 lawsuits pending against it as of June alleging personal injuries from talc. Also on Tuesday, a bankruptcy judge in Wilmington, Del. deferred ruling on a separate request by other injury claimants to pre-empt J&J from separating its talc liabilities from its core business, a potential first step toward moving thousands of injury claims into chapter 11.

Healthcare Services Group Inc. will pay a $6 million fine to settle U.S. Securities and Exchange Commission civil charges that its failure to account for legal settlements with its employees enabled it to inflate quarterly results, the regulator said yesterday, Reuters reported. The SEC said that the Bensalem, Pa.-based provider of housekeeping and dining services to healthcare facilities did not set aside enough money in 2014 and 2015 for expected settlements of class-action litigation claiming it violated federal and state wage-and-hour laws. Had the company properly recorded its settlement costs, it would have missed Wall Street earnings forecasts at least four times and been unable to report multiple quarters of increased earnings per share, thereby misleading investors, the SEC said. The SEC called the settlement the third in its EPS Imitative, which uses risk-based data analysis to uncover potential accounting and disclosure violations resulting from so-called "earnings management," among other things. John Shea, Healthcare Services' chief financial officer since 2012, will pay a related $50,000 civil fine and accepted a two-year suspension from appearing before the SEC as an accountant.