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Congressional Democrats are seeking to prevent members of the Sackler family who own OxyContin maker Purdue Pharma LP from using the drug company’s bankruptcy to get legal releases freeing them from government lawsuits over the opioid painkiller, WSJ Pro Bankruptcy reported. Rep. Carolyn B. Maloney (D-N.Y.), chairwoman of the House Committee on Oversight and Reform, and senior committee member Rep. Mark DeSaulnier (D-Calif.) introduced a bill on Friday specifying that bankruptcy judges cannot release legal claims brought by states, tribes, municipalities or the U.S. government against a bankrupt company’s owners, like the Sacklers, or its directors, officers or other third parties with ties to a chapter 11 case. The legislative proposal comes after the Sacklers offered to pay $4.28 billion over the next decade in exchange for legal releases that would resolve lawsuits accusing Purdue of helping fuel the opioid epidemic. The settlement offer is part of a larger multibillion-dollar reorganization plan designed to get Purdue out of chapter 11. Attorneys general from 24 states plus Washington, D.C., have come out against Purdue’s plan and have demanded greater transparency and more upfront money from the Sacklers.

California-Nevada Methodist Homes filed for chapter 11 bankruptcy protection Tuesday in a bid to avert disastrous consequences at its two retirement communities if the Oakland-based operator's unruly debt isn't reined in by the court, the San Francisco Business Times reported. Otherwise, Methodist Homes, which offers four levels of care up to skilled nursing and rehabilitation, says it will be "unable to operate its business during the chapter 11 case" and could result in "potentially leaving residents without food, medical supplies, proper medical care, and other services they require," according to documents filed in bankruptcy court. Years of financial troubles exacerbated by COVID-19 has strained the nonprofit senior living operator's finances to the point it where it can no longer make good on payments for a roughly $33 million tax-free bond it borrowed in 2015to refinance and to make more than $6 million in renovations to its two retirement homes. Methodist Homes stopped making payments on the bond, managed by Wilmington Trust, in February 2020. Methodist Homes, which was founded nearly 70 years ago and operates retirement communities in Oakland and Pacific Grove, is hoping the court will allow it to continue using its remaining assets to pay 223 employees and expenses related to operating the homes and their 220 residents until it is able to come up with a plan, likely finding a buyer. According to its bankruptcy documents, Methodist Homes owes between $50 million and $100 million.

Some state attorneys general and opioid addiction activists pushed back Tuesday against a settlement offer from OxyContin maker Purdue Pharma, saying it didn’t include enough money and goes too far in protecting the company and family members who own it from future liability, the Associated Press reported. A group of nearly half the state attorneys general said it was disappointed in the plan Purdue filed late Monday night in federal bankruptcy court and some said they would seek changes. The lukewarm reaction from them and others raised doubts about how soon the company could emerge from bankruptcy and begin to compensate victims. “We think it’s a step in the right direction, but we’ve got a long way to go,” said Joe Rice, one of the lead lawyers representing local governments that have sued Purdue and other companies over the toll of opioids. The $10 billion plan calls for turning the Connecticut-based pharmaceutical giant into a new company, with its profits going toward efforts to combat the opioid crisis. Members of the Sackler family who own Purdue would contribute about $4.3 billion.

The family that owns OxyContin maker Purdue Pharma LP agreed to pay roughly $4.28 billion — a larger sum than previously promised — to resolve lawsuits accusing it of helping to fuel the opioid epidemic, the Wall Street Journal reported. The payment from members of the Sackler family is part of a larger restructuring plan filed yesterday in U.S. Bankruptcy Court in White Plains, N.Y., that is intended to get Purdue out of chapter 11. The plan is a critical milestone in the Stamford, Conn.-based drugmaker’s bankruptcy and the culmination of months of negotiation between members of the Sackler family and states, personal-injury plaintiffs and other creditors. A group of around half of all U.S. states has repeatedly demanded more money from the Sackler family, a concession included in Monday’s plan. At the time of its September 2019 bankruptcy filing, the family had agreed to pay $3 billion with the promise of up to another $1.5 billion contingent on the sale of its international business. The new offer guarantees $4.28 billion, paid in installments over the next decade. A key piece of the restructuring plan, which includes another $1.5 billion in cash and expected proceeds from OxyContin sales, is ensuring that the money will largely be spent to help abate the nation’s opioid crisis, rather than going into the general coffers of state and local government creditors. Purdue’s chapter 11 plan must be approved by a bankruptcy judge and likely will be challenged in court by individuals who have suffered injuries from opioids and state attorneys general who have not signed onto the deal. A final resolution isn’t expected before the summer. “We’re going to keep fighting for the accountability that families all across this country deserve,” said Massachusetts Attorney General Maura Healey, who, along with 23 other attorneys general, voiced opposition to the plan yesterday and called for greater transparency and more money upfront from the Sacklers.

Members of the Sackler family who own Purdue Pharma LP have offered roughly $4.3 billion to resolve sprawling opioid litigation, up from $3 billion initially proposed in settlement discussions underway in the OxyContin maker’s bankruptcy proceedings, Reuters reported. Sackler family members are now willing to contribute $4.275 billion to help settle about 3,000 lawsuits brought by U.S. communities seeking to hold them and Purdue responsible for damage wrought by the opioid epidemic. Details of a far-reaching settlement could be outlined in a Purdue reorganization plan filed in a U.S. bankruptcy court next week. Purdue filed for bankruptcy in 2019 facing on onslaught of opioid litigation. In November, the Stamford, Connecticut-based company pleaded guilty to three felonies arising from its marketing of prescription opioid painkillers. A previous proposed settlement that Purdue values at more than $10 billion guaranteed $3 billion from the Sacklers over seven years, with additional funds from family members contingent on sales of other international businesses they own. That offer as a practical matter decreased to $2.775 billion after the Sacklers agreed to pay $225 million to settle a Justice Department civil probe. Under terms of the latest proposal, the Sacklers could still use proceeds from sales of those businesses to cover the higher $4.275 billion payout, but would need to make good on it regardless. It is not clear how long the Sacklers would take to pay the proposed higher amount, but it would likely be a period of years.

President Biden on Thursday directed states to ensure that all adults are eligible for a coronavirus vaccine by May 1, and he declared a goal of allowing small celebrations on July 4, setting up significant landmarks in the effort to return to normalcy after the devastating pandemic, the Washington Post reported. Speaking from the East Room of the White House in his first prime-time address, Biden sought to hit hopeful notes as he ticked through a series of new actions he intends to take to combat the virus in the spring and summer. His new initiatives include creating a “find a vaccination” website and allowing dentists, veterinarians and other health professionals to administer doses. “If we do our part, if we do this together, by July Fourth, there’s a good chance you, your family and friends can gather in your backyard and have a barbecue and celebrate Independence Day,” Biden said. A few moments later, Biden added a caveat: “A lot can happen. Conditions can change. The scientists have made clear that things may get worse again as new variants of the virus spread.”

Trinity Health Corp. has agreed to sell Chicago’s Mercy Hospital and Medical Center to a Flint, Michigan-based biomedical company that will keep the facility running, Bloomberg News reported. Insight, the potential buyer that intends to operate the facility as a full-service acute care hospital, is filing paperwork for the change of ownership with the Illinois Health Facilities and Services Review Board, according to a statement from the company. The agreement is non-binding and final terms will be negotiated in the coming weeks, according to a statement from Mercy. “If the acquisition meets state regulatory approval, Insight plans to operate a community-based hospital that will serve patients from Bronzeville, Chicago’s South Side and the city of Chicago,” Jawad Shah, chief executive officer of Insight, said in the company’s statement. “We are committed to a thoughtful community engagement process to ensure access to care for Chicago’s diverse populations while achieving financial solvency.” The pandemic has exacerbated the financial struggles of many U.S. hospitals, including Mercy. Costs from treating COVID-19 patients have soared, and hospitals had to curtail profitable elective procedures. The proposed sale comes after Mercy Hospital filed for bankruptcy last month and Illinois health officials rejected plans by Mercy’s owner, Trinity, to close the 258-bed medical center and open an outpatient center on Chicago’s South Side. Read more.

Don’t miss next week’s Bankruptcy Battleground West as an expert panel will tackle issues related to current hospital distress. Register today! 

U.S. hospitals face up to $122 billion in lost revenue this year as the pandemic continues its rampage, threatening to push more critical-care centers into bankruptcy or out of business entirely, Bloomberg News reported. Even a best-case scenario would cost hospitals $53 billion of revenue, according to a new Kaufman, Hall & Associates report for the American Hospital Association. That’s on top of more than $323 billion in reduced revenue and higher expenses last year. U.S. hospitals were already hard-pressed before the COVID-19 outbreak, especially in poor and rural regions, with more than 30 going bankrupt in the year preceding the pandemic. “We need additional funding to both participate in the vaccination efforts as well as care for large numbers of critically ill patients, maintain sufficient staffing and continue to acquire enough personal protective equipment and other resources necessary to do this critical work,” according to a Thursday letter from the group to Senate leaders. How quickly hospitals recover depends on the vaccine rollout, the spread of more infectious strains, and how potential patients behave — both in terms of how cautious they remain and how willing they are to return for not only profitable elective procedures but even for emergencies. “Even as restrictions lifted, our data found that many patients continued to hold off on rescheduling elective procedures in certain categories, like plastic surgery and orthopedic procedures,” said Matt Hawkins, chief executive officer of Waystar, a company that works with hospitals on billing. Falling revenue squeezed hospitals as safety and treatment costs soared, with a 14% rise in labor and 17% for drugs last year, the report said. Even before the pandemic, hospitals operated on thin margins, with a median of 2.5% in 2019, according to the report. Read more.

Don’t miss next week’s Bankruptcy Battleground West as an expert panel will tackle issues related to current hospital distress. Register today!