Skip to main content

%1

Justice Department Appeal Threatens $6 Billion Sackler Opioid Settlement

Submitted by ckanon@abi.org on
The Justice Department is continuing to fight in federal appeals court over controversial liability releases that would shield Purdue Pharma LP’s Sackler family owners from opioid litigation, threatening the family’s $6 billion settlement with state attorneys general, WSJPro reported. The U.S. Trustee Program on Friday urged a federal appeals court to affirm the unlawfulness of legal releases protecting the Sackler family members who own Purdue, the bankrupt OxyContin manufacturer. The U.S. Trustee argued that such releases aren’t permitted by U.S. bankruptcy law, which Purdue and the Sacklers dispute. The releases at issue are controversial because they would have released Sackler family members, who aren’t in bankruptcy, from civil opioid lawsuits even though some state attorneys general didn’t support an earlier settlement they had offered. While the appeal was pending, the Sacklers won support from all states by agreeing to increase their settlement offer to between $5.5 billion and $6 billion. However, if the appeals court sides with the U.S. Trustee, the higher settlement won’t go into effect, potentially delaying or jeopardizing funding for anti-addiction programs nationwide, according to court papers. Judge <b>Robert Drain</b>, who is overseeing Purdue’s chapter 11 case, approved the higher settlement earlier this month. He criticized the U.S. Trustee for challenging the revised deal, calling it “reprehensible” and “just not right.” A government lawyer said in response that the U.S. Trustee was defending the Bankruptcy Code and the rule of law by challenging the Sackler settlement.
Article Tags

Op-Ed: The Sacklers Get to Walk Away

Submitted by ckanon@abi.org on
At any one time, NPR’s Brian Mann is probably following about a dozen legal proceedings — all of them seeking some kind of accountability for the opioid crisis. But none of them quite like the hearing he went to a couple weeks back, according to an op-ed in Slate. What made it remarkable were the two dozen people giving searing testimony about the way addiction had upended their lives. “Bankruptcy courts don’t usually do things like this. This is not a normal thing in bankruptcy court to have victim testimony,” Mann said. “But as part of the agreement, three members of the Sackler family did agree to sit through it and listen as these families held up photographs of the dead and talked about what they’d lost. It was powerful and heart-wrenching.” To the people testifying, the billionaire Sackler family is a bunch of high-end drug dealers — executives who led Purdue Pharma as that company aggressively marketed OxyContin in doctor’s offices and hospital wards all over the country. This hearing was part of a settlement deal: The Sacklers have said they’ll give up control of their drug company, they’ll even cough up $6 billion dollars. In exchange: They want to be shielded from personal liability.  “A lot of people, including the U.S. Justice Department, have said, ‘Is that how justice is supposed to work? We don’t really think so,’ ” Mann said. “But these family members have been forced to live in this space for a long time, seeking justice, wanting some accountability. And at the end of the day, they think this is the best deal they’re going to get. They think this is the closest they’re going to get to justice.” On Monday’s episode of What Next, Mann spoke about what accountability in the opioid crisis would look like, with half a million Americans dead, according to the op-ed.
Article Tags

J&J Spin-Off Company Allowed to Proceed with Bankruptcy Affecting Baby Powder Lawsuits

Submitted by ckanon@abi.org on
Those suing Johnson & Johnson, claiming talc-based baby powder caused their cancer, found themselves frustrated again. After separating into two companies, Johnson & Johnson’s subsidiary LTL Management can proceed with its bankruptcy filing, the Legal Examiner reported. Under a Texas law, commonly known as the “Texas Two-Step,” Johnson & Johnson separated the company and created LTL Management. After its creation, Johnson & Johnson assigned legal liability for baby powder lawsuits to LTL Management. This business was then moved to North Carolina, where it declared bankruptcy. Filing for bankruptcy paused all lawsuits against LTL. Some of these baby powder lawsuits are sitting before the court in jury trials close to verdicts. Opponents argue that LTL’s bankruptcy was a move in bad faith to protect Johnson & Johnson from the mountain of litigation originating from their baby powder product. Judge Michael Kaplan ruled that LTL’s bankruptcy can continue to move forward. In Judge Kaplan’s decision, he referenced that frustration would be felt by plaintiffs but was optimistic that bankruptcy would be an efficient conclusion for those who claim the use of Johnson & Johnson’s talc-based baby powder caused medical problems. Market valuations of Johnson & Johnson estimate the company’s worth to be more than $430 billion, with a strong credit rating. Experts believe that J&J’s credit score to be higher than the federal government’s score.

Boy Scouts Insurers Say Abuse Payouts in Bankruptcy Case Include Unverified Claims

Submitted by ckanon@abi.org on
Insurers that sold coverage to the Boy Scouts of America sought to prove that its sex-abuse settlement plan includes payments for unverified claims and would compensate abuse survivors at higher rates than they would receive in the court system outside chapter 11, WSJ Pro reported. As the youth group seeks approval from the U.S. Bankruptcy Court in Wilmington, Del., for a $2.7 billion plan to settle roughly 82,200 sexual-abuse claims, legal advisers to insurers, including National Surety Corp., devoted much of the second day of the trial to the questioning of Bruce Griggs , a lawyer who was hired in 2016 to coordinate abuse claims for the Boy Scouts. These liability insurers that also include American International Group Inc. and Travelers Cos. haven’t contributed to the Boy Scouts settlement fund and remain exposed to further litigation from victims. They had said the bankruptcy plan, if approved, would put them on the hook for inflated or unverified claims. How much each individual victim will get is still not finalized and will be decided by a trustee who will assess each claim based on factors such as the severity of the abuse, statutes of limitations in the relevant states, whether the perpetrator was a repeat offender and the strength of evidence provided. The trial is expected to last roughly two weeks.

Vermont's $36 Million Settlement with Purdue Pharma and Sacklers Moves Ahead

Submitted by ckanon@abi.org on
Vermont’s receipt of its share of a national settlement with Purdue Pharma and its owners, the Sackler family, cleared its first hurdle when the U.S. Bankruptcy Court for the Southern District of New York determined that the settlement did not violate the Bankruptcy Code, the Vermont Business Magazine reported. Under the settlement agreement, Vermont is to receive $36.4 million and up to an additional $1.454 million if certain conditions are met. The settlement is conditioned on the Second Circuit Court of Appeals overturning an earlier District Court. The result will be a nearly three-fold increase over the $12.58 million allocated to Vermont in Purdue’s original bankruptcy plan — a plan that Attorney General T.J. Donovan objected to and appealed in December 2021. Donovan has been fighting to hold the industry accountable for its role in promoting and profiting from the opioid crisis since 2017 when his office began investigating opioid manufacturers and distributors. The settlement with Purdue and the Sacklers, which Vermont agreed to in principle last week, follows last month’s final approval of a $64 million agreement with opioid distributors and Johnson & Johnson and a settlement of $1.5 million with McKinsey in 2021. The total amount of opioid settlements negotiated by Donovan is now more than $100 million for Vermont.

Boy Scouts Win Over More Abuse Survivors For $2.7 Billion Bankruptcy Deal

Submitted by jhartgen@abi.org on

An additional 9,000 individuals claiming they were sexually abused while in the Boy Scouts of America voted in favor of a $2.7 billion compensation plan, pushing support for it to nearly 86% of all ballots cast ahead of a bankruptcy-court trial next week, the Wall Street Journal reported. The additional votes among the roughly 82,200 individuals who have filed sexual-abuse claims against the youth group increase its chances of winning approval for the settlement from Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., at a trial scheduled to begin today. The final tally released late Thursday puts the Boy Scouts over a self-imposed target of three-quarters support from abuse survivors. While bankruptcy law generally requires two thirds approval from creditors for a proposed deal, chapter 11 cases involving mass injury and tort liabilities typically have to garner greater support. The Boy Scouts have said that 75% approval from survivors would ease court approval, while anything less could make the bankruptcy plan more vulnerable to legal challenges from objectors. Read more. (Subscription required.) 

In related news, the Boy Scouts of America’s plan for resolving 82,200 claims of childhood sexual abuse is being opposed by some insurance companies that worry some victims’ claims may not be worth as much as what the youth group says they are, the Wall Street Journal reported. Several liability insurers have said the Boy Scouts’ chapter 11 plan pegs the value of abuse claims at higher levels than what victims likely would get in state-court lawsuits or private negotiations, and that those estimates could be used by victims to extract more money from them. The Boy Scouts have said in court filings that the estimates of values of claims and the process established under its plan to award payouts mimic what victims would experience in the state-court system. Read more. (Subscription required.) 

Opioid Victims Confront Purdue Pharma’s Sacklers in Bankruptcy Court

Submitted by jhartgen@abi.org on

Victims of the opioid epidemic confronted the Sackler family members who own Purdue Pharma LP for the first time in bankruptcy court as the OxyContin maker nears a possible exit from chapter 11 that requires $6 billion in settlement payments from its owners, WSJ Pro Bankruptcy reported. Addressing three members of the Sackler family who served on Purdue’s board, more than two dozen people shared stories Thursday in the U.S. Bankruptcy Court in White Plains, N.Y., of the disastrous effects physician-prescribed OxyContin, an addictive opioid, had on them, their children, siblings, spouses and parents. Dede Yoder said that her son, Chris, died in 2017 of an overdose at the age of 21 after spending most of her retirement savings on addiction treatment and rehab, which mostly wasn’t covered by health insurance. Doctors first prescribed her son OxyContin when he was 14 years old following two knee surgeries, Ms. Yoder said. Dr. Richard Sackler, Theresa Sackler and David Sackler appeared in the hearing remotely and didn’t respond to victims’ statements. They and other family members consented to hearing victims’ impact statements under a proposed settlement approved on Wednesday by the judge overseeing Purdue’s chapter 11 case. The bankruptcy deal, backed by state attorneys general, would end civil litigation accusing the Sacklers of helping fuel the opioid epidemic and taking improper dividends from Purdue, allegations the family denies.