Appeals court clears the way to shield Sackler family from opioid crisis lawsuits
MARY LOUISE KELLY, HOST:
First, though, to a landmark ruling today in New York where a federal appeals court has cleared the way for a bankruptcy deal involving Purdue Pharma, the maker of OxyContin. The deal is controversial. It shelters the company's owners, members of the Sackler family, from future opioid lawsuits. NPR addiction correspondent Brian Mann has been following this case. Hey there.
BRIAN MANN, BYLINE: Hi, Mary Louise.
KELLY: Hey. So what's your read on what today's ruling actually will mean?
MANN: Well, really, it means two big things. First, it means after years of legal wrangling, members of the Sackler family who earned billions from the sale of OxyContin won't face personal lawsuits over their alleged role in this addiction crisis that has killed hundreds of thousands of Americans. But there's something else here. This ruling continues to amplify the power of federal bankruptcy courts. This bankruptcy deal involving Purdue Pharma protects the Sacklers legally, even though they never filed for bankruptcy.
KELLY: Stay on that point for a second. I'm trying to wrap my head around how the Sacklers win immunity from lawsuits from a bankruptcy court if they never declared bankruptcy.
MANN: Yeah, this is hugely controversial. The Sacklers hashed out a deal with state and local governments who sued Purdue Pharma where they'll pay between 5- and $6 billion out of their personal fortunes. They'll also give up control of their company. That still leaves the Sacklers with a lot of money. But the bankruptcy court ruled that this was a way to get as much cash value as quickly as possible to creditors. I spoke about this with Ryan Hampton, who was himself addicted to OxyContin and later helped negotiate this deal. He'll get a payout, and he says it is time to end this legal fight.
RYAN HAMPTON: We need to get what we can get right now and put this bankruptcy behind us. We know that there are widespread systemic injustices in the United States bankruptcy code that allowed the Sacklers to be shielded. But at this point, that is an issue that needs to be taken up by Congress.
MANN: So now victims and their families are going to get $750 million in settlements from this deal. The Sacklers and Purdue Pharma also sent statements to NPR today praising this ruling.
KELLY: Brian, circle back to a point you made a moment ago about how this ruling would continue to amplify the power of federal bankruptcy courts. Does that suggest precedent could go beyond this one opioid case?
MANN: Absolutely. There's a huge legal fight underway across the U.S., Mary Louise, over how much power federal bankruptcy courts should wield. More and more wealthy individuals and companies that aren't bankrupt are asking bankruptcy judges to shield them from lawsuits in exchange for sizable payouts like this one promised by the Sacklers. So in this new ruling, the Second Circuit found that in a lot of those bankruptcy cases, courts can approve the deals, effectively shielding rich firms and rich individuals from lawsuits. I spoke about this with Lindsey Simon, who studies bankruptcy law at the University of Georgia, and she says this means more wealthy corporations will likely try this.
LINDSEY SIMON: I think it will fortify companies' desire to use Chapter 11. That will continue, and I think it will just have more fuel.
MANN: It's important to point out some regions of the U.S. federal appeals courts haven't approved these bankruptcy deals. So today's ruling is big, but it's going to take action by Congress or the U.S. Supreme Court to settle this legal fight nationally. So far, the Supreme Court has declined to take on this issue and bankruptcy reform has stalled in Congress.
KELLY: Yeah. And just briefly, where does all this leave the Sacklers?
MANN: Well, they'll remain one of the wealthiest families in the U.S. The way this deal is structured, they'll keep much of their fortunes, but they have seen their reputation take a huge hit. Books, documentaries and news reports laid bare the role some family members played pushing opioid sales. The last few years, the Sackler family name has been stripped from museums and medical schools and art galleries around the world.
KELLY: NPR's Brian Mann, thank you.
MANN: Thank you. Transcript provided by NPR, Copyright NPR.