Connecticut Pledges to Hold Purdue Pharma Accountable for Opioid Crisis

Connecticut is not backing down in its opposition to a judge’s approval last month of OxyContin maker Purdue Pharma’s settlement plan, while the Stamford-based company is still at least two months away from bankruptcy.

The state has now appealed to Judge Colleen McMahon in the U.S. District Court for the Southern District of New York. The appeal reflects his objection to Judge Robert Drain’s September 1 confirmation in bankruptcy court of Purdue’s settlement framework, which would resolve several thousand lawsuits alleging the company fueled the opioid crisis with deceptive marketing of OxyContin and ultimately dissolve the business.

“We cannot allow our bankruptcy laws to be abused and misused as a loophole for the rich and powerful to avoid justice and accountability,” Connecticut Attorney General William Tong said, in a statement in response to a Hearst Connecticut Media investigation into the status of the appeal. “When I talk to parents who have lost their children, to people who will spend the rest of their lives battling drug addiction, they don’t tell me to settle down. They tell me to keep fighting for justice, and that’s what I promised to do.

While his appeal is heard, Connecticut is seeking to stop the implementation of Purdue’s settlement plan. A hearing for his motion to stay Drain’s confirmation order is scheduled for November 9 in bankruptcy court.

Last week, McMahon rejected a similar claim by the US Trustee, who represented the US Department of Justice in Purdue’s bankruptcy proceeding. She conditioned her decision on Purdue agreeing that he would not attempt to argue that the appeals of Drain’s confirmation order were “fairly moot”, or essentially too late to stop the implementation of the Drain plan. regulation.

“Every day of delay caused by calls is a day when billions of dollars go unused in unpaid bank accounts to communities and victims who desperately need these funds to deal with and reduce the opioid crisis,” said Purdue in a statement.

Purdue values ​​its settlement plan at more than $ 10 billion. Implementation of the plan would see the company dissolved and its assets transferred to a new utility company, Knoa Pharma, focused on using its resources to alleviate the national opioid crisis. No assets have yet been transferred.

Meanwhile, “less than $ 7 million out of several billion dollars is being distributed to Creditor Trusts, the Master Disbursement Trust and TopCo (a holding company of Knoa Pharma) for purely administrative pre-set-up work so that distributions can be made as soon as possible, as soon as possible after the Effective Date, ”Purdue added in the release.

The earliest Purdue could emerge from bankruptcy would be mid-December, “depending on court proceedings and rulings,” according to the company. Purdue filed for Chapter 11 protection in September 2019.

Concerted opposition

Tong’s opposition to the settlement plan focuses largely on demanding that members of the Sackler family who own Purdue be released from pending lawsuits, as well as potential opioid claims. The plan also includes releases for many other parties, including members of the Sackler family who are not directly involved in the business.

Liability shields are a condition of the Sacklers’ agreement to contribute an estimated $ 4.3 billion in cash to the settlement. The Sacklers, whose family net worth was estimated by Forbes at nearly $ 11 billion last year, have not personally filed for bankruptcy.

McMahon, the U.S. District Court judge, said she plans to focus on the Sacklers’ legal protections when assessing appeals of Drain’s approval of the settlement framework.

“He’s the big dog here,” McMahon said at an Oct. 12 hearing. “This poses a pure question of law.”

Although Tong blasted the versions, their scope would not be unlimited. They would not prohibit possible criminal prosecution. Last November, Purdue, as a company, pleaded guilty to three counts of conspiring to defraud the government and violate anti-bribery law. However, no person was charged in connection with this plea.

Coinciding with Purdue’s settlement last year with the Department of Justice, the Sacklers involved with Purdue agreed to a separate $ 225 million settlement with the Department of Justice to resolve allegations of business and financial misconduct. . The Sacklers did not admit any wrongdoing under that deal, and they also denied the wrongdoing allegations made against them in the Connecticut lawsuit and numerous other complaints against Purdue.

In addition to Connecticut, several other parties also appealed approval of the settlement plan by Drain. Other opponents include the US Trustee, Maryland, Washington State and the District of Columbia.

“While appeals may create a fairer settlement, it would be a settlement that is more distant,” said Robert Bird, professor of business law at the University of Connecticut. “It would take longer. This is a concern that beneficiaries (of the settlement plan) and the courts might have, formally or informally, as appeals make their way through the courts.

Dissatisfaction over the Purdue bankruptcy has also prompted efforts to reform bankruptcy law. Senator Richard Blumenthal, D-Connecticut, pushes legislation forward in Congress
which seeks to ban the kinds of legal protections the settlement plan offers the Sacklers.

Blumenthal, who sued Purdue when he was state attorney general, said “I strongly support Attorney General Tong’s appeal for the Purdue settlement plan that does not provide adequate compensation to the victims of Purdue Pharma and not hold the Sackler family accountable for their, inadmissible actions and their disregard for the hundreds of thousands of families who have lost loved ones to opioid addiction.

Regardless of the Purdue case, Connecticut is expected to receive an estimated $ 300 million share of a $ 26 billion nationwide settlement in the coming years with the nation’s three largest pharmaceutical distributors and drug maker Johnson & Johnson. These funds will help support programs to fight a relentless epidemic that last year killed 1,273 people in Connecticut from opioid-related overdoses, up 13% from 2019.

“The Distributor Settlement will bring approximately $ 300 million to Connecticut over the next 18 years to fight the opioid epidemic and billions of dollars to communities nationwide,” Tong said. “No amount of money will ever bring back those lost in this tragedy, but these funds can be deployed immediately to start turning the tide of this epidemic.”

[email protected]; Twitter: @paulschott

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