Purdue Pharma $6B settlement plan paused

The Supreme Court on Thursday put on hold a proposed bankruptcy plan for Purdue Pharma that would allocate billions of dollars to help ease the nation’s opioid crisis — a plan that would also shield the family that owns the company from future lawsuits.

In a brief unsigned order, the court granted the Justice Department’s request to temporarily block the plan. The department is challenging whether Sackler family members — who themselves did not file for bankruptcy — can be spared from future litigation over their role in fueling the nation’s crushing opioid crisis. The court agreed to review the case and consider whether U.S. bankruptcy code authorizes such agreements. Arguments are set for December.

Purdue Pharma’s bankruptcy case will unfold before the high court as the United States continues to contend with an addiction crisis initially fueled by opioid pain pills flooding the country. Today, illicit synthetic fentanyl, which is up to 100 times stronger than morphine, is the catalyst for an overdose crisis killing more than 100,000 Americans each year.

Thursday’s decision means settlement money meant for thousands of victims and their relatives and for local and state governments could be delayed. Attorney Edward Neiger, who represents thousands of family members affected by the opioid crisis, called the delay disappointing for victims but he said the expedited schedule shows the Supreme Court “appreciates the urgency of the matter, including the plight of the victims waiting for recovery and the terrible toll the opioid crisis at large is still taking on our country.”

The appeal to the Supreme Court comes more than two months after the U.S. Court of Appeals for the Second Circuit greenlit the bankruptcy plan, saying the Sacklers being shielded from lawsuits was needed to “ensure the fair distribution” of the settlement money. Under the negotiated deal, the Sacklers would pay up to $6 billion over nearly two decades to help alleviate the crisis.

The Office of the U.S. Trustee, a branch of the Department of Justice, is challenging the lower court’s decision. The Justice Department argues in its filing to the high court that shielding the Sacklers is “an abuse of the bankruptcy system,” and that allowing the appellate court’s decision to stand would leave in place “a road map for wealthy corporations and individuals to misuse the bankruptcy system” to avoid liability from lawsuits.

“This case is a clear-cut candidate for this Court’s review,” Solicitor General Elizabeth B. Prelogar wrote in the motion asking for a stay.