U.S. States Fight Back Against Purdue's Bid to Halt Opioid Lawsuits

By Nate Raymond

October 08, 2019

(Reuters) - U.S. state officials launched a legal counterattack on Friday against Purdue Pharma LP's attempt to shield itself and its controlling Sackler family from thousands of lawsuits claiming the OxyContin maker helped fuel the opioid epidemic.

Attorneys general from 24 states and the District of Columbia objected to Purdue's request that a U.S. bankruptcy judge shield the company from more than 2,600 lawsuits seeking billions of dollars in damages, according to court filings.

The lawsuits allege Purdue and the Sacklers contributed to a public health crisis that has claimed the lives of nearly 400,000 people since 1999 by aggressively marketing opioids while downplaying their addiction and overdose risks.

"The Sacklers are billionaires, they are not bankrupt," Massachusetts Attorney General Maura Healey told Reuters in an interview. "They should not be allowed to use the filing to shield their assets."

Purdue filed for Chapter 11 bankruptcy protection last month after reaching a deal it estimated valued at more than $10 billion that would resolve the bulk of the cases, most of which were brought by states and local governments.

The company said it needed the judge to pause the litigation against it and the Sacklers for nine months to try to settle with the hold-out plaintiffs and to preserve money being squandered on legal fees.

Healey, a Democrat and leading objector to Purdue's proposed settlement, called Purdue's motion a "highly unusual" bid by the Sacklers to use their company's bankruptcy filing to protect themselves.

Healey was the first attorney general to sue the Sacklers as well as the company. Some family members served on Purdue's board.

Purdue said the costs of continued litigation were "staggering," putting its legal expenses this year at nearly $250 million.

"Without a stay of the litigation, only lawyers will win," the company said in a statement.

Typically, a bankruptcy filing triggers an "automatic stay" of all litigation without a specific order from a judge.

However, Purdue is seeking an injunction to stop the lawsuits because the Sacklers did not seek bankruptcy protection and there is an exception to the automatic stay for government actions that seek to enforce laws related to public health and safety.

Healey said the exception gives the states a strong argument to move forward with their cases against the OxyContin maker. "We're exercising our police power and have the right to do so," she said.

The Sacklers have offered to cede control of Purdue to the plaintiffs and contribute at least $3 billion toward the proposed settlement.

Healey said the Sacklers should increase their contribution and she criticized the structure of the deal, which is premised in part on the continued sale of OxyContin, a drug that critics say helped launch the nation's opioid addiction crisis.

"It's wrong that the settlement will be funded through continued sales of this deadly and dangerous drug," she said.