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The Justice Department Moves To Block The Purdue Pharma Sackler Bankruptcy Deal

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Purdue Pharma filed for bankruptcy with a more than $10 billion plan to settle claims that it fueled the U.S. opioid epidemic by illegally pushing sales of its addictive OxyContin painkiller. The company's headquarters in Stamford, Conn., is shown here i
Victor J. Blue, Bloomberg/Getty Images

Purdue Pharma filed for bankruptcy with a more than $10 billion plan to settle claims that it fueled the U.S. opioid epidemic by illegally pushing sales of its addictive OxyContin painkiller. The company's headquarters in Stamford, Conn., is shown here in 2019.

A division of the Justice Department that serves as a watchdog over the federal bankruptcy system filed an appeal late Wednesday seeking to block the controversial Purdue Pharma bankruptcy plan.

William Harrington, who serves as U.S. Trustee for the Justice Department, also filed documents requesting an "expedited stay" to prevent implementation of the settlement.

The deal, approved Sept. 1 by Judge Robert Drain, granted sweeping immunity from opioid lawsuits to members of the Sackler family who own the drug company.

The Sacklers, who are not bankrupt, were granted releases from liability after agreeing to contribute roughly $4.3 billion of their private wealth to the deal.

Supporters of the settlement, including most state attorneys general, say it will avoid costly litigation while funding drug treatment programs over the next decade.

But throughout a two-week bankruptcy trial, and in court documents, the DOJ repeatedly blasted releases from liability granted to the Sacklers as "unlawful" and "unconstitutional."

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In an earlier filing, Harrington accused the Sacklers and their associates of using the bankruptcy system to avoid liability for "alleged wrongdoing in concocting and perpetuating for profit one of the most severe public health crises ever experienced in the United States."

Introduction of Oxcontin in the 1990s is widely seen as one of the spurs of an opioid epidemic which has killed more than 500,000 people in the U.S.

The Sacklers, who by their own reckoning earned more than $10 billion from opioid sales, have said repeatedly they did nothing wrong and acted ethically.

In new court documents filed Wednesday, attorneys for the DOJ signaled they are concerned some provisions of the Purdue Pharma bankruptcy plan might be implemented quickly, complicating an appeal.

"In seeking a stay pending appeal, the United States Trustee's objective is to preserve the status quo during the life of the appeal," the document said.

The DOJ requested an expedited hearing within the next two weeks. The states of Maryland and Washington, as well as Washington, D.C., h\also have filed appeals.

In approving the Purdue Pharma bankruptcy earlier this month, Judge Robert Drain described it as the best possible resolution to a case involving more than 600,000 parties who say they were harmed by Oxycontin.

"This is a bitter result," Drain said during his ruling on Sept. 1. "I believe that at least some of the Sackler parties have liability for those [opioid OxyContin] claims. ... I would have expected a higher settlement."

Purdue Pharma has twice pleaded guilty to federal crimes relating to its marketing of OxyContin. The Sacklers who led the company say they did nothing criminal or unethical.

Under this deal, if it survives appeal, the Sacklers would again acknowledge no wrongdoing.

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