CT to appeal judge's OK of Purdue Pharma settlement plan: 'Unprecedented and unacceptable overreach'

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STAMFORD — Connecticut Attorney General William Tong said the state would appeal a bankruptcy judge’s approval of OxyContin maker Purdue Pharma’s settlement plan, reiterating his objection to sweeping legal protections that the proposal grants to the Sackler family members who own the company.

The state’s filing of a notice of appeal in federal bankruptcy court was expected as Tong has repeatedly said in the past two weeks that Connecticut would not accept Judge Robert Drain’s Sept. 1 confirmation of Stamford-based Purdue’s plan, which would settle several thousand lawsuits alleging the firm fueled the opioid crisis with deceptive OxyContin marketing and ultimately dissolve the company.

“The Sacklers are not bankrupt. We cannot allow our bankruptcy laws to be abused and misused as a loophole for the rich and powerful to avoid justice and accountability,” Tong said in a statement Friday. “This decision was an unprecedented and unacceptable overreach by the bankruptcy court.”

Connecticut’s filing Friday indicated that it wanted the Bankruptcy Appellate Panel to hear its appeal. The BAP comprises a group of judges of U. S. bankruptcy courts who are appointed to hear appeals from certain bankruptcy cases under the supervision of the U.S. courts of appeals.

“While we understand the objectors’ views are deeply held, 95 percent of Purdue’s creditors, including 43 states and territories, continue to believe the plan is the best option for people and communities suffering from the opioid crisis, the most fair and expeditious way to resolve the Purdue litigation, and the only way to deliver billions of dollars in value to fund programs specifically for abatement of the crisis,” Purdue said in a statement. “The bankruptcy court’s ruling confirms this belief, and appeals will only further hurt the states, victims and creditors by delaying and eroding their recoveries.”

Through a spokesman, the family of late Purdue co-founder Mortimer Sackler declined to comment on the notice of appeal. A message left for the family of late Purdue co-founder Raymond Sackler was not immediately returned.

The two families previously issued statements supporting Drain’s ruling.

Tong’s opposition to the settlement plan focuses largely on a stipulation for the Sacklers who own the company to be released from the pending lawsuits, as well as potential opioid-related claims. The plan also provides releases for many other parties, including Sackler family members not directly involved in the company.

The Sacklers did not personally file for bankruptcy.

Those liability shields are a condition of the Sacklers’ agreement to contribute $4.325 billion in cash to the settlement, which Purdue values at a total of more than $10 billion.

Tong’s announcement said that “by the time they are finished paying this settlement (over a nine-year period), the Sacklers will be wealthier than they were when they started.”

The Sacklers’ family net worth was estimated last year by Forbes to be nearly $11 billion.

While Tong and a number of his counterparts have condemned the releases, their scope would not be unlimited. They would not prohibit potential criminal prosecution. Last November, Purdue as a company pleaded guilty to three criminal charges of conspiring to defraud the government and violate anti-kickback law. No individuals, however, were charged in connection with that plea.

Concurrent with Purdue’s settlement last year with the Department of Justice, the Sacklers involved in Purdue agreed to a separate $225 million settlement with DOJ to resolve allegations of marketing and financial misconduct. They did not admit any wrongdoing as part of that agreement.

With an appeal, Connecticut would continue the legal battle it has waged against Purdue since it filed in December 2018 a lawsuit against the company and a number of individual defendants, including eight of the Sacklers. The complaint was consolidated with the other pending complaints when Purdue filed for bankruptcy in September 2019 and halted through subsequent court orders.

In addition to Connecticut, several other parties have also filed notices of appeal including the U.S. Trustee, which has represented the Department of Justice in the bankruptcy proceedings; Maryland; Washington state; and the District of Columbia.

“The objections note that the Sackler family made at least $11 billion in profits from producing and deceptively marketing OxyContin, a major driver in the rise of the opioid crisis,” Tong’s announcement said.

Representatives of the Sacklers have denied Tong’s accusations.

Dissatisfaction with the outcome of Purdue’s bankruptcy has also sparked efforts to reform bankruptcy law. Sen. Richard Blumenthal, D-Conn., is advancing legislation in Congress that seeks to prohibit the types of legal protections that the settlement plan provides to the Sacklers whom he said earlier this month had embarked on “a shameful quest to avoid responsibility for their deliberate, reckless disregard of human life.”

In July, Tong testified in support of bankruptcy reform, before a House Judiciary subcommittee.

Meanwhile, the state and the rest of the country are still grappling with an unrelenting opioid epidemic. It resulted in nearly 500,000 people dying from overdoses involving prescription or illicit opioids between 1999 and 2019. Last year in Connecticut, 1,273 people died from opioid-related overdoses, up 13 percent from 2019.

“Connecticut has filed notice that we will appeal and will continue to fight on behalf of the victims and families of the opioid epidemic until we see justice,” Tong said.

pschott@stamfordadvocate.com; twitter: @paulschott