NEW YORK: A US judge on Thursday struck down the Purdue Pharma bankruptcy plan because it provided some immunity for the owners of the company in exchange for a $4.5 billion payout to victims of the opioid crisis.
In her decision, seen by AFP, Judge Colleen McMahon said the federal judge who approved the pharmaceutical company's bankruptcy plan in September did not have authority to prevent future lawsuits against members of the Sackler family, except in cases of intentional misconduct.
Forty-three US states had approved the plan but the Justice Department and a handful of other states challenged it. They argued that it denied victims the right to sue the company.
US Attorney General Merrick Garland welcomed the ruling. "The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family," he said.
"This is a seismic victory for justice and accountability that will re-open the deeply flawed Purdue bankruptcy and force the Sackler family to confront the pain and devastation they have caused," added William Tong, the attorney general for Connecticut who led the appeal against the earlier ruling.
Under the settlement Purdue Pharma, the manufacturer of OxyContin, would be dissolved and the Sackler families that founded and profited from the company would have to pay $4.5 billion. But they could not be taken to court again over the drug.
The opioid addiction crisis caused more than 500,000 overdose deaths in the United States over the past 20 years.
Facing an avalanche of litigation, Purdue last year pled guilty to three criminal charges over its aggressive drive to push sales of OxyContin, a highly addictive prescription painkiller.
Under the terms of the deal, the company would be sold by 2024 to be replaced by a new entity managed by a trust, and its involvement in selling opioid products would be restricted.
Purdue also would be required to create a repository for tens of millions of documents detailing its sales and marketing practices.
In her ruling, Judge McMahon acknowledged that striking down the immunity granted to the Sacklers "will almost certainly lead to the undoing of a carefully crafted plan that would bring about many wonderful things, including especially the funding of desperately needed programs to counter opioid addiction."
But since the bankruptcy code "confers no such authority, the order confirming the Plan must be vacated," she said in a verdict that can itself be appealed.
The judge acknowledged that her opinion on the ability of bankruptcy judges to grant immunity would likely not be the last word on the subject.
Purdue Pharma said it would appeal.
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