Purdue Pharma bankruptcy plan unconstitutional, DOJ leaders say

Two divisions of the U.S. Justice Department have described Purdue Pharma's proposed bankruptcy settlement as flawed and unconstitutional, NPR reported July 19. 

The Justice Department's U.S. Trustee program, a watchdog for the federal bankruptcy system, said in a July 19 court filing that the settlement proposal is unconstitutional and illegal. The U.S. attorney for the Southern District of New York said the plan violates the constitutional right to due process for people with potential opioid claims. 

Under the settlement proposal, members of the Sackler family, who own Purdue Pharma, would pay about $4.3 billion of their private fortune to help compensate people and communities harmed by oxycontin, a powerful opioid, NPR reported. The Sacklers have earned more than $10 billion from opioid sales. 

In exchange for that money, the Sacklers and their associates — many of whom haven't filed for bankruptcy — would be granted "third-party releases," which would block them from future opioid lawsuits. 

U.S. Trustee William Harrington has described that part of the proposed settlement as "impermissible," NPR reported. He accused the Sacklers of using the bankruptcy system to avoid liability for their alleged roles in perpetuating the opioid epidemic. 

The Sacklers have repeatedly said they did nothing wrong and have acted ethically. Purdue Pharma has twice pleaded guilty to federal criminal charges related to its marketing practices for oxycontin. 

Acting U.S. Attorney Audrey Strauss said the settlement plan takes away a "sufficient opportunity to be heard" for people with potential opioid claims and effectively denies them due process, according to NPR

Both objections were filed in the court of federal bankruptcy Judge Robert Drain, who is widely expected to approve the settlement plan at a confirmation hearing scheduled for Aug. 9, NPR reported. He has said multiple times that the settlement is an opportunity to avoid years of costly and uncertain litigation. 

A spokesperson for Purdue Pharma said in a statement emailed to NPR that the settlement plan would "transfer billions of dollars of value into trusts for the benefit of the American people."

The company also said that third-party releases "have long been allowed under the law in most jurisdictions."

A spokesperson for the Sackler family declined to comment to NPR

Members of the Sackler family aren't expected to acknowledge any wrongdoing under the bankruptcy plan, NPR reported 

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