How the Sacklers' opioid lawsuit could scam the bankruptcy system

Opioids helped kill friends of mine. Even more frustrating is that this is not particularly unique or interesting. According to the US Department of Health and Human Services:

More than 760,000 people have died since 1999 from a drug overdose. Two out of three drug overdose deaths in 2018 involved an opioid.

Much of that has been allegedly enabled by the Sackler family, which owns Purdue Pharma and made nearly $11 billion dollars peddling OxyContin. In October 2020, the Sacklers reached a settlement agreement with the US Department of Justice, after previously filing for bankruptcy in 2019. As NPR reports:

As part of bankruptcy talks, they've offered to give up control of the company and pay roughly $4.2 billion.

In exchange, under the current deal on the table, the Sacklers would keep much of their wealth, admit no wrongdoing and be sheltered from future opioid lawsuits.

Again: they made nearly $11 billion, and will potentially be forced to pay less than half of that as punishment. As it stands, hundreds of families have filed lawsuits against the Sackler family for their role in the opioid epidemic. And all of those cases would be thrown out, if the court agrees to their proposal.

But as The American Prospect explains, it actually gets worse. Because the same liability release proposed by the company would, if approved, extend to the Sackler family's personal property as well. By protecting the family from individual lawsuits, the courts could potentially allow the family to fold in all of their personal assets into the bankruptcy filing under the guise of company property:

A liability release for the individual Sacklers forcibly converts the rights of victims to seek redress for personal misconduct by the people who owned Purdue into a kind of property of Purdue. Property that Purdue can dispose of any way it wants as part of its bankruptcy—if the judge agrees.


A bankruptcy judge doesn't have the power to rule on the merits of lawsuits by victims, like those alleging wrongs by the Sackler family members. That is the work of Article III judges.

But with a liability release like the Sackler family members are seeking, the bankruptcy judge in effect is ruling on those lawsuits—by extinguishing them. So, he's claiming the power of an Article III judge, even though he is not one.

And he is claiming it over people like Jenny Scully, a mother whose six-year-old daughter was born addicted to OxyContin and other opioids doctors prescribed her before and during her pregnancy. Scully's suit naming the Sackler family members speaks to their personal liability, not to the source of the judge's power: the bankruptcy estate of Purdue.


It leaves the Sackler family members with unknown billions of dollars—unknown because the individual Sacklers are not in bankruptcy—now protected from any future lawsuits, or civil investigations, over the opioid epidemic that helped make their fortune.

The American Prospect gets into more detail about how this proposed settlement could work, if accepted by the courts. And it is far more egregious than paying $4.8 billion on a nearly $11 billion profit that killed hundreds of thousands of people.

The Sackler Family's Bankruptcy Scheme [Libby Lewis / The American Prospect]

Judge Blocks Lawsuits Against Sackler Family As OxyContin Bankruptcy Talks Continue [Brian Mann / NPR]

Purdue Pharma Offers Plan to End Sackler Control and Mounting Lawsuits [Jan Hoffman and Mary Williams Walsh / New York Times]

Image: Psiĥedelisto / Wikimedia Commons (Public Domain)