In a highly anticipated Supreme Court case, the justices are weighing whether to uphold a bankruptcy plan for Purdue Pharma that grants the Sackler family broad legal protections from civil lawsuits related to their role in the opioid epidemic. The dispute centers around a provision in the plan that releases the Sacklers and related entities from civil liability for the opioid crisis, which was fueled in part by Purdue's drug OxyContin.

Purdue Pharma, owned and operated by the Sacklers during the height of the opioid crisis, filed for Chapter 11 bankruptcy in 2019. As part of the bankruptcy plan, the Sacklers agreed to contribute $6 billion towards abating the opioid crisis in exchange for the legal shield. However, the Biden administration and a small group of victims who object to the plan argue that these third-party releases are not permissible under the bankruptcy code.

During oral arguments, several Supreme Court justices expressed concerns about the potential consequences of unraveling Purdue's agreement. Justice Brett Kavanaugh noted that bankruptcy courts have historically approved similar releases under certain circumstances. Justices Elena Kagan and Clarence Thomas also questioned why the U.S. Trustee, an arm of the Justice Department, can intervene and seek to reject an agreement backed by the majority of victims.

Purdue Pharma sought bankruptcy protection after facing numerous lawsuits seeking damages for its manufacture and sale of OxyContin. The company previously pleaded guilty to a felony count of misbranding the drug in 2007 and has paid over $600 million in fines. As part of a settlement with claimants, the Sacklers agreed to contribute over $4 billion, which ultimately increased to $6 billion, to fund efforts to combat the opioid crisis. The settlement also includes $750 million to compensate victims and requires the disclosure of millions of documents.

Under the bankruptcy plan, Purdue would restructure itself as a public benefit company, with its profits used to develop products that address opioid addiction. However, the plan's release provision has drawn criticism from several states, Canadian municipalities, indigenous tribes, and over 2,600 individuals. They argue that the Sacklers should not be shielded from civil lawsuits, especially considering their significant profits from Purdue.

The bankruptcy court in New York approved the plan in September 2021, but opponents challenged the approval in a federal district court. The district court ruled in December 2021 that bankruptcy courts do not have the authority to approve such releases. Purdue and other plan proponents appealed to the U.S. Court of Appeals for the 2nd Circuit, which reversed the district court's decision in May. The Justice Department then asked the Supreme Court to review the ruling and temporarily halt the bankruptcy plan, which the court agreed to do in August.

During the Supreme Court arguments, the justices appeared divided on whether dissenting parties should be bound by the release provision. Justice Neil Gorsuch expressed constitutional concerns about eliminating a nonconsenting party's claim without due process, while Justice Ketanji Brown Jackson questioned why the Sacklers should receive bankruptcy discharge without fully disclosing all their assets.

The outcome of the case will have significant implications for future bankruptcy proceedings involving similar releases. Third-party releases have been used in major Chapter 11 bankruptcies, such as those involving the Boy Scouts of America and the Catholic Church. Justice Amy Coney Barrett asked about the potential effect on future settlement negotiations if the Supreme Court were to restrict bankruptcy courts from approving releases.

A decision from the Supreme Court is expected by the end of June. The case has sparked division among victims of the opioid crisis, with some supporting the settlement as the best path forward for accountability, while others argue that the Sacklers should not be shielded from civil lawsuits. Ellen Isaacs, a vocal advocate who lost her son to a drug overdose, has been actively protesting against the bankruptcy plan and is set to appear in Washington to fight for accountability.