Purdue bankruptcy draws 2 objections

Massachusetts, N.Y. oppose settlement

The attorneys general of Massachusetts and New York on Monday gave Purdue Pharma, the maker of the painkiller OxyContin, a preview of the opposition it's facing in bankruptcy court.

Maura Healey, the Massachusetts attorney general who sued Purdue and its board members last year, said Monday she'll soon file an objection in bankruptcy court challenging the proposed settlement of $10 billion to $12 billion with 24 states, five U.S. territories and law firms representing more than 1,000 counties, cities and American Indian tribes.

At a news conference Monday in Boston, Healey said the proposal fails to make Purdue's billionaire owners, the Sackler family, turn over opioid profits that she says they transferred overseas after "sucking the life out of Purdue."

"It should not be about billionaires using the bankruptcy process as a vehicle to further shield their assets and escape accountability," Healey said.

The attorney general also criticized the way Purdue plans to pay for the accord. The company would become a "public benefit trust" that would continue selling opioids but turn its profits over to those who have sued the company.

"This settlement is to be funded by continued and future sales of OxyContin here and abroad -- I reject that," she said. "Every day, people in this country are dying as a result of opioids. Fundamentally I don't look at that as doing good or being part of the solution."

Healey has also argued that a proper settlement would include making public millions of pages of documents -- including emails, business plans and board minutes -- that she says Purdue and the Sacklers have fought for years to keep secret. The current settlement lacks that transparency, she said Monday.

Letitia James, the attorney general of New York, was also critical of the plan and vowed to continue her lawsuit against Purdue and the Sacklers in state court.

"Any deal that cheats Americans out of billions of dollars, allows the Sacklers to evade responsibility, and lets this family continue peddling their drugs to the world is a bad one, which is why New York remains opposed to it," James said in a statement.

Under the settlement, however, the Sackler family would give up ownership of Purdue and contribute at least $3 billion. Critics say that's not enough, citing estimates that the family's net worth is at least $13 billion.

Although Massachusetts, New York, Pennsylvania and North Carolina intend to continue a court fight against Purdue and the Sacklers, other states support the settlement, including Tennessee and Texas.

Ohio Attorney General Dave Yost said in a statement that the deal is better than other possibilities.

"The settlement puts the Sacklers out of the drug business permanently -- not just in the United States, but around the globe. It takes every last dime that Purdue has and billions more from the Sacklers personally," Yost said.

"The only alternative involves years of additional litigation in the forlorn hope of getting more personal money for corporate conduct."

In its bankruptcy filing, Purdue denied it is "seeking refuge" and said the settlement is the best way to deliver the most possible money to the public.

The company projected it will spend $263 million this year on legal expenses and other matters associated with the litigation, warning that the continuing costs will only reduce the amount of money available to the plaintiffs.

Federal Bankruptcy Judge Robert Drain in White Plains, N.Y., will have wide discretion over the case, including whether the states that don't like the settlement can press on with their lawsuits. Drain is scheduled to hold his first hearing on the bankruptcy plan today.

Because of Sunday's filing, Purdue will not have to face the first federal trial over the opioid crisis. The case is scheduled to start next month in Cleveland. The defendants will be a group of drugmakers, distributors and a pharmacy.

Shaun Wallace, 40, who co-owns three "sober homes" in Worcester, Mass., said he has been in recovery for five years from an opioid addiction that started with OxyContin. He said he supports Healey's decision to continue pursuing the company.

"They were pretty much giving us minor-league heroin and saying it was safe," he said. "There should be more consequences for that family. Your average drug dealer gets in way more trouble than this family that's just taken out a whole generation of our people."

Information for this article was contributed by Erik Larson of Bloomberg News; and by Geoff Mulvihill, Steve LeBlanc, Dave Collins and Andrew Welsh-Huggins of The Associated Press.

A Section on 09/17/2019

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