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SCOTUS will hear a case involving Purdue Pharma and how corporations escape bankruptcy

AYESHA RASCOE, HOST:

A case at the heart of America's deadly opioid crisis goes before the U.S. Supreme Court this week. It involves Purdue Pharma and its owners, the Sackler family, and could set a major precedent shaping the way wealthy people and corporations use bankruptcy to shield themselves from lawsuits. NPR's addiction correspondent Brian Mann has been following the case. Hi, Brian.

BRIAN MANN, BYLINE: Hi, Ayesha.

RASCOE: This family, this company, has become infamous. Remind us of the backstory that's central to this case.

MANN: Yeah, this starts back in the '90s when Purdue Pharma, this little-known company, won federal approval for a time-release opioid pain medication called OxyContin. And under direction of members of the Sackler family, the company marketed OxyContin as less risky, less addictive than other opioid medications, and it worked. Suddenly, doctors and dentists all over the country were prescribing a lot more pain pills. Only Purdue Pharma's safety claims weren't true. Experts say the OxyContin boom led to the overdose crisis that keeps getting worse in America. It put us on a path to the fentanyl overdose crisis we're in now. Hundreds of thousands of people have died. And in the end, Purdue Pharma wound up pleading guilty to three federal felonies. Thousands of people and communities sued this company, and that pushed Purdue Pharma into bankruptcy.

RASCOE: So why is the U.S. Supreme Court involved?

MANN: Well, it's because the owners of Purdue Pharma, the Sacklers, wanted something controversial. Members of the family who deny any wrongdoing, who've never been charged with any crimes, got rich from OxyContin sales. And they agreed to pay $6 billion out of their private fortunes into this bankruptcy settlement. In exchange, they demanded complete immunity from all those thousands of opioid lawsuits, and they won. A federal bankruptcy judge signed off on that deal - cash in exchange for a clean legal slate. And that infuriated Mike Quinn. He's an attorney who represents clients who still want to sue the Sacklers. He says this kind of bankruptcy maneuver sets a dangerous precedent where the rich can pay cash to avoid accountability.

MIKE QUINN: They're just going to know they can act recklessly, and if they do it through a company and that company makes enough money, they'll be able to get away with it.

MANN: And, Ayesha, Quinn wasn't the only one who opposed the Sackler deal. The U.S. Justice Department challenged it, which is how this case wound up before the Supreme Court.

RASCOE: And, presumably, other wealthy people who get into legal troubles that could cost them money would want to use these same tactics, right?

MANN: That's exactly right. And this is another reason the Justice Department got interested in this case. A growing number of wealthy corporations, organizations and individuals have been doing what the Sacklers did - offering cash into bankruptcy settlements in exchange for a kind of firewall against lawsuits. And one of the most high-profile cases involves Johnson & Johnson, the company that used to manufacture talc baby powder, which thousands of women say gave them cancer.

HANNA WILT: I'm a young girl. My entire life has been dramatically changed.

MANN: That's Hanna Wilt, a woman I interviewed in New Jersey. She tried to sue Johnson & Johnson after she got sick, but the company - remember, one of the wealthiest corporations in the world - used a bankruptcy maneuver to freeze her lawsuit.

WILT: What I see is who can play the game best. Big corporations trying to work the system in a way that they don't have to take full responsibility is not something new.

MANN: And Hanna Wilt actually died of her cancer last year at the age of 27 while her Johnson & Johnson case was still stuck in bankruptcy court.

RASCOE: Oh, my goodness. Obviously, this bankruptcy maneuver has a lot of critics, but I understand that there are some unlikely supporters of this maneuver as well, right?

MANN: That's right, and we'll hear some of those arguments before the Supreme Court tomorrow. Supporters believe allowing rich people in corporations to pay for these legal protections is a quick, efficient way to get a lot of money to victims, to people who've been hurt in some way. Let's go back to Purdue Pharma and the Sacklers. Some people say if the Supreme Court strikes down that bankruptcy deal, a lot of opioid victims will be stuck without any compensation. Here's Ryan Hampton. He was addicted to OxyContin for years.

RYAN HAMPTON: If the Supreme Court overturns the appellate court decision, financial recovery for 120,000 victims, over $750 million, goes up in smoke overnight.

MANN: And Arik Preis agrees. He's an attorney who represents a lot of people harmed by OxyContin. He says if this bankruptcy deal is struck down by the Supreme Court, it's going to lead to legal chaos.

ARIK PREIS: There's going to be a lot of infighting that - I don't know if it ever gets settled.

RASCOE: So, Brian, what are you watching for when the Supreme Court takes up this case tomorrow?

MANN: Well, this is a big precedent-setting moment, and a lot of legal experts I talked to say they think the Supreme Court is going to strike down the Sacklers' deal. And that means this family at the center of the opioid crisis could wind up back in court facing this tsunami of lawsuits. It could take years or even decades to resolve. I should say, I reached out to the Sacklers about this moment, and a representative said they have no comment.

RASCOE: NPR's Brian Mann, thank you so much.

MANN: Thank you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Ayesha Rascoe is a White House correspondent for NPR. She is currently covering her third presidential administration. Rascoe's White House coverage has included a number of high profile foreign trips, including President Trump's 2019 summit with North Korean leader Kim Jong Un in Hanoi, Vietnam, and President Obama's final NATO summit in Warsaw, Poland in 2016. As a part of the White House team, she's also a regular on the NPR Politics Podcast.
Brian Mann is NPR's first national addiction correspondent. He also covers breaking news in the U.S. and around the world.
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