NEW YORK (REUTERS) - A federal judge has thrown out a US$4.5 billion (S$6 billion) settlement that would have shielded the Sackler family, which owned OxyContin maker Purdue Pharma, from future lawsuits over opioids, upending the company's plan to reorganise in bankruptcy court.
US District Judge Colleen McMahon in Manhattan said in a written ruling on Thursday (Dec 16) the bankruptcy court did not have the legal authority to release the family from liability. She noted that the ruling was likely to be appealed at the 2nd US Circuit Court of Appeals.
Purdue and lawyers for the Sacklers could not immediately be reached for comment.
Purdue has been accused of pushing massive amounts of its OxyContin pain drug on patients, while underplaying its potential for addiction and abuse, which the company has denied. It filed for bankruptcy in 2019, facing a slew of legal claims over the drug.
US Bankruptcy Judge Robert Drain in September approved a reorganisation plan, including a settlement of the lawsuits against the company in which the Sacklers would pay US$4.5 billion and be released from future liability.
The US Department of Justice's bankruptcy watchdog and some states had appealed against Judge Drain's ruling, saying the Sacklers were not entitled to the legal protections because they did not file for bankruptcy themselves.
About US$10 billion was transferred from Purdue to the Sacklers between 2008 and 2018, about half of which went to taxes or business investments, according to court documents.
A lawyer for the Sacklers at a hearing told Judge McMahon there was no evidence the family intentionally transferred the money anticipating bankruptcy.
More than 500,000 people have died from opioid overdoses since 1999, according to the Centres for Disease Control and Prevention.
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