CT's Tong remains 'a firm no,' as 15 more states sign on to OxyContin maker Purdue Pharma's settlement plan

Photo of Paul Schott

STAMFORD — Connecticut Attorney General William Tong maintained Thursday his opposition to bankrupt OxyContin maker Purdue Pharma’s settlement plan despite 15 other states dropping their longstanding objections to the proposal.

“I’m a firm ‘no’ on this proposal,” Tong told Hearst Connecticut Media. “It does not achieve what I think any resolution should achieve, which is as much justice as possible for victims and their families.”

An agreement among the 15 previously “non-consenting” states, Purdue and the Sackler family members who own the Stamford-based company was disclosed late Wednesday night in a filing in federal bankruptcy court. After negotiations in recent weeks, those states said they were now willing to support a settlement after the Sacklers agreed to contribute more funding and the parties hammered out a framework for Purdue to make public tens of millions of internal documents.

“Today’s resolution delivers the most important things that we’ve been fighting for — a reckoning that exposes the Sacklers’ misconduct, strips them of their power and provides money that will be dedicated entirely to prevention, treatment and recovery,” Massachusetts Attorney General Maura Healey said Thursday in a virtual press conference, held with New York Attorney General Letitia James and Minnesota Attorney General Keith Ellison.

In addition to those three states, the others that have agreed to the modified settlement plan are Colorado, Hawaii, Idaho, Illinois, Iowa, Maine, Nevada, New Jersey, North Carolina, Pennsylvania, Virginia and Wisconsin.

Purdue officials said in a statement that they were encouraged by the recent negotiations. Despite denying the lawsuits’ accusations, the company has offered a settlement plan that it values at more than $10 billion.

“The progress made in the third and final round of mediation builds upon the support already publicly expressed by nearly every organized creditor group in the bankruptcy proceedings,” the statement said. “We will continue to work to build even greater consensus for our plan of reorganization, which would transfer billions of dollars of value into trusts for the benefit of the American people and direct critically-needed medicines and resources to communities and individuals nationwide who have been affected by the opioid crisis.”

But Tong remains dissatisfied with the proposed terms. The state filed its lawsuit in December 2018, comprising one of about 3,000 lawsuits consolidated in Purdue’s bankruptcy that alleges the company fueled the opioid crisis with deceptive OxyContin marketing. Purdue denies those allegations.

California, Delaware, Maryland, Oregon, New Hampshire, Rhode Island, Vermont, Washington and the District of Columbia have not accepted the modified plan either.

Sackler family members who own Purdue agreed to increase their cash contribution to the settlement by $50 million, according to the court filing from a bankruptcy court-appointed mediator. In addition, they will allow $175 million held in Sackler family charities to go toward abating the opioid crisis.

In total, the Sacklers are offering to contribute $4.5 billion in cash and assets in the charitable funds toward the settlement. In 2020, the Sackler family’s net worth was estimated by Forbes at nearly $11 billion.

“It’s not nearly enough given their wealth and given the fact that they’ve stashed it all away. I don’t see any suffering on their part,” Tong said. “It does not do enough to recognize the harm they’ve caused to thousands of Connecticut victims and their families.”

Since Purdue filed for bankruptcy in September 2019, Tong has not publicly disclosed a specific settlement amount that he would accept.

He also objected to the inclusion of the Sacklers’ charitable funds in the settlement and said the proposed multiyear time frame for the Sacklers’ payments would significantly diminish their value.

As part of the settlement, the Sacklers have agreed to relinquish control of Purdue and let the company be converted into a new “public-benefit company” focused on using its resources to tackle the opioid crisis.

Representatives of late Purdue founders Mortimer Sackler’s and Raymond Sackler’s sides of the family said in a statement that “this resolution to the mediation is an important step toward providing substantial resources for people and communities in need. The Sackler family hopes these funds will help achieve that goal.”

Despite their planned settlement contribution, the Sacklers have denied any wrongdoing related to Purdue. Many of the complaints, including Connecticut’s, name the Sacklers who own Purdue as defendants.

Major concerns as bankruptcy continues

A settlement is not a done deal because it still needs to secure the approval of the judge overseeing Purdue’s bankruptcy. A “confirmation hearing” for Judge Robert Drain to review the latest plan has been scheduled for Aug. 9.

Most groups representing creditors, including opioid victims and their families, have supported Purdue’s settlement offer — but often with major reservations.

State attorneys general had been starkly divided until this week, with about half of them supporting the proposal and half opposing it. The opposing attorneys general have largely been Democrats such as Tong, Healey and James.

“I don’t think any of us this will say this deal is perfect, but we can’t let perfect be the enemy of good,” James said during Thursday’s press conference. “This deal gets one of the nation’s most harmful drug dealers out of the opioid business. And if approved, it would put an end to delays and legal maneuvering that could possibly continue for years across multiple continents. And further, I’ve always said my primary goal was to deliver critical funds into communities devastated by opioids, as quickly as possible.”

Legal experts such as Robert Bird, a professor of business law at the University of Connecticut, said the growing support for Purdue’s settlement offer could diminish the company’s desire to make further concessions. But they said they also understood Tong’s opposition.

“Attorney General Tong has powerful reasons not to accept this agreement,” Bird said. “So much of what many people wanted has been left unacquired. For example, the Sacklers would still walk away with massive personal wealth. The family that has profited so much from this company will not have a direct moral condemnation of their behavior.”

While agreeing to the modified settlement plan, Healey and James said they remained unhappy about how Purdue’s bankruptcy had frozen the pending litigation against Purdue, including the lawsuits that name the Sacklers as defendants, despite the Sacklers not personally filing for bankruptcy.

They expressed support for the SACKLER Act introduced in Congress earlier this year by Rep. Carolyn Maloney, D-New York, and Rep. Mark De Saulnier, D-California, legislation that seeks to overturn the legal protections that the Sacklers have gained through the company’s bankruptcy. Tong also supports the bill.

“It’s the bankruptcy system right now that allows this bad precedent of having people who are billionaires, who are not bankrupt, come to a bankruptcy court and get relief from their claims and end the ability of our offices to pursue our cases in our own state courts,” said Healey, who was the first state attorney general to sue the Sacklers who own Purdue. “Congress may not act on that (SACKLER Act) before the conformation hearing, but they still should pass that law so that future billionaires aren’t able to abuse and manipulate the current bankruptcy process in the way the Sacklers have done.”

The Sacklers deny that they have misused Purdue’s bankruptcy.

Tong said he respected the positions of Healey and James and other attorneys general in the 15-state group, but that he did not think the modified plan would adequately tackle the opioid crisis in Connecticut.

In Connecticut 1,273 people died last year from opioid-involved overdoses, up 13 percent from 2019. There are also many thousands of family members of opioid victims.

The toll of the opioid crisis, particularly the impact of OxyContin, was examined in a recent Hearst Connecticut Media series.

“These are the real-life experiences of families and other people in Connecticut who I have sworn an oath to protect,” Tong said. “It haunts me and everyone else who works in our office. There are many people I’ve met face to face, and I’ve heard their stories, heard them cry and seen their anguish. These are real people. They’re people in our communities.”

This article contains reporting from The Associated Press.

pschott@stamfordadvocate.com; twitter: @paulschott