FAQs

You received the notice to apprise your of your rights and options as a creditor in the Purdue bankruptcy In 2020, the health plan that administers your “Administrator Service Only” contract for health insurance filed a proof of claim on behalf of your health benefit plan in the Purdue bankruptcy. That filing preserved your right to vote for or against Purdue’s plan of reorganization (“the Plan”) and receive proceeds as a creditor. Purdue’s has submitted its Plan to the court overseeing its bankruptcy proceedings, and creditors will be voting on plan approval in September. If you participate in the vote, you will also be asked to approve the consensual release from liability for members of the Sackler family. If you do not approve the release, you cannot participate in the bankruptcy as a creditor.

As discussed in greater detail, below, you can either (a) allow your administrator to vote, grant the release to the Sacklers, and submit a claim on your behalf, or (b) opt out of the bankruptcy, not grant the release to the Sacklers, and retain counsel to pursue claims against the Sacklers on your own behalf.

Purdue Pharma is a drug company notorious for manufacturing and marketing pain medicines such as hydromorphone, fentanyl, codeine, hydrocodone, and oxycodone, also known by its brand name, OxyContin. For years, Purdue was owned and managed by the Sackler family.

Purdue, under management of the Sacklers, was more responsible for the opioid epidemic than any other opioid defendant. Purdue’s aggressive marketing tactics directed at doctors, health plans, and the public at large led to the overprescription of all its products, and especially OxyContin. Sales of their drugs soared, as did the number of people dying from overdoses. From 1999 to 2020, 841,000 people died from drug overdoses in the United States, with prescription and illicit opioids responsible for 500,000 of those deaths.

Purdue filed for bankruptcy in 2019 because it faced billions of dollars in liability over its role in the opioid epidemic. Purdue is a defendant in consolidated litigation consisting of over 2,000 lawsuits alleging that Purdue and other opioid manufacturers oversold the drugs’ benefits and downplayed their risks while marketing them to doctors, health plans (with ASOs, “Third Party Payors” or “TPPs”), and patients.

In September 2021, after two years of negotiations between Purdue, the Sacklers, and creditors, the Bankruptcy Court approved Purdue’s plan of reorganization. It was challenged based on the releases that the plan gave to the Sacklers. The case eventually went to the Supreme Court, which ruled that third party releases cannot be granted under the Bankruptcy Code without the consent of all affected claimants. After redrafting its plan to reflect the Supreme Court’s decision, on June 20 Purdue filed an amended version. The bankruptcy estate is currently estimated at $7.4 billion, most of which will be contributed by the Sackler family. However, the Sackler’s contribution is contingent on participating claimants, including health insurers and the ASOs they administer, granting consensual third party releases (“Consensual Third Party Releases”) to the Sacklers.

Yes. Prior to the June 30, 2020 bar date, health plan administrators submitted proofs of claim on behalf of themselves as well as their ASOs in order for those groups to be allowed to file claims. Now, health plans will submit a more detailed consolidated claim with assigned dollar amounts on behalf of itself and their ASOs.

Pursuant to the terms of the Plan, TPP claimants will collectively receive $394 million. Additionally, TPPs will receive a portion of the personal injury claimants’ distribution pursuant to a Lien Resolution Program (“LRP”) established with the personal injury creditor group.

All impaired creditors that filed timely claims, including health plans and their ASOs, can now vote to accept or reject the Plan and agree to release their claims against the Sacklers. The Plan provides for the use of aggregate “Master Ballots” allowing attorneys representing the health plans and their ASOs to submit the votes of multiple claimants through a single ballot. The law firms representing the health plans and their ASOs will submit their votes via the Master Ballot process in advance of the voting deadline. Along with their vote, creditors must also elect whether to grant the Third-Party Releases. Meanwhile, TPP Trust Claim Forms must be completed and submitted in September.

A main element of the Plan is the settlement with the Sackler Families. Members of the Sackler family will pay up to $7 billion in cash to the bankruptcy estate over a period of years in exchange for the consensual release of potential claims of third parties against the Sackler family. Creditors, including health plans and the ASOs that they administer, must grant these releases to be eligible to receive their full claim recovery under the Plan.

The ASO would forfeit 75% of its potential recovery and face a much more difficult process to obtain the remaining 25%. Any TPP, including any ASO with a timely filed master proof of claim filed by an administrator, that does not grant the Third-Party releases will immediately forfeit 75% of its potential recovery from the Plan and be subject to objection by the Debtors and other parties for the remaining 25%. Once an objection is filed, the TPP would be required to establish the Debtors’ liability as if they had filed an ordinary lawsuit and be subject to applicable higher proof thresholds. Objectors will have two years from the Effective Date to file their objections, and so any potential recovery will be delayed for that two-year period. If successful, the TPP will only be able to recover a maximum of 25% of its potential recovery had it granted the releases. If the TPP is unsuccessful in establishing liability, the TPP will be barred from getting any distribution from the TPP Trust.

If you do not file a claim in the bankruptcy, you will not be able to otherwise recover for any claims against Purdue. Under the terms of the Plan, Purdue is contributing 100% of its assets, an expected $900 million, to the bankruptcy to satisfy claims. Upon emerging from bankruptcy, Purdue will be dissolved. The public benefit company that succeeds it will be owned by an independent, newly created foundation. By charter, its core mission will be to abate the opioid crisis and improve public health. The Sacklers will have no role whatsoever in the new company. Purdue as an entity will no longer exist and the new entity will not be liable for any of Purdue’s wrongdoing. Additionally, as a function of the bankruptcy there will be a Plan injunction in place, and any future claims against Purdue will be channeled to the trust and forever barred. As a result, this will be their only opportunity to recover from Purdue for its misconduct. The Sacklers are not in bankruptcy. If you do not grant the Third-Party Releases to the Sacklers, you may still pursue recovery against them, but will need to obtain your own counsel and litigate the matter outside of the bankruptcy, which will be time-consuming and costly. Additionally, you will forfeit any potential recovery from the Sacklers in this bankruptcy.

Because your health plan administrator filed proofs of claim on your behalf before the July 30, 2020 bar date, and your health plan administrator will complete claims for you before the filing deadline, you need do nothing further to receive a recovery. If you do not want to grant the Third Party Releases (which, as explained above, would eliminate your ability to recover from the bankruptcy) you must contact your administrator on or before September 1st, 2025 at 5pm Eastern Time and notify the administrator in writing that you do not want to grant the Third Party Releases. If the administrator does not receive notice from you by that deadline, the administrator will assume that you intend to grant the releases and will record your vote accordingly on the Master Ballot.