Deal Flow

On a scale of 0 to 10, how much pain has the Sackler family inflicted?

Rhode Island may find itself in a unique legal position regarding efforts to hold Purdue Pharma accountable for its actions

Photo by Richard Asinof

An image of a documentary produced by HBO, which had its world premier at Brown University in 2017.

By Richard Asinof
Posted 10/7/19
The legal attempts to hold Purdue Pharma and its owners, the Sackler family, accountable for their role in the opioid addiction and overdose crisis may present Rhode Island with some intriguing legal opportunities.
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Tom Coderre, who joined Gov. Raimondo’s staff as a senior advisor in January of 2018, has accepted the job as Region One Administrator for the Substance Abuse and Mental Health Services Administration [SAMHSA], serving as the point person for federal policy in New England, working out of the office in Boston.
Deb Dettor has left her position as director at the Anchor Recovery Community Center.
RICARES recently began publishing a digital newsletter sharing information happening on a state, local, regional and national basis.
In an age when cultural competency is considered an important attribute in improving the delivery of health care, particularly around mental health and behavioral health issues, the decision not to reschedule this week’s meeting of the Governor’s Task Force on Overdose Prevention and Intervention, to be held on this Wednesday on Yom Kippur, may require some further discussion.

PROVIDENCE – The legal twists and turns in the attempts to hold the manufacturers and distributors accountable for their role in creating and perpetuating the epidemic of addiction and overdose deaths related to opioid prescription painkillers continue to play out in numerous courtroom dramas across the nation.

In Oklahoma, at the end of August, a judge found Johnson & Johnson liable for damages in causing the state’s opioid epidemic and ordered the pharmaceutical giant to pay $572 million to help fix the problems. The firm is appealing the verdict.

A month later, on Oct. 1, perhaps influenced by the Oklahoma verdict, Johnson & Johnson settled a lawsuit brought by two Ohio counties for $20.4 million, without admitting to any liability. The decision to settle came less than three weeks before the scheduled start of the trial in federal court on Oct. 15 involving more than 2,600 plaintiffs, removing Johnson & Johnson as a defendant.

Sacklers on trial
Meanwhile, the family behind the privately held Purdue Pharma, the Sacklers, who built a fortune worth billions on the manufacture and marketing of OxyContin, is also at the center of a series of wranglings to limit their financial legal liability.

In September, the Sacklers proposed a settlement in the current pending consolidated lawsuit in Cleveland federal district court, offering to pay upward of $3 billion to settle all the claims against them and Purdue Pharma.

When the proposed settlement was announced, R.I. Attorney General Peter Neronha said he was opposed to the deal.

“Far too many lives have been lost or devastated in Rhode Island as a result of the opioid crisis,” Neronha wrote in a prepared statement. “We have not agreed to the proposed settlement framework with Purdue Pharma,” he continued. “Before we could responsibly reach any agreement, we would need much more information about the financial holdings of Purdue Pharma and the Sacklers to be confident that this resolution adequately compensates Rhode Island and, equally as important, holds the company and its owners accountable for the enormous destruction they have caused.”

Neronha said that his office was committed to aggressively pursuing claims against Purdue Pharma and the Sacklers.

Because Rhode Island is home to a manufacturing facility originally affiliated with Purdue Pharma, Rhodes Technologies in Coventry, which in 2017 reportedly produced as much as 750 tons a year of the raw ingredient used in Purdue Pharma’s prescription painkillers, the legal remedies available to Rhode Island seeking financial restitution for damages could provide some intriguing options. [See link below to ConvergenceRI story, “What you do not know may kill you, when it comes to painkillers.”]

ConvergenceRI plans to pursue these questions in an upcoming rescheduled interview with R.I. Attorney General Peter Neronha, originally to have been conducted on Oct. 2.

Two-pronged legal strategy
At the same time that the Sacklers offered to settle the pending lawsuit in federal court in Cleveland, it also filed for bankruptcy for Purdue Pharma, seeking protection for the firm and the potential costs of lawsuits. In proceedings being argued before a bankruptcy court in White Plains, N.Y., attorneys representing the Sacklers asked that the bankruptcy judge delay the start of the pending trial in Cleveland by nine months as a result of the bankruptcy filing.

[What is the joke about the definition of chutzpah? The person who asks for leniency from the judge because he is an orphan, after being charged with killing his mother and father.]

On Friday, Oct. 4, 24 states and the District of Columbia sought to block the Sackler family from winning a nine-month reprieve against OxyContin lawsuits, filing a joint motion in U.S. Bankruptcy Court in White Plains, N.Y.

Purdue Pharma had asked the bankruptcy court to temporarily halt litigation against its Sackler family owners, a step that the company said is necessary to allow progress on a tentative $3 billion settlement with more than 2,600 plaintiffs who have accused Purdue of deceptively marketing its blockbuster opioid pain pill.

States opposing the settlement strongly objected in a joint motion filed Friday in U.S. Bankruptcy Court in White Plains, N.Y.

“The Sacklers used the profits from their illegal scheme to become one of the richest families in the world — far wealthier than the company they ran,’’ the states said in their brief, as reported by Christopher Rowland of The Washington Post. “Now, the Sacklers seek to leverage Purdue’s corporate bankruptcy to avoid their own individual accountability.’’

In their legal brief, the states cited deposition testimony accusing the Sackler family of taking between $12 billion to $13 billion cash out of Purdue Pharma, compared to the proposed $3 billion contribution offered in the settlement.

“The Sacklers want the bankruptcy court to stop our lawsuits so they can keep the billions of dollars they pocketed from OxyContin and walk away without ever being held accountable. That’s unacceptable,’’ Maura Healey, the Massachusetts attorney general, said in a statement, as reported in Rowland’s story.

In previous court filings, based on its analysis of Purdue financial records, Massachusetts claimed that the Sackler family took some $4 billion out of Purdue from 2008 to 2016, as reported in Rowland’s story. In turn, Oregon, based on its own analysis of Purdue records, has said that the number was $11 billion from 2008 to 2018.

“The Sackler family is trying to take advantage of the fact that they’ve extracted nearly all the money out of Purdue and pushed the carcass of the company into bankruptcy,’’ said North Carolina Attorney General Josh Stein, as reported by Rowland. “That’s unacceptable. Multibillionaires are the opposite of bankrupt.’’

A big question for Rhode Island to answer, moving forward, is this: Was the recent change in corporate ownership of Rhodes Technologies in Coventry related to an effort by the Sacklers to shield its family assets from potential legal liabilities?

Other storms on the legal front
Another potential legal storm that could impact Rhode Island is the Oct. 2 decision by U.S. District Court Judge Gerald McHugh in Philadelphia that a nonprofit group’s plan to open the first site in the U.S. where people can use illegal opioids under medical supervision does not violate federal drug laws.

“The ultimate goal of Safehouse’s proposed operation is to reduce drug use, not facilitate it,” McHugh wrote in his decision, which represents the first legal decision about whether supervised injection sites can be legally permissible under U.S. law, as reported by Bobby Allyn for NPR.

The potential to create so-called safe injection sites is actively being considered by cities such as New York, Denver and Seattle, based upon models that exist in Europe and Canada. Rhode Island has had a number of public forums discussing the potential for the creation of a such a safe injection site, but the straetgy is currently not included as part of the harm reduction plan articulated by the Governor’s Task Force on Overdose Prevention and Intervention.

What role, if any, the Rhode Island Attorney General’s office would play in supporting or opposing plans to develop a similar safe injection facility in the state, based upon the Philadelphia model, is another question that ConvergenceRI plans to ask R.I. Attorney General Peter Neronha.

Medicaid rates
It may not yet rise to the level of an issue that would involve the R.I. Attorney General’s office, but the low rates of reimbursement paid for by the R.I. Medicaid office for behavioral health and mental health services as well as residential treatment services, an issue frequently brought up during public comments at the Governor’s Task Force on Overdose Prevention and Intervention, may warrant an investigation by the Attorney General’s staff regarding discriminatory practices, despite legal requirements of parity established by the R.I. General Assembly.

To help remedy the current situation of alleged problematic poor Medicaid rates paid for behavioral and mental health services, the state of Rhode Island has retained an independent research/health care actuarial firm to determine what are appropriate market rates for certain behavioral health care services, involving about a dozen such services, according to sources.

In that context, the most recent statewide community health needs assessment conducted by the Hospital Association of Rhode Island found that the top three needs identified by its member hospitals were maternal and child health, behavioral health [emphasis added] and chronic disease.

Similarly, an analysis conducted by the chief medical officer at the R.I. Department of Behavioral Healthcare, Developmental Disabilities and Hospitals found that there is large gap in the way that mental health and behavioral health issues were treated in conjunction with substance use disorders, with only 6 percent of all cases being treated holistically.

More than an actuarial accounting of the problematic low rates paid by the R.I. Mediciad office for behavioral and mental health services, would the threat of legal action prompt an increase in rates? Another question ConvergenceRI plans to ask R.I. Attorney General Peter Neronha at the rescheduled interview.


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