NEW YORK — West Virginia Attorney General Patrick Morrisey argued for greater accountability and more resources for West Virginia in closing arguments at Purdue Pharma’s bankruptcy hearing.
According to Morrisey's office, the bankruptcy judge in U.S. Bankruptcy Court for the Southern District of New York focused on what Morrisey's argument referred to as the “California Carve Out,” which involves an exclusion in the multistate allocation plan that allows California to be the only state not to contribute to an intensity fund designed to allocate additional funds to smaller states hardest hit by the opioid epidemic including West Virginia.
The AG's office said the judge expressed concern in citing bankruptcy law that requires the plan provide the same treatment for each claim or interest of a particular class.
“The allocation formula, coupled with the California cash grab, fails to recognize the disproportionate harm inflicted by opioids upon West Virginia," Morrisey said. “I continue to press every legal lever I can to see fair distribution of recoveries in the opioid litigation and that California does not get more than it deserves at the expense of other states like mine.”
Morrisey's office already had introduced evidence and expert testimony. Morrisey personally gave closing arguments August 25.
In April, Morrisey filed his objection, saying Purdue’s failure to disclose how its multibillion-dollar proposal would be split among states undermined its desire to avoid court challenges to an inequitable arrangement.
Purdue Pharma responded by disclosing publicly the Denver Plan, which Morrisey opposes since it would distribute settlement funds largely based on population – not intensity of the problem.
Morrisey, with expressed support from 18 counties and 64 municipalities as well as pledged support from dozens of others, forced Purdue Pharma to disclose how its bankruptcy Denver Plan would shortchange West Virginia. Morrisey's objection claimed Purdue’s failure to disclose how its multibillion-dollar proposal would be split among states undermined its desire to avoid court challenges to an inherently inequitable arrangement.
Morrisey's office filed suit against Purdue Pharma and former chief executive Richard Sackler in May 2019. The lawsuit alleges Purdue Pharma created a false narrative to convince prescribers that opioids are not addictive and that its opioid products were safer than they actually were.
The lawsuit contends Purdue Pharma proliferated a deceptive marketing strategy with reckless disregard for compliance enforcement. It also alleges company sales representatives routinely claimed OxyContin had no dose ceiling, despite assertions by federal regulators that OxyContin’s dose ceiling was evident by adverse reactions.
The lawsuit marked West Virginia’s second against Purdue Pharma. The first, filed in 2001, resulted in a $10 million settlement in 2004. However, that case involved an earlier version of the opioid than the reformulated, so-called tamper-resistant OxyContin that debuted in 2010.
The $7 billion proposal represents a combining of company assets and a guaranteed $4.275 billion from the Sackler family, a contribution of nearly 50 percent more than the family’s offer from two years ago. The bankruptcy plan also removes the Sackler family’s control and ownership of Purdue Pharma, effectively barring them from any future involvement in opioid sales in the United States.
The bankruptcy plan says assets from Purdue Pharma will be transferred to a new company that will emerge from the bankruptcy with an independent board of directors and oversight by a court-appointed monitor.
Morrisey has argued that an allocation plan based upon population – with only minimal consideration given to the intensity of the addiction epidemic – will render the broader bankruptcy plan unconfirmable since it would fail to account in any meaningful way for the great disparities in intensity of opioid addiction and opioid death that exist between the states.