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 U.S. Justice Department officials outlined additional details of
their ongoing investigations of the company, controlled by the
wealthy Sackler family, in paperwork filed last week with a federal
bankruptcy court in White Plains, N.Y., which has not yet become
public, the people said.
As with other Purdue creditors, the Justice Department had to meet a
July 30 deadline to assert financial claims against the company. The
initial claims seek about $10 billion in criminal penalties,
consisting of a fine exceeding $6 billion and a forfeiture of more
than $3 billion, as well as a civil penalty of nearly $3 billion,
one of the people said.
The size of the claims represent the upper limit of penalties
federal prosecutors might seek, and the ultimate sums paid to
resolve the investigations are likely to be far lower, the people
said.
The Justice Department is among thousands of creditors vying to
extract money from Purdue, which has a liquidation value of only a
bit more than $2 billion. Purdue has offered to settle widespread
opioid litigation in a deal it values at more than $10 billion.
That includes $3 billion from the Sacklers and value derived from
the Stamford, Connecticut-based firm transforming into a public
benefit company run on behalf of plaintiffs that would donate
addiction treatment drugs and opioid overdose-reversal medications
under development.
Purdue filed for bankruptcy protection nearly a year ago and
received court approval to halt more than 2,600 lawsuits brought by
cities, counties, states, hospitals and other plaintiffs alleging
the company and the Sacklers were major contributors to the U.S.
opioid epidemic. The company and family have denied the allegations.
As part of the criminal probe, Justice Department officials are
scrutinizing Purdue's alleged encouragement of illegal opioid
prescriptions, some of the people said. U.S. prosecutors are focused
on possible conspiracy charges and alleged violations of
anti-kickback and drug safety laws, they said.
A separate civil investigation is focused in part on the company's
alleged defrauding of government healthcare programs such as
Medicare, one of the people said.
Justice Department officials and lawyers for the company and family
have held discussions about resolving the probes and details,
including the size of any financial penalties prosecutors might
seek, could change, the people said.
Neither Purdue nor the Sacklers have currently been charged with
criminal wrongdoing or civil violations in the Justice Department
investigations, and federal prosecutors have not yet decided whether
to bring cases, they said.
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Purdue said it is cooperating with the Justice Department probes and in
discussions to resolve them, but declined to comment further. A lawyer for the
Raymond Sackler family said the family acted ethically and responsibly at all
times, but declined to comment on the Justice Department's filings.
Representatives for another group of Sacklers had no immediate comment.
A Justice Department spokeswoman declined to comment.
Purdue has been in the Justice Department's crosshairs before, when the company
and three executives pleaded guilty in 2007 to charges of misbranding OxyContin
to resolve a case that also included more than $600 million in penalties.
The Justice Department's current claims could significantly affect ongoing
settlement discussions among Purdue, the Sacklers, and thousands of U.S.
communities that have sued the company and family. Plaintiffs are seeking
billions of dollars in damages to address harm from opioids.
Resolving the Justice Department probes is a condition of Purdue's proposed
settlement, and penalties U.S. officials seek could affect how much money
plaintiffs receive to address a public health crisis that claimed the lives of
nearly 450,000 people between 1999 and 2018, according to the latest U.S. data.
The lawsuits against Purdue and, in some cases, the Sacklers allege they
aggressively marketed prescription painkillers while misleading doctors and
patients about their addiction and overdose risks.
Purdue has said U.S. Food and Drug Administration-approved labels for the
company's opioids carried warnings about risk and abuse associated with treating
pain. Purdue and the Sacklers have denied allegations in lawsuits that they
contributed to the opioid crisis, and have pointed to heroin and fentanyl as
more significant culprits than prescription painkillers.
Health experts have said many people turned to drugs like heroin only after
first becoming addicted to prescription opioids.
More than 20 states led by Massachusetts, New York and Connecticut initially
objected to the settlement proposal from Purdue and the Sacklers, wanting a
larger contribution from the family and more details on their finances.
Plaintiffs are currently involved in discussions overseen by court-appointed
mediators about how to allocate settlement proceeds.
(Reporting by Mike Spector; Additional reporting by Jessica DiNapoli in New
York, Nate Raymond in Boston and Chris Prentice in Washington.; Editing by Bill
Berkrot)
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