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Attorney General Morrisey Argues in Purdue Pharma Bankruptcy Case

CHARLESTON — Attorney General Patrick Morrisey pushed Wednesday for greater accountability and more resources for West Virginia in closing arguments at Purdue Pharma’s bankruptcy hearing.

The bankruptcy judge focused particular attention on what the Attorney General’s argument referred to as the “California Carve Out”. It 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 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,” Attorney General 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.”

The confirmation hearing began earlier this month in the U.S. Bankruptcy Court for the Southern District of New York.

The West Virginia Attorney General’s Office had already introduced evidence and expert testimony. The Attorney General then gave closing arguments Wednesday.

In April, the Attorney General filed his objection in U.S. Bankruptcy Court for the Southern District of New York, arguing that 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.

Purdue Pharma responded by disclosing publicly the once-closely held Denver Plan, which the Attorney General opposes since it would distribute settlement funds largely based on population – not intensity of the problem.
Attorney General Morrisey 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 that 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 Purdue matter is one of the West Virginia Attorney General’s pending lawsuits against five opioid manufacturers and other national chain distributors.