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Court approves Bates White client Mallinckrodt’s settlements and restructuring plan

Latham & Watkins retained Bates White in the Mallinckrodt Chapter 11 bankruptcy on behalf of the debtors. Mallinckrodt manufactures Acthar Gel, as well as generic and branded forms of opioids and other products. In addition to being subject to opioid multidistrict litigation, Mallinckrodt was alleged to have engaged in false claims by updating its base Average Manufacturer Price, resulting in an underpayment of $650 million in Medicaid rebates for Acthar Gel.

Bates White submitted a report explaining that, given other settlements to resolve the opioid claims and the fact that the company was asset-constrained, its $1.6 billion settlement to resolve these claims is within a reasonable range. A second Bates White report explained that Mallinckrodt faced a credible threat of federal healthcare program exclusion had the company not resolved its federal Acthar Gel false claims allegations for $260 million before filing for bankruptcy, and subsequent testimony explained the reasonableness of that settlement between the Department of Justice and Mallinckrodt to resolve False Claims Act allegations related to Mallinckrodt's Acthar Gel.

The US Bankruptcy Court in Wilmington, Delaware, approved Mallinckrodt’s $1.7 billion opioid settlement, its $260 million settlement to resolve false claims related to its Acthar Gel product, and its restructuring plan.

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