On April 14, 2023, Reid Collins & Tsai LLP, representing the Insys Liquidation Trust, announced a $175 million settlement agreement with certain former directors of Insys Therapeutics, Inc. partially resolving civil litigation arising from the company’s bankruptcy case.

Insys, a former public company, marketed and sold a highly addictive and inherently dangerous fentanyl spray to millions of people. The Trust, as the successor to Insys, alleges in its lawsuit that the company’s executives engaged in a multi-faceted unlawful scheme involving off-label marketing of the drug (non-FDA approved uses), titration of drug dosages (higher than FDA-approved doses), and payment of bribes and other kickbacks to doctors who prescribed the drug.

Due to the alleged misconduct, Insys and its executives became the target of multiple criminal proceedings, class actions, and other civil cases, as well as intense media scrutiny, including an HBO documentary and feature stories on 60 Minutes, Frontline, and NBC News. Ultimately, several of the company’s executives were convicted of racketeering charges, and the company agreed to a $225 million settlement with the federal government before collapsing into bankruptcy.

The Trust, as the successor to Insys in its bankruptcy action, then brought a lawsuit against the former directors of the company, alleging that their failures of oversight enabled this unlawful sales and marketing scheme. The Trust has settled its claims with the company’s former outside directors— Patrick Fourteau, Pierre Lapalme, Steven Meyer, and Brian Tambi. The settlement includes a $175 million judgment against these former directors, a partial payment from their personal assets, and assignment of their claims to recover the balance from XL Specialty Insurance Company and other insurers that issued D&O policies to Insys and its directors.

Reid Collins partner Eric D. Madden, who leads the prosecution of the lawsuit, on the settlement’s significance: “The alleged misconduct by defendants in this case contributed to the opioid crisis in this country and the demise of the company. The $175 million settlement, a substantial portion of the damages sought by the Trust, is an excellent result for the company’s creditors, the culmination of hard-fought litigation and extensive negotiations, and comprised in part from personal assets of the defendants.”

Madden further stated: “This settlement is also noteworthy as a successful resolution of a Caremark claim, which Delaware courts have described as ‘possibly the most difficult theory in corporation law upon which a plaintiff might hope to win a judgment.’”

Reid Collins was retained as special litigation counsel to investigate and pursue claims on behalf of the Trust in early 2021, after an extensive interview process. The Insys bankruptcy case is captioned In re Insys Therapeutics, Inc., No. 19-11292 (Bankr. D. Del.), and the Trust’s lawsuit is captioned Henrich v. Kapoor, et al., C.A. No. 12696-JTL (Del. Ch.). The Trust’s claims in that lawsuit remain pending against John Kapoor and Michael Babich, the company’s former Chairman and CEO, who were convicted on racketeering charges.

Click here to view the motion to approve the settlement.

Press coverage:

Ex-Insys Directors Agree To $175M Ch. 11 Settlement (Law360)

Ex-Insys Directors Agree to $175 Million Opioid-Sale Accord (Bloomberg Law)

Bankruptcy Trust Reaches $175M Settlement With Insys Board of Directors (

Prior results do not guarantee a similar outcome.