Shortly after Philip Seymour Hoffman died suddenly of an apparent heroin overdose, the National Enquirer proclaimed that it had interviewed his best friend, David Bar Katz, who claimed he and Hoffman were "homosexual lovers" and that he watched Hoffman freebase cocaine and take heroin. The only problem with the story is that the tabloid never spoke to Katz at all. So Katz sued. Now, through a settlement between Katz and the National Enquirer, a playwriting prize has been created in memory of Hoffman.
Katz, who discovered Hoffman's body with Hoffman's assistant on February 2, spoke to the NY Times, and said he heard about the Enquirer's supposed scoop from one of his sons: "My 14-year-old said, ‘Dad, there’s something online about you and Phil being lovers.' I said, ‘Phil would get a kick out of that.’"
He admitted, "Things had already achieved the maximum level of surreality, and I thought this thing online was a big nothing." But then, Katz said on CNN today, "This is now becoming this story and I was being chased by photographers and it became a thing where I unfortunately had to deal with in the midst of dealing with more important things. And that's when—luckily I was friends with someone that's the kind of person that handles this sort of thing. And we did the lawsuit and forced the 'Enquirer' to admit that they totally screwed up. "

Katz shared a photograph of himself and Hoffman at the Waverly Diner with the Times (above); he said, "The issue was never me being outraged at being accused of being gay — we’re theater guys, who cares? The issue was lying about the drugs, that I would betray my friend by telling confidences."
Katz sued the National Enquirer for $5 million in damages and another $45 million in punitive damages. The Enquirer withdrew the story days later. From the NY Times:
Here's the full adAnd on Tuesday, less than three weeks after the article was published, Mr. Katz said he had formed the American Playwriting Foundation, which will give out an annual prize of $45,000 for an unproduced play. In honor of Mr. Hoffman’s dogged pursuit of artistic truth, it will be called the Relentless Award.
The foundation and the prize are being paid for by The Enquirer and its publisher, American Media Incorporated, under a settlement of the lawsuit, said Judd Burstein, the lawyer for Mr. Katz. As part of the agreement, The Enquirer has also bought a full-page advertisement in the main news section of The New York Times on Wednesday. In it, The Enquirer says it was duped by a person claiming to be the same Mr. Katz. Mr. Burstein provided the text of the ad.
The amount of money being paid by The Enquirer will not be disclosed, Mr. Burstein said, adding, “It’s enough for the foundation to give out these grants for years to come.” On Tuesday, he formally filed papers to dismiss the lawsuit.
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Katz said on CNN, "Well, you know, through this process, and you and I were just discussing it on the break, I'm constantly dealing with what would Phil want? How -- you know, Phil's voice in my head. And so how can I do something out of this that he would like? And Phil loved theater and loved playwrights and loved plays, so creating a foundation that is dedicated to his spirit, and an award that allows plays to be written that wouldn't maybe otherwise be written because it gives playwrights, that are generally a disenfranchised group, some money so they can focus on writing." He also discussed Hoffman's battle of addiction and the taxing toll of acting:
As for how the National Enquirer royally messed up, Katz' lawyer Judd Burstein explained to the Times that the NE team did a search for David Katz and thought they found the one who was a playwright who was friends with Hoffman, "They asked, ‘Are you the David Katz who is the playwright?’ They believed him. He sounded distraught. They couldn’t believe that someone would be so callous to say, ‘I’m the real David Katz.’ From what I understand, it was one senior reporter who worked on it with some researchers. The reporter did the interview and was convinced it was the right person." Burstein added that he wants to sue the guy who claimed he was David Katz, "My goal is to have him living out of a cardboard box."