 |
AGENDA ITEM REVIEW FORM |
7.F.
Regular City Council Meeting
- Meeting Date:
- 01/10/2024
- Department Head:
- Kay Macuil
- Submitted By:
- Kay Macuil, City Attorney, Attorney's Office
Action Requested:
Motion
Order
Order
ITEM:
Discussion and possible action on any and all matters regarding Order No. 2024-01. An order of the Mayor and City Council of the City of San Luis, Arizona, opting for disbursements of all present and future settlement funds from Yuma County from settlement money in the case titled, In re National Prescription Opiate Litigation: repealing conflicting provisions; and providing for severability. (Kay Marion Macuil, City Attorney)
SUMMARY:
The Case:
In re National Prescription Opiate Litigation, Federal District Court, Northern District of Ohio, Multi-District Litigation
Case No. 2804.
Towns, cities, and counties across the country have sued manufacturers, distributors, and retailers of prescription opiate drugs seeking reimbursement for monies spent addressing the opioid crisis. This lawsuit centralizes the lawsuits into one case. It brings criminal charges against thirteen (13) defendants: Purdue, Cephalon, Endo, Mallinckrodt, Actavis, Janssen, McKesson, Cardinal, AmerisourceBergen, CVS, Rite-Aid, Walgreens, and Walmart for:
In re National Prescription Opiate Litigation, Federal District Court, Northern District of Ohio, Multi-District Litigation
Case No. 2804.
Towns, cities, and counties across the country have sued manufacturers, distributors, and retailers of prescription opiate drugs seeking reimbursement for monies spent addressing the opioid crisis. This lawsuit centralizes the lawsuits into one case. It brings criminal charges against thirteen (13) defendants: Purdue, Cephalon, Endo, Mallinckrodt, Actavis, Janssen, McKesson, Cardinal, AmerisourceBergen, CVS, Rite-Aid, Walgreens, and Walmart for:
- two (2) violations of the Racketeer Influenced and Corrupt Organization (RICO) Act and
- two (2) violations of the Controlled Substances Act (CSA)
By Order No. 2019-10, the City Council determined to be part of the litigation, San Luis is bound to the settlements as they are reached. Not all the defendants have settled, but some have. There is no cost to the litigation. The plaintiffs' attorneys are paid off the top of the settlement before the disbursements to the governments.
Settlement Disbursement Plan
There are approximately 34,459 governments involved. The Court anticipates a lump-sum settlement, of an unknown amount but estimates in the range of $20 billion is possible. The Court accepted plans for disbursement for each of the 50 states. Arizona's Plan was the One Arizona Distribution of Opioid Settlement Funds Agreement, which the City Council adopted by Order No. 2021-10 on October 13, 2021. Under this settlement plan, the sum is based on data on how much our population was affected by the opioid crisis. Under this plan, it was estimated that San Luis would receive in the range of $200,000 over 18 years.
Defendants who have Settled and Settlement Funds for San Luis
The two defendants who have settled and there are funds available for San Luis are Mallinckrodt and Janssen.
Mallinckrodt (develops, manufactures, markets, and distributes pharmaceuticals) created a National Opioid Abatement Trust II ("NOATII) for the governmental creditors in this case. Janssen is a pharmaceutical developer of Johnson & Johnson (this year rebranded Johnson & Johnson Innovative Medicine).
Yuma County has received a $42,845.00 deposit from these two settlements for San Luis. There will also be an interest on this sum which the State Treasurer has not yet deposited with the County in the amount of $736.79.
Yuma County has decided any funds it receives will be used by the Public Health Services District. However, since the Public Health Services District doesn't yet know how many cities will be leaving funds with the County, it does not yet have a plan for the funds.
San Luis Public Safety Use of Funds
The uses for the money under the One Arizona Distribution of Opioid Settlement Funds Agreement are broad. However, the defendants in the national litigation have been challenging the uses of the funds. The Arizona League of Cities and Towns put on a webinar that included a slide with the uses that the defendants have not challenged.
Earlier this year, the San Luis Police and Fire Departments met with the Administration and the City Attorney. Although all involved thought that one of the approved uses (a mobile unit for treatment) would be an excellent use of the funds, the estimated funding would not cover the expense of such a unit.
A couple of the approved uses are already available at no cost. The Fire Department already receives Narcan supplies at no cost. The Police Department already has a program that tracks key opioid indicators at no additional cost.
So, the public safety departments opted for prevention through education for the use of the funds.
Reporting
Reporting on the use of funds is due by July 31 every year to the Attorney General's Office.
The Proposed Order
The proposed order opts for the disbursement of the funds to San Luis.
Settlement Disbursement Plan
There are approximately 34,459 governments involved. The Court anticipates a lump-sum settlement, of an unknown amount but estimates in the range of $20 billion is possible. The Court accepted plans for disbursement for each of the 50 states. Arizona's Plan was the One Arizona Distribution of Opioid Settlement Funds Agreement, which the City Council adopted by Order No. 2021-10 on October 13, 2021. Under this settlement plan, the sum is based on data on how much our population was affected by the opioid crisis. Under this plan, it was estimated that San Luis would receive in the range of $200,000 over 18 years.
Defendants who have Settled and Settlement Funds for San Luis
The two defendants who have settled and there are funds available for San Luis are Mallinckrodt and Janssen.
Mallinckrodt (develops, manufactures, markets, and distributes pharmaceuticals) created a National Opioid Abatement Trust II ("NOATII) for the governmental creditors in this case. Janssen is a pharmaceutical developer of Johnson & Johnson (this year rebranded Johnson & Johnson Innovative Medicine).
Yuma County has received a $42,845.00 deposit from these two settlements for San Luis. There will also be an interest on this sum which the State Treasurer has not yet deposited with the County in the amount of $736.79.
Yuma County has decided any funds it receives will be used by the Public Health Services District. However, since the Public Health Services District doesn't yet know how many cities will be leaving funds with the County, it does not yet have a plan for the funds.
San Luis Public Safety Use of Funds
The uses for the money under the One Arizona Distribution of Opioid Settlement Funds Agreement are broad. However, the defendants in the national litigation have been challenging the uses of the funds. The Arizona League of Cities and Towns put on a webinar that included a slide with the uses that the defendants have not challenged.
Earlier this year, the San Luis Police and Fire Departments met with the Administration and the City Attorney. Although all involved thought that one of the approved uses (a mobile unit for treatment) would be an excellent use of the funds, the estimated funding would not cover the expense of such a unit.
A couple of the approved uses are already available at no cost. The Fire Department already receives Narcan supplies at no cost. The Police Department already has a program that tracks key opioid indicators at no additional cost.
So, the public safety departments opted for prevention through education for the use of the funds.
Reporting
Reporting on the use of funds is due by July 31 every year to the Attorney General's Office.
The Proposed Order
The proposed order opts for the disbursement of the funds to San Luis.
RECOMMENDATION / SUGGESTED MOTION:
I MOVE TO ADOPT AND APPROVE ORDER NO. 2024-01.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- Please see the Fiscal Impact Statement
- CITY/STATE/FEDERAL FUNDS:
- Please see the Fiscal Impact Statement
- TOTAL:
- Please see the Fiscal Impact Statement
- BUDGETED AMOUNT:
- N/A
- AVAILABLE AMOUNT TO TRANSFER:
- N/A
- ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
- N/A
FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):
If the City Council opts to have Yuma County disburse the litigation settlement funds, there will be money available for increasing opioid crisis mitigation efforts.
Currently, the County has $42,845.00 on deposit available to the city. An interest sum is still with the state and will go to Yuma County for disbursement to the city in the amount of $736.79. It is expected that more defendants will settle and more funds will become available. It is uncertain how much money the court will award when the case closes years from now. However, it was estimated that the city's allocation under the One Arizona Opioid Settlement Agreement will be in the range of $200,000 over 18 years. Attorneys for the thousands of governmental entities suing the defendants are paid off the top of the settlement before distributions are calculated, so there is no expense to the city.
Currently, the County has $42,845.00 on deposit available to the city. An interest sum is still with the state and will go to Yuma County for disbursement to the city in the amount of $736.79. It is expected that more defendants will settle and more funds will become available. It is uncertain how much money the court will award when the case closes years from now. However, it was estimated that the city's allocation under the One Arizona Opioid Settlement Agreement will be in the range of $200,000 over 18 years. Attorneys for the thousands of governmental entities suing the defendants are paid off the top of the settlement before distributions are calculated, so there is no expense to the city.
Attachments
- Order No. 2024-01
- Order No. 2019-10 Opiate Litigation
- Order No. 2021-10 One Arizona Agreement
- Slides for One Arizona Agreement
- League Slides on Reporting