HomeMy WebLinkAboutAgenda - 03-07-2023; 8-k - Opioid Litigation Supplemental Agreement for Additional Funds 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: March 7, 2023
Action Agenda
Item No. 8-k
SUBJECT: Opioid Litigation Supplemental Agreement for Additional Funds
DEPARTMENT: County Attorney
ATTACHMENT(S): INFORMATION CONTACT:
Supplemental Agreement for Additional Funds John Roberts, County Attorney, 245-
Resolution 2318
Letter from Attorney General Josh Stein
PURPOSE: To amend a Memorandum of Agreement (MOA) with the State of North Carolina
regarding the disbursement of settlement funds related to the national opioid litigation by
entering a Supplemental Agreement for Additional Funds (SAAF).
BACKGROUND: In 2018 the Board of Commissioners authorized Orange County's participation
in national litigation related to the nationwide opioid epidemic. In 2021 the Board of
Commissioners entered the MOA with the State related to the disbursement of funds.
The national litigation has resulted in a $26 billion settlement with the four largest corporate
defendants, with $750 million going to North Carolina of which Orange County is receiving up to
$6.8 million. There have also been several bankruptcies resulting in funds going to North
Carolina of which Orange County also receives a share. The purpose of entering the SAAF is to
authorize the entry into a settlement with five additional defendants; CVS, Walgreens, Walmart,
Allergan, and Teva; and to ensure the resulting funds are subject to the MOA. The Board of
Commissioners previously authorized accepting the terms of this additional settlement, which
will result in up to $600 million coming to North Carolina of which Orange County will receive up
to $5.4 million.
Funds received pursuant to the litigation are subject to the terms of the MOA and the
expenditure of those funds is generally limited to opioid impact mitigation.
FINANCIAL IMPACT: As noted above, adopting the SAAF could result in up to $600 million
dollars coming to the State of North Carolina of which up to $5.4 million will be disbursed to
Orange County.
SOCIAL JUSTICE IMPACT: The following Orange County Social Justice Goal is applicable to
this item:
• GOAL: CREATE A SAFE COMMUNITY
The reduction of risks from vehicle/traffic accidents, childhood and senior injuries, gang
activity, substance abuse and domestic violence.
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ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal
impact associated with this item.
RECOMMENDATION(S): The County Attorney recommends the Board consider and enter the
SAAF, and adopt and authorize the Chair to sign the attached resolution.
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Supplemental Agreement for Additional Funds
From Additional Settlements of Opioid Litigation
I. PURPOSE
The purpose of this Supplemental Agreement for Additional Funds ("SAAF") is to
direct Additional Funds from Additional Settlements of opioid litigation to the state
of North Carolina and local governments in a manner consistent with the
Memorandum of Agreement ("MOA") Between the State of North Carolina and
Local Governments on Proceeds Relating to the Settlement of Opioid Litigation that
has governed the distribution of Opioid Settlement Funds to the State and its Local
Governments since May 2022.
This SAAF does not change the scope or meaning of the MOA with respect to Opioid
Settlement Funds governed by the MOA. Instead, this SAAF applies the terms of
the MOA— with certain clarifications noted below —to the Additional Settlements
and Additional Funds described below.
II. SCOPE
A. Scope of the MOA. Under the terms of the MOA, the MOA governs Opioid
Settlement Funds from:
1. The National Settlement Agreement with the drug distributors
Cardinal, McKesson, and AmerisourceBergen and the drug maker
Johnson & Johnson and its subsidiary Janssen Pharmaceuticals; and
2. The Bankruptcy Resolution with Mallinckrodt; any Bankruptcy
Resolution with Purdue; and any other Bankruptcy Resolution as the
term "Bankruptcy Resolution" is defined in the MOA.
B. Scope of this SAAF. This SAAF governs Additional Funds from the
Additional Settlements with Additional Settling Defendants Walmart, Inc.,
Teva Pharmaceutical Industries Ltd., Allergan Finance, LLC, Allergan
Limited, CVS Health Corporation, CVS Pharmacy, Inc., and Walgreen Co., as
well as their subsidiaries, affiliates, officers, and directors named in the
Additional Settlements.
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III. APPLICATION OF THE MOA TO ADDITIONAL SETTLEMENTS
AND FUNDS
The MOA, which is incorporated herein by reference, governs Additional
Settlements and Additional Funds in every respect, except as set forth hereinbelow.
In the event of any conflict between the MOA and this SAAF, with respect to
Additional Settlements and Additional Funds, the provisions of this SAAF shall
take precedence.
A. Definitions.
1. The definitions used in the MOA are incorporated by reference into
this SAAF.
2. "Additional Funds" shall mean all funds allocated by the Additional
Settlements to the State or Local Governments for purposes of opioid
remediation activities, as well as any repayment of those funds and
any interest or investment earnings that may accrue as those funds
are temporarily held before being expended on opioid remediation
strategies. Not included are funds made available in Additional
Settlements for the payment of the Parties' litigation expenses or the
reimbursement of the United States Government.
3. "Additional Settlements" means a national opioid settlement
agreement with the Parties and one or more of the Additional Settling
Defendants concerning alleged misconduct in manufacture, marketing,
promotion, distribution, or dispensing of an opioid analgesic.
4. "Additional Settling Defendants" means the defendants listed in
section II.B of this SAAF.
5. "Local Counsel" means legal counsel and law firms who have a
principal office in North Carolina and represented one or more North
Carolina counties and municipalities in litigation against one or more
Additional Settling Defendant concerning opioids.
6. "National Counsel" means legal counsel and law firms who have a
principal office outside of North Carolina and represented various
North Carolina counties and municipalities in litigation against one or
more Settling Defendant or Additional Settling Defendant concerning
opioids.
7. "Required Local Governments" means all North Carolina counties and
municipalities that have filed litigation against any of the Settling
Defendants or Additional Settling Defendants.
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B. Allocation of Additional Funds
1. Method of distribution. Pursuant to any Additional Settlements,
Additional Funds shall be distributed directly to the State, Local
Governments, and Local Counsel for such uses as set forth in the MOA
and this SAAF, provided Opioid Settlement Funds shall not be
considered funds of the State, any Local Governments, or any Local
Counsel unless and until such time as each distribution is made.
2. Overall allocation of funds. Additional Funds shall be allocated as
follows with respect to each payment from the Additional Settling
Defendants: (i) 15% directly to the State ("State Additional Abatement
Fund"), (ii) 84.62% to abatement funds established by Local
Governments ("Local Additional Abatement Funds"), and (iii) 0.38% to
a Local Counsel Fee Fund described in section IV of this SAAR
3. The allocation of Local Additional Abatement Funds between Local
Governments shall be as described in MOA section B.3. However, to
the extent required by the terms of an Additional Settlement, the
proportions set forth in MOA Exhibit G shall be adjusted: (i) to provide
no payment from an Additional Settlement to any listed county or
municipality that does not participate in the Additional Settlement;
and (ii) to provide a reduced payment from an Additional Settlement to
any listed county or municipality that signs onto the Additional
Settlement after the deadline specified by the Additional Settlement.
4. Municipal allocations of Local Additional Abatement Funds shall be as
described in MOA section B.4. Consistent with the manner in which
MOA section B.4.b has been interpreted by the parties to the MOA
with respect to Opioid Settlement Funds, a municipality that directs
Local Additional Abatement Funds to the county or counties in which
it is located pursuant to MOA section B.4 shall be relieved of any
reporting or other obligations under the MOA with respect to the
redirected funds.
5. The use of Additional Funds for opioid remediation activities shall be
as described in MOA section B.S.
6. All Parties acknowledge and agree the Additional Settlements will
require a Local Government to release all its claims against the
Additional Settling Defendants to receive Additional Funds. All Parties
further acknowledge and agree based on the terms of the Additional
Settlements, a Local Government may receive funds through this
SAAF only after complying with all requirements set forth in the
Additional Agreements to release its claims.
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C. Payment of Litigating and Non-Litigating Parties
No party engaged in litigating the MDL Matter shall receive a smaller
payment than a similarly situated non-litigating Party, other than as
based on the Allocation Proportions in MOA Exhibit G.
D. Special Revenue Fund
Every Local Government receiving Additional Funds shall either (1)
deposit the Additional Funds in the special revenue fund that the
Local Government created for Opioid Settlement Funds pursuant to
MOA section DA or (2) create a separate special revenue fund as
described in MOA section D.1 that is designated for the receipt and
expenditure of the Additional Funds. In either case, every Local
Government receiving Additional Funds shall abide by MOA section D
and other relevant provisions of the MOA with respect to the
Additional Funds in the special revenue fund.
E. Opioid Remediation Activities
1. Local Governments shall expend Additional Funds according to the
requirements for Opioid Settlement Funds stated in MOA section E.
2. The coordination group established by MOA section E.7 and described
in MOA Exhibit D shall have the same responsibilities with respect to
remediation activities funded by Additional Funds and related
requirements and procedures that it has with respect to the Opioid
Settlement Funds covered by the MOA.
F. Auditing, Compliance, Reporting, and Accountability
1. The Auditing, Compliance, Reporting, and Accountability provisions
stated in MOA section F shall apply to Additional Funds in the way
they apply to Opioid Settlement Funds.
2. The coordination group established by MOA section E.7 and described
in MOA Exhibit D shall have the same responsibilities with respect to
auditing, compliance, reporting, and accountability provisions relating
to Additional Funds that it has with respect to the Opioid Settlement
Funds covered by the MOA.
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G. Effectiveness
1. When this SAAF takes effect. This SAAF shall become effective at the
time a sufficient number of Local Governments have joined the SAAF
to qualify the SAAF as a State-Subdivision Agreement under the
Additional Settlements. If this SAAF does not thereby qualify as a
State-Subdivision Agreement, this SAAF will have no effect.
2. Amendments to the SAAR
a. Amendments to conform to final national documents. The
Attorney General, with the consent of a majority vote from a
group of Local Government attorneys appointed by the
Association of County Commissioners, may initiate a process
to amend this SAAF to make any changes required by the final
provisions of the Additional Settlements. The Attorney
General's Office will provide written notice of the necessary
amendments to all the previously joining parties. Any
previously joining party will have a two-week opportunity to
withdraw from the SAAR The amendments will be effective to
any party that does not withdraw.
b. Coordination group. The coordination group may make the
changes to the SAAF described and authorized in MOA
Exhibit D.
c. No amendments to allocation between Local Governments.
Notwithstanding any other provision of this SAAF, the
allocation proportions set forth in MOA Exhibit G may not be
amended.
d. General amendment power. After execution, the coordination
group may propose other amendments to the SAAF, subject to
the limitation in Section G.2.c of this SAAR Such
amendments will take effect only if approved in writing by the
Attorney General and at least two-thirds of the Local
Governments who are Parties to this SAAR In the vote, each
Local Government Party will have a number of votes measured
by the allocation proportions set forth in MOA Exhibit G.
3. Acknowledgement. The Parties acknowledge this SAAF is an effective
and fair way to address the needs arising from the public health crisis
due to the misconduct committed by the Pharmaceutical Supply Chain
Participants.
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4. When SAAF is no longer in effect. This SAAF is effective until one
year after the last date on which any (a) Opioid Settlement Funds are
being spent by Local Governments pursuant to the National
Settlement Agreement and any Bankruptcy Resolution or (b)
Additional Funds are being spent by Local Governments pursuant to
the Additional Settlements.
5. Application of SAAF to settlements. This SAAF applies to the
Additional Settlements.
6. Applicable law and venue. Unless required otherwise by the
Additional Settlements, this MOA shall be interpreted using North
Carolina law and any action related to the provisions of this SAAF
must be adjudicated by the Superior Court of Wake County. If any
provision of this SAAF is held invalid by any court of competent
jurisdiction, this invalidity does not affect any other provision which
can be given effect without the invalid provision.
7. Scope of this SAAF. The Parties acknowledge this SAAF does not
excuse any requirements placed upon them by the terms of the
Additional Settlements, except to the extent those terms allow for a
State-Subdivision Agreement to do so.
8. No third party beneficiaries. No person or entity is intended to be a
third party beneficiary of this SAAF.
9. No effect on authority of parties. Nothing in this SAAF shall be
construed to affect or constrain the authority of the Parties under law.
10.Signing and execution of this SAAF. This SAAF may be signed and
executed simultaneously in any number of counterparts, each of which
shall be deemed an original, but all of which together shall constitute
one and the same agreement. A signature transmitted by facsimile,
electronic image, or DocuSign shall be deemed an original signature for
purposes of executing this SAAF. Each person signing this SAAF
represents he or she is fully authorized to enter into the terms and
conditions of, and to execute, this SAAF, and all necessary approvals
and conditions precedent to execution have been satisfied.
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IV. LOCAL COUNSEL FEE FUND
Local Counsel have reviewed the Additional Settlements, find them to be equitable,
and recommend their clients execute these Additional Settlements and this SAAF.
If(1) all Local Counsel sign this SAAF whereby they consent to the terms of this
SAAF and agree to be legally bound by this SAAF, including but not limited to Section
IV of this SAAF, and (2) all Required Local Governments agree on or before April 18,
2023 to dismiss all litigation against the Additional Settling Defendants as required
by the Additional Settlements, then each Local Counsel shall be entitled to receive a
portion of the Local Counsel Fee Fund for the Additional Settlements, in such
proportions as set forth below. If one or more Required Local Governments does not
dismiss litigation as required by the Additional Settlements, then the 0.38% share
of Additional Funds set forth in Section III.B.2 of this SAAF for the Local Counsel
Fee Fund shall be included in the Local Additional Abatement Funds, such that
85% of the Additional Funds will be allocated to Local Additional Abatement Funds,
and 0% will be allocated to the Local Counsel Fee Fund.
Local Counsel release all North Carolina counties and municipalities from any
claim regarding the obligation to pay legal fees or costs relating to their
representation of North Carolina counties and municipalities regarding opioid
claims and litigation against the Settling Defendants and Additional Settling
Defendants. Local Counsel retain their rights to recover legal fees from any
national legal fee fund established by a national settlement and to collect any fees
due from National Counsel. If one or more National Counsel fails to release its
North Carolina client counties and/or municipalities from any contractual obligation
to pay legal fees or costs relating to their representation of North Carolina counties
and municipalities regarding opioid claims and litigation against the Settling
Defendants and Additional Settling Defendants, as required for National Counsel
and Local Counsel to receive a portion of the national fee funds created by the
National Settlement Agreements and Additional Settlement, then the 0.38% share
of Additional Funds set forth in Section III.B.2 of this SAAF for the Local Counsel
Fee Fund shall be included in the Local Additional Abatement Funds, such that
85% of the Additional Funds will be allocated to Local Additional Abatement Funds,
and 0% will be allocated to the Local Counsel Fee Fund.
As soon as practicable, but in any event no later than May 1, 2023, Local Counsel
shall report to the settlement administrator the proportion of the Local Counsel Fee
Fund to be received by each Local Counsel. No funds shall be paid out of the Local
Counsel Fee Fund until such report is received. Each Local Counsel's release of
claims against all North Carolina counties and municipalities as provided above
shall remain in full force and effect regardless of the proportion of the Local Counsel
Fee Fund that any Local Counsel receives.
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IN WITNESS WHEREOF, the parties, through their duly authorized officers, have
executed this Supplemental Agreement for Additional Funds under seal as of the
date hereof.
By:
Name:
Title:
County/City/Town of
Date:
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RES-2023-022
RESOLUTION BY THE BOARD OF COMMISSIONERS OF ORANGE COUNTY
AUTHORIZING EXECUTION OF OPIOID SETTLEMENTS AND APPROVING THE
SUPPLEMENTAL AGREEMENT FOR ADDITIONAL FUNDS BETWEEN THE STATE OF
NORTH CAROLINA AND LOCAL GOVERNMENTS ON PROCEEDS RELATING TO THE
SETTLEMENT OF OPIOID LITIGATION
WHEREAS,the opioid overdose epidemic had taken the lives of more than 32,000 North
Carolinians (2000-2021); and
WHEREAS,the COVID-19 pandemic has compounded the opioid overdose crisis, increasing
levels of drug misuse, addiction, and overdose death; and
WHEREAS,the Centers for Disease Control and Prevention estimates the total economic
burden of prescription opioid misuse alone in the United States is $78.5 billion a year, including the
costs of healthcare, lost productivity, addiction treatment, and criminal justice involvement; and
WHEREAS, certain counties and municipalities in North Carolina joined with thousands of local
governments across the country to file lawsuits against opioid manufacturers, pharmaceutical distribution
companies, and chain drug stores to hold those companies accountable for their misconduct; and
WHEREAS, settlements have been reached in litigation against Walmart, Inc., Teva
Pharmaceutical Industries Ltd., Allergan Finance, LLC,Allergan Limited, CVS Health Corporation,
CVS Pharmacy, Inc., and Walgreen Co., as well as their subsidiaries, affiliates, officers, and directors
named in the these Settlements; and
WHEREAS,representatives of local North Carolina governments, the North Carolina
Association of County Commissioners, and the North Carolina Department of Justice have negotiated
and prepared a Supplemental Agreement for Additional Funds (SAAF) to provide for the equitable
distribution of the proceeds of these settlements; and
WHEREAS,by joining the settlements and approving the SAAF, the state and local
governments maximize North Carolina's share of opioid settlement funds to ensure the needed
resources reach communities, as quickly, effectively, and directly as possible; and
WHEREAS, it is advantageous to all North Carolinians for local governments, including
Orange County and its residents,to sign onto the settlements and SAAF and demonstrate solidarity in
response to the opioid overdose crisis, and to maximize the share of opioid settlement funds received
both in the state and Orange County to help abate the harm; and
WHEREAS, the SAAF directs substantial resources over multiple years to local governments
on the front lines of the opioid overdose epidemic while ensuring that these resources are used in an
effective way to address the crisis.
NOW, THEREFORE BE IT RESOLVED, that the Board of Commissioners of Orange
County hereby authorizes the County Manager to execute all documents necessary to enter into opioid
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settlement agreements with Walmart, Walgreens, CVS, Allergan, and Teva, to execute the SAAF, and to
provide such documents to Rubris, the Implementation Administrator.
Adopted this the 7th day of March, 2023.
Jamezetta Bedford, Chair
Orange County Board of Commissioners
ATTEST:
Laura Jensen, Clerk to the Board
SEAL
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N*C
JOSH STEIN
ATTORNEY GENERAL
February 14, 2023
Dear County Commissioners, Managers, and Attorneys:
I am writing with an important update in our collective fight to address the opioid epidemic and save
lives—and a request for you to take action to secure additional opioid settlement funds for your county.
As you know, I helped negotiate the $26 billion national opioid settlements with the "big three" drug
distributors plus Johnson &Johnson ("Wave One Settlements"). These funds began flowing to your
county in 2022.
We recently negotiated $21 billion in new settlements with CVS, Walgreens, Walmart, Allergan and Teva
("Wave Two Settlements"). These Wave Two Settlements have the potential to bring significantly
greater resources to your county to address the opioid epidemic. North Carolina's state and local
governments stand to receive more than $600 million from the Wave Two Settlements— in addition to
the more than $750 million we are already receiving from the Wave One Settlements.
In traveling across North Carolina in recent months, I have learned firsthand about the many innovative
programs to address the opioid crisis that counties and municipalities are funding with money from the
Wave One Settlements. I am excited about the many new or expanded programs that can be funded
with additional resources from the Wave Two Settlements.
As with the Wave One Settlements, North Carolina will receive its full share of payments from the
Wave Two Settlements only if all eligible governments, including your county, sign onto each
settlement. And the defendants will agree to finalize the Wave Two Settlements only if the vast majority
of local governments across the nation sign onto them.
In the coming days, your county manager or attorney (or other senior staff your county identified in the
course of approving the Wave One Settlements) will receive an email from the national administrator,
Rubris. The email from Rubris will invite your county to sign onto each of the five new Wave Two
Settlements as well as a supplement to the North Carolina Memorandum of Agreement ("MOA") on the
allocation, use, and reporting of funds from the Wave One settlements.
This supplement to the MOA is called the "Supplemental Agreement for Additional Funds from
Additional Settlements of Opioid Litigation" or "SAAF" for short. It provides that the bulk of North
Carolina's money from the Wave Two Settlements will go to counties and municipalities to address the
opioid crisis. The SAAF extends the basic terms of the MOA governing the Wave One Settlements to the
Wave Two Settlements. Like the MOA, the SAAF has the support of my office, the North Carolina
Association of County Commissioners (NCACC), and the North Carolina League of Municipalities (NCLM).
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Opioid Settlement Letter— Page 2
April 18, 2023 is the deadline to sign onto the Wave Two Settlements and the SAAF. To assist you in
meeting this deadline, NCACC has created a draft resolution template that your county board may adopt
to authorize signing onto the Wave Two Settlements and the SAAF. The draft resolution template is
available HERE on NCACC's Opioid Settlement Assistance website; and a link to the template is also
available HERE on the "Wave Two Settlements" page of DOJ's www.MorePowerfuINC.org website. I
encourage your county board to adopt its authorizing resolution as soon as possible so that North
Carolina can help build national momentum in support of the Wave Two Settlements.
I'm proud that the strong partnership between the state and local governments in North Carolina
produced 100% local government participation in the Wave One Settlements. This enabled the state and
the participating local governments to receive 100% of our collective share of the national settlement
funds.
We are hoping to achieve the same unanimous approval of the Wave Two Settlements. Assuming this
high level of participation by local governments across North Carolina and the country, which we expect,
your county should start receiving money from the Wave Two Settlements during the second half of
2023. These funds will be in addition to the money you are already projected to receive from the Wave
One Settlements. The maximum amount your county is projected to receive from the Wave Two
Settlements (along with a reminder of the amount your county is projected to receive from Wave One
Settlements) is available HERE on the "Wave Two Settlements" page of DOJ's www.MorePowerfuINC.org
website.
For more information, I encourage you to visit the "Opioid Settlements" section of DOJ's
www.MorePowerfuINC.org website. You will find additional tools, resources, and information about the
opioid settlements on the Community Opioid Resources Engine for North Carolina (CORE-NC)
(https://ncopioidsettlement.org/).
If your county has filed a lawsuit against opioid manufacturers or pharmacies, information about the
Wave Two Settlements has also been provided to your outside counsel, with whom we encourage you
to consult. If you have questions for my team about the Wave Two Settlements or SAAF, please do not
hesitate to email us at opioidsettlement@ncdoi.gov.
Thank you for your consideration and partnership in this ongoing effort to save lives and improve the
health and well-being of North Carolina residents impacted by the opioid crisis.
Sincerely,
q,�''
Josh Stein