Judge Rules all U.S. Cities, Counties Have Stake in Opioid Settlements

Every city and county in the United States will be able to participate in a potential settlement agreement with the drug companies blamed for igniting the ongoing opioid epidemic, a federal judge ruled this week.

The decision has the potential to dramatically expand the number of municipal governments involved in the already sprawling multi-district litigation, reducing the amount available to individual jurisdictions. But the ruling would ensure that settlement payments go directly to counties and cities, a decision that experts say makes it more likely funding will be used to reimburse public health costs rather than fund broad prevention or addiction treatment strategies.  

More than 2,000 cities, counties and states had filed lawsuits that were consolidated in the litigation. The ruling, handed down by U.S. District Judge Daniel Polster on Wednesday, expands the potential roster of participating jurisdictions and establishes rules for how members of the class will approve any settlement agreement going forward.

The decision “clears the way for all towns, cities, and counties in our country to not only negotiate with the opioid industry but to use their joint bargaining power to secure the resources they need to fund addiction, recovery, and prevention efforts in their own neighborhoods,” attorneys Jayne Conroy and Chris Seeger, the co-lead negotiation class counsel, said in a statement.

The ruling does not apply to a pending $12 billion settlement being hammered out between Purdue Pharma, the maker of OxyContin, and state and municipal governments. Thirteen defendants, including drug manufacturers, distributors and pharmacies are involved in the case. Judge Polster, who is based in Cleveland, Ohio, is overseeing consolidated litigation brought by governments across the country against the drug companies and has been actively working to broker a comprehensive settlement agreement. 

Under Polster’s ruling, local governments would have until November 22 to opt out of the case. Local governments would have to decide whether to be part of the case before any settlement amount was agreed to, but certifying the size of the class would allow them to calculate their share of any potential settlement.

State attorneys general had opposed the negotiation class proposal.  

“The states have been trying to override the negotiating by the cities and counties out of fear it will be hard to get a global resolution with these smaller entities at the table,” said Harry Nelson, a healthcare attorney and author of the book The United States of Opioids.

The judge rejected the notion that cities and counties, which have primarily borne the costs of responding to the opioid epidemic, should take a back seat in the negotiations, Nelson said.

Acknowledging the opposition by attorneys general, Polster noted that nothing in his decision precludes states from continuing with their own cases.

“There is nothing exclusive about this process: it does not interfere with the States settling their own cases any way they want, and it does not stop parties in the MDL from settling in other ways,” Polster wrote in the 40-page ruling. “And there is nothing intrusive about this process: it does not stop any litigation from continuing and in no way interferes with the upcoming bellwether trials in this MDL. This process simply provides an option—and in the Court’s opinion, it is a powerful, creative, and helpful one.”

An estimated 130 people die every day in the United States from opioid-related overdoses, according to the Centers for Disease Control and Prevention. While some states have been hit harder by the opioid epidemic than others, experts say the scale of the problem requires a settlement that provides financial help for all communities across the country.

“It certainly is in everybody’s interest to have one settlement that meets all the needs across the country,” said Paul Samuels, director of the Legal Action Center.

The center helped outline a series of key strategies for investing in solutions to the opioid crisis.

But differing opinions about how to best spend the money have led to disagreements between state and local government.

In Oklahoma, where a state-led lawsuit resulted in $270 million settlement with Purdue, municipalities complained of being left out when most of the money was allotted for the establishment of a new research and addiction treatment center at Oklahoma State University.

In the 1998 tobacco settlements, states received the lion’s share of settlement payouts. But much of the funding never went to tobacco secession efforts. Concern about a replay of the tobacco settlements led cities and counties to more aggressively pursue litigation related to the opioid epidemic.

“The settlement is likely to look very different based on the allocation of funds to cities and counties,” Nelson said. “On the ground the cities are looking for reimbursement for public health costs incurred, but we are not going to see broad investments.”

Before any proposed settlement is made, litigants will have to vote to approve the deal. Polster’s ruling outlines procedures for approval that require support from 75% of members. Approval would require 75% support in three categories, including the number and population of municipalities and a breakdown in the allocation of funds.

The settlement funds would be divided among counties based on a formula that weighs certain public health factors. Counties would distribute funds to cities located in their boundaries through their own negotiated agreements, according to the ruling.