Opioid Settlement with Distributors

Committee Status:

Approved

Budget Status:

External Source

Decision Impact:

Significant

FTE Impact:

Funding Source:

Other (see budget status)

Purpose

Resolution to Authorizing the County to Enter Into the Settlement Agreements with 3 Teva Pharmaceutical Industries Ltd., Allergan Finance, LLC, Walgreen Co., Walmart, 4 Inc., CVS Health Corporation and CVS Pharmacy, Inc., Agree to the Terms of the 5 Addendum to the MOU Allocating Settlement Proceeds, and Authorize Entry Into the 6 MOU with the Attorney General

Background

BACKGROUND: the County Board of Supervisors previously authorized the County to enter 13 into an engagement agreement with von Briesen & Roper, s.c., Crueger Dickinson LLC and 14 Simmons Hanly Conroy LLC (the “Law Firms”) to pursue litigation against certain manufacturers, 15 distributors, and retailers of opioid pharmaceuticals (the “Opioid Defendants”) in an effort to hold 16 the Opioid Defendants financially responsible for the County’s expenditure of vast money and 17 resources to combat the opioid epidemic. On behalf of the County, the Law Firms filed a lawsuit 18 against the Opioid Defendants. The Law Firms filed similar lawsuits on behalf of 66 other 19 Wisconsin counties and all Wisconsin cases were coordinated with thousands of other lawsuits 20 filed against the same or substantially similar parties as the Opioid Defendants in the Northern 21 District of Ohio, captioned In re: Opioid Litigation, MDL 2804 (the “Litigation”). four (4) additional 22 Wisconsin counties (Milwaukee, Dane, Waukesha, and Walworth) hired separate counsel and 23 joined the Litigation. 24
Since the inception of the Litigation, the Law Firms have coordinated with counsel from around 25 the country (including counsel for Milwaukee, Dane, Waukesha, and Walworth Counties) to 26 prepare the County’s case for trial and engage in extensive settlement discussions with the Opioid 27 Defendants. the settlement discussions with Teva Pharmaceutical Industries Ltd., Allergan 28 Finance, LLC, Walgreen Co., Walmart, Inc., CVS Health Corporation and CVS Pharmacy, Inc.. 29 (the “Settling Defendants”) resulted in a tentative agreement as to settlement terms pending 30 agreement from the County and other plaintiffs involved in the Litigation. Copies of the various 31 settlement agreements relating to the Settling Defendants (collectively “Settlement Agreements”) 32 representing the terms of the tentative settlement agreements with the Settling Defendants have 33 been provided with this Resolution. The Settlement Agreements provide, among other things, for 34 the payment of certain sums to Participating Subdivisions (as defined in the Settlement 35 Agreements) upon the occurrence of certain events detailed in the Settlement Agreements. 36
The County is a Participating Subdivision in the Settlement Agreements and has the 37 opportunity to participate in the benefits associated with the Settlement Agreement provided the 38 County (a) approves the Settlement Agreements; (b) approves the Memorandum of 39 Understanding allocating proceeds from the Settlement Agreements among the various 40 Wisconsin Participating Subdivisions, a copy of which is attached to this Resolution (the 41 “Allocation MOU”); (c) approves the Memorandum of Understanding with the Wisconsin Attorney 42 General regarding allocation of settlement proceeds, a copy of which is attached to this Resolution 43 (the “AG MOU”); and (d) the Legislature’s Joint Committee on Finance approves the terms of the 44 Settlement Agreements and the AG MOU. 2021 Wisconsin Act 57 created Section 165.12 of the 45 Wisconsin Statutes relating to the settlement of all or part of the Litigation. Pursuant to Wis. Stat. 46 §165.12(2), the Legislature’s Joint Committee on Finance is required to approve the Settlement47 Agreements and the AG MOU. Pursuant to Wis. Stat. § 165.12(2), the proceeds from any48 settlement of all or part of the Litigation are distributed 70% to local governments in Wisconsin49 that are parties to the Litigation and 30% to the State. Wis. Stat. § 165.12(4)(b)2. provides the50 proceeds from the Settlement Agreement must be deposited in a segregated account (the “Opioid51
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Abatement Account”) and may be expended only for approved uses for opioid abatement as 52 provided in the Settlement Agreements. Wis. Stat. § 165.12(7) bars claims from any Wisconsin 53 local government against the Opioid Defendants filed after June 1, 2021. The Legislature’s Joint 54 Committee on Finance is not statutorily authorized or required to approve the allocation of 55 proceeds of the Settlement Agreements among Wisconsin Participating Subdivisions. 56
The Law Firms have engaged in extensive discussions with counsel for all other Wisconsin 57 Participating Subdivisions resulting in the proposed Allocation MOU, which is an agreement 58 between all of the entities identified in the Allocation MOU as to how the proceeds payable to 59 those entities under the Settlement Agreements will be allocated. The proposed Addendum to the 60 MOU (“Addendum”) provided with this Resolution provides for allocation of settlement proceeds 61 among the Wisconsin Participating Subdivisions according to the same percentages as that 62 provided in the previously-approved MOU allocating the settlement proceeds of the settlements 63 involving McKesson Corporation, Cardinal Health, Inc., AmerisourceBergen Corporation, 64 Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho-McNeil-Janssen Pharmaceuticals, 65 Inc., and Janssen Pharmaceuitca, Inc.. Further information on the essential terms of the 66 Settlement Agreements, the deadlines related to the effective dates of the Settlement 67 Agreements, the ramifications associated with the County’s refusal to enter into the Settlement 68 Agreements, the form of the Addendum, the form of the AG MOU, and an overview of the process 69 for finalizing the Settlement Agreements may be found at https://nationalopioidsettlement.com/. 70 The County, by this Resolution, shall deposit the proceeds of the Settlement Agreements 71 consistent with the terms of this Resolution and Wis. Stat. § 165.12(4)(b). 72
Pursuant to the County’s engagement agreement with the Law Firms, the County shall pay 73 up to an amount equal to 25% of the proceeds from successful resolution of all or part of the 74 Litigation, whether through settlement or otherwise, plus the Law Firms’ costs and disbursements, 75 to the Law Firms as compensation for the Law Firms’ efforts in the Litigation and any settlement. 76 The Law Firms anticipate making application to the national fee fund established in the Settlement 77 Agreements seeking payment, in whole or part, of the fees, costs, and disbursements owed the 78 Law Firms pursuant to the engagement agreement with the County. It is anticipated the amount 79 of any award from the fee fund established in the Settlement Agreements will be insufficient to 80 satisfy the County’s obligations under the engagement agreement with the Law Firms. The 81 County, by this Resolution, and pursuant to the authority granted the County in the applicable 82 Order emanating from the Litigation in relation to the Settlement Agreements and payment of 83 attorney fees, shall authorize and direct the escrow agent responsible for the receipt and 84 distribution of the proceeds from the Settlement Agreements to establish an account for the 85 purpose of segregating funds to pay the fees, costs, and disbursements of the Law Firms owed 86 by the County (the “Attorney Fees Account”) in order to fund a local “backstop” for payment of the 87 fees, costs, and disbursements of the Law Firms. In no event shall payments to the Law Firms 88 out of the Attorney Fees Account and the fee fund established in the Settlement Agreements 89 exceed an amount equal to 25% of the amounts allocated to the County in the Addendum. The 90 intent of this Resolution is to authorize the County to enter into the Settlement Agreements, the 91 Addendum, and the AG MOU, establish the County’s Opioid Abatement Account, and establish 92 the Attorney Fees Account. The County, by this Resolution, shall authorize the County’s 93 Administrator to finalize and execute any escrow agreement and other document or agreement 94 necessary to effectuate the Settlement Agreements and the other agreements referenced herein.

Resolution Files:

resolution_-_opioid_settlement_with_distributors_final.pdf

Resolution Body

THEREFORE, BE IT RESOLVED, the County Board of Supervisors hereby approves: 97
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1. The execution of the Settlement Agreements and any and all documents ancillary 99 thereto and authorizes the Administrator or designee to execute same. 100
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2. The final negotiation and execution of the Addendum in form substantially similar 102 to that presented with this Resolution and any and all documents ancillary thereto 103 and authorizes the Administrator or designee to execute same upon finalization 104 provided the percentage share identified as allocated to the County is substantially 105 similar to that identified in the Addendum provided to the Board with this 106 Resolution. 107
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3. The final negotiation and execution of the AG MOU in form substantially similar to 109 that presented with this Resolution and any and all documents ancillary thereto 110 and authorizes the Administrator or designee to execute same. 111
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4. The execution by the Administrator or designee of any additional documents or 113 agreements for the receipt and disbursement of the proceeds of the Settlement 114 Agreements as referenced in the Addendum. 115
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BE IT FURTHER RESOLVED, all proceeds from the Settlement Agreements not otherwise 117 directed to the Attorney Fees Account shall be deposited in the County’s Opioid Abatement 118 Account. The Opioid Abatement Account shall be administered consistent with the terms of this 119 Resolution, Wis. Stat. § 165.12(4), and the Settlement Agreements. 120
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BE IT FURTHER RESOLVED, the County hereby authorizes the establishment of an account 122 separate and distinct from any account containing funds allocated or allocable to the County which 123 shall be referred to by the County as the “Attorney Fees Account.” An escrow agent shall deposit 124 a sum equal to up to, but in no event exceeding, an amount equal to 20% of the County’s proceeds 125 from the Settlement Agreements into the Attorney Fees Account. If the payments to the County 126 are not enough to fully fund the Attorney Fees Account as provided herein because such 127 payments are made over time, the Attorney Fees Account shall be funded by placing up to, but 128 in no event exceeding, an amount equal to 20% of the proceeds from the Settlement Agreements 129 attributable to Local Governments (as that term is defined in the Allocation MOU) into the Attorney 130 Fees Account for each payment. Funds in the Attorney Fees Account shall be utilized to pay the 131 fees, costs, and disbursements owed to the Law Firms pursuant to the engagement agreement 132 between the County and the Law Firms provided, however, the Law Firms shall receive no more 133 than that to which they are entitled under their fee contract when considering the amounts paid 134 the Law Firms from the fee fund established in the Settlement Agreements and allocable to the 135 County. The Law Firms may make application for payment from the Attorney Fees Account at any 136 time and the County shall cooperate with the Law Firms in executing any documents necessary 137 for the escrow agent to make payments out of the Attorney Fees Account. 138
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BE IT FURTHER RESOLVED, that all actions heretofore taken by the Board of Supervisors 140 and other appropriate public officers and agents of the County with respect to the matters 141 contemplated under this Resolution are hereby ratified, confirmed and approved. 142
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Approved for presentation to the County Board by the Executive & Legislative Committee, 144 this 7th day of March, 2023. 145
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Consent Agenda Item: [ ] YES [ ] NO 147
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Fiscal Impact: [ x ] None [ ] Budgeted Expenditure [ ] Not Budgeted 149
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Vote Required: Majority = __X___ 2/3 Majority = _____ 3/4 Majority = ________ 151
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The County Board has the legal authority to adopt: Yes __X__ No ________ as reviewed 153 by the Corporation Counsel, _________________________________, Date: 154 ________________ . 155
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Offered and passage moved by: _________________________________ 158
Supervisor 159
_________________________________ 160
Supervisor 161
_________________________________ 162
Supervisor 163
_________________________________ 164
Supervisor 165
_________________________________ 166
Supervisor 167
168
169
170
171
Fiscal Note: 172
173
MIS Note: 174 None
Accounting and reporting associated with receiving and dispersing funds.
ADDENDUM TO WISCONSIN LOCAL GOVERNMENT
MEMORANDUM OF UNDERSTANDING
WHEREAS, the Local Governments entered into the MOU for purposes of memorializing their agreement surrounding, among other things, allocation of the proceeds of the settlements with McKesson Corporation, Cardinal Health, Inc., AmerisourceBergen Corporation, Johnson & Johnson, Janssen Pharmaceuticals, Inc., Ortho- McNeil-Janssen Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc.;
WHEREAS, the settlement discussions with Walgreens, Walmart, CVS, Teva, and Allergan resulted in tentative agreements as to settlement terms (“Settlement Agreements”) pending agreement from the State of Wisconsin, the Local Governments and other parties involved in the Litigation; and
WHEREAS, the Local Governments intend this Addendum to the MOU to effectuate the terms of the Settlement Agreements and allocate the proceeds of the Settlement Agreements to each of the Local Governments in the same manner and same percentages as set forth in the MOU and Exhibit A thereto.
NOW, THEREFORE, the Local Governments enter into this Addendum to the MOU upon the terms described herein.
1. The Local Governments ratify, confirm and agree in all respects to the MOU. By this Addendum, the Local Governments agree that any and all proceeds of the Settlement Agreements defined herein shall be distributed, allocated and otherwise disposed of in the same manner as set forth in the MOU and Exhibit A thereto.
2. Nothing in this MOU is intended to alter or change any Local Government’s right to pursue its own claim. Rather, the intent of this MOU is to provide a mechanism for the receipt and expenditure of Opioid Funds.
3. This MOU may be executed in counterparts. Electronic signatures shall in all respects be considered valid and binding.
[Signatures on Following Page]
___________________________________ Date: ______________________
Rusk County
Printed: ___________________________
___________________________________ Date: ______________________
Sauk County
Printed: ____________________________
___________________________________ Date: ______________________
Sawyer County
Printed: ____________________________
___________________________________ Date: ______________________
Shawano County
Printed: ____________________________
___________________________________ Date: ______________________
Sheboygan County
Printed: ____________________________
___________________________________ Date: ______________________
St. Croix County
Printed: ____________________________
___________________________________ Date: ______________________
Taylor County
Printed: ____________________________
___________________________________ Date: ______________________
Trempealeau County
Printed: ____________________________
___________________________________ Date: ______________________
Vernon County
Printed: ____________________________
WISCONSIN STATE-LOCAL GOVERNMENT MEMORANDUM OF UNDERSTANDING FOR THE ALLOCATION OF
OPIOID SETTLEMENT PROCEEDS
WHEREAS, the State of Wisconsin (“State”), its communities, and their people have been harmed by misfeasance, nonfeasance and malfeasance committed by certain entities that engage in or have engaged in the manufacture, marketing, promotion, distribution or dispensing of an opioid analgesic, specifically related to the covered conduct by Defendants In re: Opioid Litigation, MDL 2804 pending in the United States District Court for the Northern District of Ohio (“Litigation”);
WHEREAS, certain Wisconsin local governments identified on the attached Exhibit A (“Local Governments”), through their counsel, and the State of Wisconsin, through its Attorney General, are separately engaged in investigations, litigation, and settlement discussions seeking to hold the Defendants in the Litigation accountable for the damage caused by their misfeasance, nonfeasance and malfeasance;
WHEREAS, the State of Wisconsin and the Local Governments share a common desire to abate and alleviate the impacts of the misfeasance, nonfeasance and malfeasance described above throughout the State of Wisconsin and in its local communities;
WHEREAS, the settlement discussions with Walgreens, Walmart, CVS, Teva, and Allergan (“Settling Defendants”) resulted in tentative agreements as to settlement terms (“Settlement Agreements”) pending agreement from the State of Wisconsin, the Local Governments and other parties involved in the Litigation;
WHEREAS, while the Local Governments and the State recognize that the sums which may be available from the aforementioned Settlement Agreements will likely be insufficient to fully abate the public health crisis caused by the Opioid epidemic, they share a common interest in dedicating the most resources possible to the abatement effort;
WHEREAS, the State of Wisconsin enacted Wis. Stat. § 165.12 which provides for an allocation of opioid settlement proceeds;
WHEREAS, the State and the Local Governments intend this Memorandum of Understanding (“MOU”) to effectuate the terms of future Settlement Agreements arising out of the Litigation in a manner consistent with Wis. Stat. § 165.12(2); and
WHEREAS, this MOU does not supersede or alter any previously agreed upon MOU between the State and Local Governments related to the Litigation.
NOW, THEREFORE, the State and the Local Governments, enter into this MOU upon the terms described herein.
1. As used in this MOU, the term “Opioid Settlement Proceeds” shall mean all funds allocated by a Settlement Agreement (“Settlement Payments”) 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. “Opioid
Settlement Proceeds” do not include the “Additional Restitution Amount” (also known
as additional remediation, or any other fund, proceed, or amount paid to States who did
not utilize outside counsel), reimbursement of the United States Government, or
separate funds identified in Settlement Agreements as direct or indirect compensation
for a Party’s litigation fees, expenses, and/or costs.
2. The Settlement Administrator shall directly distribute the Opioid Settlement Proceeds
to the State and to Local Governments in such proportions and for such uses as set forth
in this MOU.
3. Opioid Settlement Proceeds shall be allocated as follows: (i) 30% to the State of
Wisconsin (“State Share”); and (ii) 70% to Local Governments (“LG Share”). Opioid
Settlement Proceeds shall not be considered funds of the State or any Local
Government unless and until such time as each annual distribution is made.
4. 100% of the “Additional Restitution Amount” shall be paid to the State and deposited
with the Department of Health Services.
5. Except for Opioid Settlement Funds expended in payment of attorney fees as provided
in Wis. Stat. § 165.12(6), all Opioid Settlement Proceeds, regardless of allocation, and
the entire “Additional Restitution Amount,” shall, consistent with Wis. Stat. §
165.12(3) and (4), and except as provided in Wis. Stat. § 165.12(5), be utilized only for
purposes identified as approved uses for abatement in a Settlement Agreement.
6. If any portion of the LG Share is used for the payment of owed attorney fees as
authorized under Wis. Stat. § 165.12(6), the Local Governments shall report to the
Attorney General and the Joint Committee on Finance the amount of the payment(s)
and provide the contract(s) under which the attorney fees are purportedly owed.
Notwithstanding any limitations or characterization of funds herein to the contrary,
any payments for attorneys’ fees and expenses may only be paid for out of the owing
Local Governments’ share.
7. The parties agree to comply with the terms of the Settlement Agreements, including
but not limited to (a) a requirement that a certain percentage of the Settlement
Payment be spent on remediation, and (b) that at least 70% of a Settlement Payment
be used solely for future Opioid Remediation as defined by the Settlement
Agreements.
8. The LG Share shall be paid to each Local Government by the Settlement Administrator
based on the allocation created and agreed to by the Local Governments which assigns
each Local Government a percentage share of the LG Share, less any applicable
attorney fees as authorized under Wis. Stat. § 165.12(6) and referenced above.
9. Nothing in this MOU is intended to alter or change any Local Government’s right to pursue its own claim. Rather, the intent of this MOU is to provide a mechanism for the receipt and expenditure of Opioid Settlement Proceeds. Notwithstanding the foregoing, only Local Governments who are Participating Subdivisions under a Settlement Agreement, and who agree to the terms of this MOU may directly receive Opioid Settlement Proceeds.
10. Notwithstanding any limitations or characterization of funds herein to the contrary, any payments for Local Government attorney’s fees and expenses may be applied only to the LG Share or any Local Government share of the LG Share. The State shall have no responsibility for payment of attorneys’ fees or litigation expenses.
11. The parties understand that the United States may claim a portion of the Opioid Settlement Proceeds for Medicaid reimbursement. The parties agree that, to the extent a claim for Medicaid reimbursement is made, the parties shall bear the liability for the reimbursement on a pro rata basis based upon the particular claims made by the United States related to the Medicaid reimbursement. The parties agree to meet, confer, and cooperate in good faith concerning the allocation of any such liability.
12. The Attorney General may extend this MOU to apply to future settlements with other entities who engage in or have engaged in the manufacture, marketing, promotion, distribution or dispensing of an opioid analgesic, specifically related to the covered conduct by Defendants in the Litigation. To exercise this option, the Attorney General shall send written notice to counsel for the Local Governments. The Local Governments shall have 30 days from the date of the notice to express in writing any objection(s) to the extension of the MOU to the settlement(s). If any Local Government objects to the extension of the MOU to the settlement(s), it shall not be extended.
Notice to the Local Governments shall be sent via regular U.S. Mail or email to:
Andrew Phillips Erin Dickinson
Attolles Law, s.c. Crueger Dickinson LLC
222 E. Erie Street 4532 N. Oakland Ave.
Suite 210 Milwaukee, WI 53211
Milwaukee, WI 53202 ekd@cruegerdickinson.com
aphillips@attolles.com
Burton LeBlanc Shayna Sacks
2600 CitiPlace Drive 360 Lexington Avenue
Suite 400 Eleventh Floor
Baton Rouge, LA 70809 New York, NY 10017
bleblanc@baronbudd.com ssacks@napolilaw.com
Christopher Smith Steven Nelson
von Briesen & Roper, s.c. von Briesen & Roper, s.c.
411 E. Wisconsin Ave. 411 E. Wisconsin Ave.
Suite 1000 Suite 1000
Milwaukee, WI 53202 Milwaukee, WI 53202
christopher.smith@vonbriesen.com steven.nelson@vonbriesen.com
Any objection(s) by a Local Government shall be sent via regular U.S. Mail or email to:
Laura E. McFarlane
Assistant Attorney General
Wisconsin Department of Justice
17 W. Main Street
Post Office Box 7857
Madison, Wisconsin 53707-7857
mcfarlanele@doj.state.wi.us
and
R. Duane Harlow
Assistant Attorney General
Wisconsin Department of Justice
17 West Main Street
Post Office Box 7857
Madison, Wisconsin 53707-7857
harlowrd@doj.state.wi.us
13. This MOU may be executed in counterparts. Electronic signatures shall in all respects be considered valid and binding.
[Signatures on Following Page]
IN WITNESS WHEREOF, the parties hereby execute this MOU as of the date set forth below.
ON BEHALF OF THE STATE OF WISCONSIN:
__________________________________ Date: ____________________
Attorney General Josh Kaul
ON BEHALF OF THE LOCAL GOVERNMENTS:
___________________________________ Date: ______________________
Adams County
Printed: ____________________________
___________________________________ Date: ______________________
Ashland County
Printed: ____________________________
___________________________________ Date: ______________________
Barron County
Printed: ____________________________
___________________________________ Date: ______________________
Bayfield County
Printed: ____________________________
___________________________________ Date: ______________________
Brown County
Printed: ____________________________
___________________________________ Date: ______________________
Rock County
Printed: ____________________________
___________________________________ Date: ______________________
Rusk County
Printed: ___________________________
___________________________________ Date: ______________________
Sauk County
Printed: ____________________________
___________________________________ Date: ______________________
Sawyer County
Printed: ____________________________
___________________________________ Date: ______________________
Shawano County
Printed: ____________________________
___________________________________ Date: ______________________
Sheboygan County
Printed: ____________________________
___________________________________ Date: ______________________
St. Croix County
Printed: ____________________________
___________________________________ Date: ______________________
Taylor County
Printed: ____________________________
EXHIBIT A
Litigating Local Governments
Adams County
Ashland County
Barron County
Bayfield County
Brown County
Buffalo County
Burnett County
Calumet County
Chippewa County
Clark County
Columbia County
Crawford County
Dane County
Dodge County
Door County
Douglas County
City of Superior
Dunn County
Eau Claire County
Florence County
Fond Du Lac County
Forest County
Grant County
Green County
Green Lake County
Iowa County
Iron County
Jackson County
Jefferson County
Juneau County
Kenosha County
City of Kenosha
Village of Pleasant Prairie
Kewaunee County
La Crosse County
Lafayette County
Langlade County
Lincoln County
Manitowoc County
Marathon County
Marinette County
City of Marinette
Marquette County
Menominee County
Milwaukee County
City of Cudahy
City of Franklin
City of Greenfield
City of Milwaukee
City of Oak Creek
City of South Milwaukee
City of Wauwatosa
City of West Allis
Monroe County
Oconto County
Oneida County
Outagamie County
Ozaukee County
Pepin County
Pierce County
Portage County
Price County
Racine County
Village of Mount Pleasant
Village of Sturtevant
Village of Union Grove
Town of Yorkville
Richland County
Rock County
Rusk County
Sauk County
Sawyer County
Shawano County
Sheboygan County
St Croix County
Taylor County
Trempealeau County
Vernon County
Vilas County
Walworth County
Washburn County
Washington County
Waukesha County
Waupaca County
Waushara County
Winnebago County
Wood County

Requested Board Review Date:

Tuesday, March 21, 2023

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