HomeMy WebLinkAbout032822ca11Consent Agenda
JEFFERSON COUNTY
BOARD OF COUNTY COMMISSIONERS
AGENDA REQUEST
TO: Board of Commissioners
Mark McCauley, Interim County Administrator
FROM: Philip C. Hunsucker, Chief Civil Deputy Prosecuting Attorney
DATE: March 28, 2022
RE: Opioid Litigation — One Washington Memorandum of Understanding Between
Washington Municipalities
STATEMENT OF ISSUE:
In 2018, Jefferson County engaged the Keller Rohrback (KR) law firm to pursue affirmative
claims against Opioid manufacturers and distributors. Jefferson County is one of a number of
Washington municipalities (counties and cities) represented by KR. Other Washington
municipalities in the Opioid litigation are represented by another law firm. A lawsuit filed by
KR on behalf of Jefferson County is part of multi -district Opioid litigation in federal court in
Cleveland, Ohio.
Separately, the State of Washington has been pursuing its own affirmative claims against Opioid
manufacturers and distributors. The represented Washington municipalities and the Washington
Attorney General (AG) have been discussing a structure for distributing to Washington
municipalities funds obtained as part of any recovery on the State's claims for Opioid abatement.
The represented Washington municipalities have negotiated a memorandum of understanding,
subject to approval by the Washington municipalities. That MOU is called the One Washington
Memorandum of Understanding Between Washington Municipalities and is attached to this
agenda request.
KR is requesting the Jefferson County approve the One Washington Memorandum of
Understanding Between Washington Municipalities by March 29, 2022. The Jefferson County
Prosecuting Attorney's Office agrees.
ANALYSIS:
The more Washington municipalities that sign the One Washington Memorandum of
Understanding Between Washington Municipalities the more aggregate bargaining power of the
Washington municipalities and the AG will have. We expect the all or nearly all of the
represented Washington municipalities will sign, likely increasing the number and amount of
Opioid settlements the AG can negotiate.
Consent Agenda
FISCAL IMPACT:
Uncertain at this time because the total value of the State's recoveries cannot be known.
RECOMMENDATION:
Approve and sign the One Washington Memorandum of Understanding Between Washington
Municipalities on March 28, 2022.
DEPARTMENT CONTACT:
Philip C. Hunsucker, Chief Civil Deputy Prosecuting Attorney at Extension 219.
REVIEWED BY:
i
Mark McCaul , y Dafe
Interim County Administrator
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ONE WASHINGTON MEMORANDUM OF
UNDERSTANDING BETWEEN WASHINGTON MUNICIPALITIES
Whereas, the people of the State of Washington and its communities have been harmed by
entities within the Pharmaceutical Supply Chain who manufacture, distribute, and dispense
prescription opioids;
Whereas, certain Local Governments, through their elected representatives and counsel,
are engaged in litigation seeking to hold these entities within the Pharmaceutical Supply Chain of
prescription opioids accountable for the damage they have caused to the Local Governments;
Whereas, Local Governments and elected officials share a common desire to abate and
alleviate the impacts of harms caused by these entities within the Pharmaceutical Supply Chain
throughout the State of Washington, and strive to ensure that principals of equity and equitable
service delivery are factors considered in the allocation and use of Opioid Funds; and
Whereas, certain Local Governments engaged in litigation and the other cities and counties
in Washington desire to agree on a form of allocation for Opioid Funds they receive from entities
within the Pharmaceutical Supply Chain.
Now therefore, the Local Governments enter into this Memorandum of Understanding
("MOU") relating to the allocation and use of the proceeds of Settlements described.
A. Definitions
As used in this MOU:
1. "Allocation Regions" are the same geographic areas as the existing
nine (9) Washington State Accountable Community of Health (ACH) Regions
and have the purpose described in Section C below.
2. "Approved Purpose(s)" shall mean the strategies specified and set
forth in the Opioid Abatement Strategies attached as Exhibit A.
3. "Effective Date" shall mean the date on which a court of
competent jurisdiction, including any bankruptcy court, enters the first Settlement
by order or consent decree. The Parties anticipate that more than one Settlement
will be administered according to the terms of this MOU, but that the first entered
Settlement will trigger allocation of Opioid Funds in accordance with Section B
herein, and the formation of the Regional Abatement Advisory Councils in
Section E.
4. "Litigating Local Government(s)" shall mean Local Governments
that filed suit against any Pharmaceutical Supply Chain Participant pertaining to
the Opioid epidemic prior to September 1, 2020.
5. "Local Government(s)" shall mean all counties, cities, and towns
within the geographic boundaries of the State of Washington.
6. "National Settlement Agreements" means the national opioid
settlement agreements dated July 21, 2021 involving Johnson & Johnson, and
distributors AmerisourceBergen, Cardinal Health and McKesson as well as their
subsidiaries, affiliates, officers, and directors named in the National Settlement
Agreements, including all amendments thereto.
7. "Opioid Funds" shall mean monetary amounts obtained through a
Settlement as defined in this MOU.
8. "Opioid Abatement Council" shall have the meaning described in
Section C below.
9. "Participating Local Government(s)" shall mean all counties,
cities, and towns within the geographic boundaries of the State that have chosen
to sign on to this MOU. The Participating Local Governments may be referred to
separately in this MOU as "Participating Counties" and "Participating Cities and
Towns" (or "Participating Cities or Towns," as appropriate) or "Parties."
10. "Pharmaceutical Supply Chain" shall mean the process and
channels through which controlled substances are manufactured, marketed,
promoted, distributed, and/or dispensed, including prescription opioids.
11. "Pharmaceutical Supply Chain Participant" shall mean any entity
that engages in or has engaged in the manufacture, marketing, promotion,
distribution, and/or dispensing of a prescription opioid, including any entity that
has assisted in any of the above.
12. "Qualified Settlement Fund Account," or "QSF Account," shall
mean an account set up as a qualified settlement fund, 468b fund, as authorized by
Treasury Regulations 1.46813-1(c) (26 CFR §1.468B-1).
13. "Regional Agreements" shall mean the understanding reached by
the Participating Local Counties and Cities within an Allocation Region
governing the allocation, management, distribution of Opioid Funds within that
Allocation Region.
14. "Settlement' shall mean the future negotiated resolution of legal or
equitable claims against a Pharmaceutical Supply Chain Participant when that
resolution has been jointly entered into by the Participating Local
Governments. "Settlement" expressly does not include a plan of reorganization
confirmed under Title 11 of the United States Code, irrespective of the extent to
which Participating Local Governments vote in favor of or otherwise support such
plan of reorganization.
15. "Trustee" shall mean an independent trustee who shall be
responsible for the ministerial task of releasing Opioid Funds that are in QSF
account to Participating Local Governments as authorized herein and accounting
for all payments into or out of the trust.
16. The "Washington State Accountable Communities of Health" or
"ACH" shall mean the nine (9) regions described in Section C below.
B. Allocation of Settlement Proceeds for Approved Purposes
1. All Opioid Funds shall be held in a QSF and distributed by the
Trustee, for the benefit of the Participating Local Governments, only in a manner
consistent with this MOU.-Distribution of Opioid Funds will be subject to the
mechanisms for auditing and reporting set forth below to
provide public accountability and transparency.
2. All Opioid Funds, regardless of allocation, shall be utilized
pursuant to Approved Purposes as defined herein and set forth in Exhibit A.
Compliance with this requirement shall be verified through reporting, as set out in
this MOU.
3. The division of Opioid Funds shall first be allocated to
Participating Counties based on the methodology utilized for the Negotiation
Class in In Re: National Prescription Opiate Litigation, United States District
Court for the Northern District of Ohio, Case No. 1:17-and-02804-DAP. The
allocation model uses three equally weighted factors: (1) the amount of opioids
shipped to the county; (2) the number of opioid deaths that occurred in that
county; and (3) the number of people who suffer opioid use disorder in that
county. The allocation percentages that result from application of this
methodology are set forth in Exhibit B. In the event any county does not
participate in this MOU, that county's percentage share shall be reallocated
proportionally amongst the Participating Counties by applying this same
methodology to only the Participating Counties.
4. Allocation and distribution of Opioid Funds within each
Participating County will be based on regional agreements as described in
Section C.
C. Regional Agreements
1. For the purpose of this MOU, the regional structure for decision -
making related to opioid fund allocation will be based upon the nine (9) pre-
defined Washington State Accountable Community of Health Regions (Allocation
Regions). Reference to these pre -defined regions is solely for the purpose of
drawing geographic boundaries to facilitate regional agreements for use of Opioid
Funds. The Allocation Regions are as follows:
• King County (Single County Region)
• Pierce County (Single County Region)
• Olympic Community of Health Region (Clallam, Jefferson, and Kitsap
Counties)
• Cascade Pacific Action Alliance Region (Cowlitz, Grays Harbor, Lewis,
Mason, Pacific, Thurston, Lewis, and Wahkiakum Counties)
• North Sound Region (Island, San Juan, Skagit, Snohomish, and Whatcom
Counties)
• SouthWest Region (Clark, Klickitat, and Skamania Counties)
• Greater Columbia Region (Asotin, Benton, Columbia, Franklin, Garfield,
Kittitas, Walla Walla, Whitman, and Yakima Counties)
• Spokane Region (Adams, Ferry, Lincoln, Pend Oreille, Spokane, and
Stevens Counties)
• North Central Region (Chelan, Douglas, Grant, and Okanogan Counties)
2. Opioid Funds will be allocated, distributed and managed within
each Allocation Region, as determined by its Regional Agreement as set forth
below. If an Allocation Region does not have a Regional Agreement enumerated
in this MOU, the default mechanism for allocation, distribution and management
of Opioid Funds described in Section C.4.a will apply.
King County's Regional Agreement is reflected in Exhibit C to this
MOU.
4. All other Allocation Regions that have not specified in this MOU a
methodology for allocating, distributing and managing Opioid Funds, will apply
the following default methodology:
a. Opioid Funds shall be allocated within each region by taking the
allocation for a Participating County from Exhibit B and apportioning
those funds between that Participating County and its Participating Cities
and Towns. Exhibit B also sets forth the allocation to Participating
Counties and the Participating Cities or Towns within the Counties based
on a default allocation formula. As set forth above in B.3, to determine the
allocation to a county, this formula utilizes: (1) the amount of opioids
shipped to the county; (2) the number of opioid deaths that occurred in
that county; and (3) the number of people who suffer opioid use disorder
in that county. To determine the allocation within a county, the formula
utilizes historical federal data showing how the specific Counties and the
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Cities and Towns within the Counties have made opioids epidemic -related
expenditures in the past. This is the same methodology used in the
National Settlement Agreements for county and intra-county allocations.
A Participating County, and the Cities and Towns within it may enter into
a separate intra-county allocation agreement to modify how the Opioid
Funds are allocated amongst themselves, provided the modification is in
writing and agreed to by all Participating Local Governments in the
County. Such an agreement shall not modify any of the other terms or
requirements of this MOU.
b. 10% of the Opioid Funds received by the Region will be reserved,
on an annual basis, for administrative costs related to the OAC. The OAC
will provide an annual accounting for actual costs and any reserved funds
that exceed actual costs will be reallocated to Participating Local
Governments within the Region.
C. Cities and towns with a population of less than 10,000 shall be
excluded from the allocation, with the exception of cities and towns that
are Litigating Participating Local Governments. The portion of the Opioid
Funds that would have been allocated to a city or town with a population
of less than 10,000 that is not a Litigating Participating Local Government
shall be redistributed to Participating Counties in the manner directed
in CA.a above.
d. Each Participating County, City, or Town may elect to have its
share re -allocated to the OAC in which it is located. The OAC will then
utilize this share for the benefit of Participating Local Governments within
that Allocation Region, consistent with the Approved Purposes set forth in
Exhibit A. A Participating Local Government's election to forego its
allocation of Opioid Funds shall apply to all future allocations unless the
Participating Local Government notifies its respective OAC otherwise. If a
Participating Local Government elects to forego its allocation of the
Opioid Funds, the Participating Local Government shall be excused from
the reporting requirements set forth in this Agreement.
e. Participating Local Governments that receive a direct
payment maintain full discretion over the use and distribution of their
allocation of Opioid Funds, provided the Opioid Funds are used solely for
Approved Purposes. Reasonable administrative costs for a Participating
Local Government to administer its allocation of Opioid Funds shall not
exceed actual costs or 10% of the Participating Local Government's
allocation of Opioid Funds, whichever is less.
f. A Local Government that chooses not to become a Participating
Local Government will not receive a direct allocation of Opioid Funds.
The portion of the Opioid Funds that would have been allocated to a Local
Government that is not a Participating Local Government shall be
redistributed to Participating Counties in the manner directed
in CA.a above.
g. As a condition of receiving a direct payment, each Participating
Local Government that receives a direct payment agrees to undertake the
following actions:
i. Developing a methodology for obtaining proposals for use
of Opioid Funds.
ii. Ensuring there is opportunity for community -based input
on priorities for Opioid Fund programs and services.
iii. Receiving and reviewing proposals for use of Opioid Funds
for Approved Purposes.
iv. Approving or denying proposals for use of Opioid
Funds for Approved Purposes.
V. Receiving funds from the Trustee for approved proposals
and distributing the Opioid Funds to the recipient.
vi. Reporting to the OAC and making publicly available all
decisions on Opioid Fund allocation applications,
distributions and expenditures.
h. Prior to any distribution of Opioid Funds within the Allocation
Region, The Participating Local Governments must establish an Opioid
Abatement Council (OAC) to oversee Opioid Fund allocation,
distribution, expenditures and dispute resolution. The OAC may be a
preexisting regional body or may be a new body created for purposes of
executing the obligations of this MOU.
i. The OAC for each Allocation Region shall be composed of
representation from both Participating Counties and Participating Towns
or Cities within the Region. The method of selecting members, and the
terms for which they will serve will be determined
by the Allocation Region's Participating Local Governments. All persons
who serve on the OAC must have work or educational experience
pertaining to one or more Approved Uses.
j. The Regional OAC will be responsible for the following actions:
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Overseeing distribution of Opioid Funds from Participating
Local Governments to programs and services within the
Allocation Region for Approved Purposes.
ii. Annual review of expenditure reports from
Participating Local Jurisdictions within the Allocation
Region for compliance with Approved Purposes and the
terms of this MOU and any Settlement.
iii. In the case where Participating Local Governments chose
to forego their allocation of Opioid Funds:
(i) Approving or denying proposals by Participating Local
Governments or community groups to the OAC for use of
Opioid Funds within the Allocation Region.
(ii) Directing the Trustee to distribute Opioid Funds for use
by Participating Local Governments or community groups
whose proposals are approved by the OAC.
(iii) Administrating and maintaining records of all OAC
decisions and distributions of Opioid Funds.
iv. Reporting and making publicly available all decisions on
Opioid Fund allocation applications, distributions and
expenditures by the OAC or directly by Participating Local
Governments.
V. Developing and maintaining a centralized public dashboard
or other repository for the publication of expenditure data
from any Participating Local Government that receives
Opioid Funds, and for expenditures by the OAC in that
Allocation Region, which it shall update at least annually.
vi. If necessary, requiring and collecting additional outcome -
related data from Participating Local Governments to
evaluate the use of Opioid Funds, and all Participating
Local Governments shall comply with such requirements.
vii. Hearing complaints by Participating Local Governments
within the Allocation Region regarding alleged failure to
(1) use Opioid Funds for Approved Purposes or (2) comply
with reporting requirements.
5. Participating Local Governments may agree and elect to share,
pool, or collaborate with their respective allocation of Opioid Funds in any
manner they choose, so long as such sharing, pooling, or collaboration is
used for Approved Purposes and complies with the terms of this MOU and
any Settlement.
6. Nothing in this MOU should alter or change any Participating
Local Government's rights to pursue its own claim. Rather, the intent of
this MOU is to join all parties who wish to be Participating Local
Governments to agree upon an allocation formula for any Opioid Funds
from any future binding Settlement with one or more Pharmaceutical
Supply Chain Participants for all Local Governments in the State of
Washington.
7. If any Participating Local Government disputes the amount it
receives from its allocation of Opioid Funds, the Participating Local
Government shall alert its respective OAC within sixty (60) days of
discovering the information underlying the dispute. Failure to alert its
OAC within this time frame shall not constitute a waiver of the
Participating Local Government's right to seek recoupment of any
deficiency in its allocation of Opioid Funds.
8. If any OAC concludes that a Participating Local Government's
expenditure of its allocation of Opioid Funds did not comply with the
Approved Purposes listed in Exhibit A, or the terms of this MOU, or that
the Participating Local Government otherwise misused its allocation of
Opioid Funds, the OAC may take remedial action against the alleged
offending Participating Local Government. Such remedial action is left to
the discretion of the OAC and may include withholding future Opioid
Funds owed to the offending Participating Local Government or requiring
the offending Participating Local Government to reimburse improperly
expended Opioid Funds back to the OAC to be re -allocated to the
remaining Participating Local Governments within that Region.
9. All Participating Local Governments and OAC shall maintain all
records related to the receipt and expenditure of Opioid Funds for no less
than five (5) years and shall make such records available for review by
any other Participating Local Government or OAC, or the public. Records
requested by the public shall be produced in accordance with
Washington's Public Records Act RCW 42.56.001 et seq. Records
requested by another Participating Local Government or an OAC shall be
produced within twenty-one (21) days of the date the record request was
received. This requirement does not supplant any Participating Local
Government or OAC's obligations under Washington's Public Records
Act RCW 42.56.001 et seq.
D. Payment of Counsel and Litigation Expenses
1. The Litigating Local Governments have incurred attorneys' fees
and litigation expenses relating to their prosecution of claims against the
Pharmaceutical Supply Chain Participants, and this prosecution has inured to the
benefit of all Participating Local Governments. Accordingly, a Washington
Government Fee Fund ("GFF") shall be established that ensures that all Parties
that receive Opioid Funds contribute to the payment of fees and expenses incurred
to prosecute the claims against the Pharmaceutical Supply Chain Participants,
regardless of whether they are litigating or non -litigating entities.
2. The amount of the GFF shall be based as follows: the funds to be
deposited in the GFF shall be equal to 15% of the total cash value of the Opioid
Funds.
3. The maximum percentage of any contingency fee agreement
permitted for compensation shall be 15% of the portion of the Opioid Funds
allocated to the Litigating Local Government that is a party to the contingency fee
agreement, plus expenses attributable to that Litigating Local Government. Under
no circumstances may counsel collect more for its work on behalf of a Litigating
Local Government than it would under its contingency agreement with that
Litigating Local Government.
4. Payments from the GFF shall be overseen by a committee (the
"Opioid Fee and Expense Committee") consisting of one representative of the
following law firms: (a) Keller Rohrback L.LP.; (b) Hagens Berman Sobol
Shapiro LLP; (c) Goldfarb & Huck Roth Riojas, PLLC; and (d) Napoli Shkolnik
PLLC. The role of the Opioid Fee and Expense Committee shall be limited to
ensuring that the GFF is administered in accordance with this Section.
5. In the event that settling Pharmaceutical Supply Chain Participants
do not pay the fees and expenses of the Participating Local Governments directly
at the time settlement is achieved, payments to counsel for Participating Local
Governments shall be made from the GFF over not more than three years, with
50% paid within 12 months of the date of Settlement and 25% paid in each
subsequent year, or at the time the total Settlement amount is paid to the Trustee
by the Defendants, whichever is sooner.
6. Any funds remaining in the GFF in excess of. (i) the amounts
needed to cover Litigating Local Governments' private counsel's representation
agreements, and (ii) the amounts needed to cover the common benefit tax
discussed in Section C.8 below (if not paid directly by the Defendants in
connection with future settlement(s), shall revert to the Participating Local
Governments pro rata according to the percentages set forth in Exhibits B, to be
used for Approved Purposes as set forth herein and in Exhibit A.
7. In the event that funds in the GFF are not sufficient to pay all fees
and expenses owed under this Section, payments to counsel for all Litigating
Local Governments shall be reduced on a pro rata basis. The Litigating Local
Governments will not be responsible for any of these reduced amounts.
8. The Parties anticipate that any Opioid Funds they receive will be
subject to a common benefit "tax" imposed by the court in In Re: National
Prescription Opiate Litigation, United States District Court for the Northern
District of Ohio, Case No. 1:17-and-02804-DAP ("Common Benefit Tax"). If this
occurs, the Participating Local Governments shall first seek to have the settling
defendants pay the Common Benefit Tax. If the settling defendants do not agree
to pay the Common Benefit Tax, then the Common Benefit Tax shall be paid
from the Opioid Funds and by both litigating and non -litigating Local
Governments. This payment shall occur prior to allocation and distribution of
funds to the Participating Local Governments. In the event that GFF is not fully
exhausted to pay the Litigating Local Governments' private counsel's
representation agreements, excess funds in the GFF shall be applied to pay the
Common Benefit Tax (if any).
E. General Terms
1. If any Participating Local Government believes another
Participating Local Government, not including the Regional Abatement Advisory
Councils, violated the terms of this MOU, the alleging Participating Local
Government may seek to enforce the terms of this MOU in the court in which any
applicable Settlement(s) was entered, provided the alleging Participating Local
Government first provides the alleged offending Participating Local Government
notice of the alleged violation(s) and a reasonable opportunity to cure the alleged
violation(s). In such an enforcement action, any alleging Participating Local
Government or alleged offending Participating Local Government may be
represented by their respective public entity in accordance with Washington law.
2. Nothing in this MOU shall be interpreted to waive the right of any
Participating Local Government to seek judicial relief for conduct occurring
outside the scope of this MOU that violates any Washington law. In such an
action, the alleged offending Participating Local Government, including the
Regional Abatement Advisory Councils, may be represented by their respective
public entities in accordance with Washington law. In the event of a conflict, any
Participating Local Government, including the Regional Abatement Advisory
Councils and its Members, may seek outside representation to defend itself
against such an action.
3. Venue for any legal action related to this MOU shall be in the
court in which the Participating Local Government is located or in accordance
with the court rules on venue in that jurisdiction. This provision is not intended to
expand the court rules on venue.
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4. This MOU may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument. The Participating Local Governments approve the use of
electronic signatures for execution of this MOU. All use of electronic signatures
shall be governed by the Uniform Electronic Transactions Act, C.R.S. §§ 24-71.3-
101, et seq. The Parties agree not to deny the legal effect or enforceability of the
MOU solely because it is in electronic form or because an electronic record was
used in its formation. The Participating Local Government agree not to object to
the admissibility of the MOU in the form of an electronic record, or a paper copy
of an electronic document, or a paper copy of a document bearing an electronic
signature, on the grounds that it is an electronic record or electronic signature or
that it is not in its original form or is not an original.
5. Each Participating Local Government represents that all
procedures necessary to authorize such Participating Local Government's
execution of this MOU have been performed and that the person signing for such
Party has been authorized to execute the MOU.
[Remainder of Page Intentionally Left Blank — Signature Pages Follow]
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This One Washington Memorandum of Understanding Between Washington
Municipalities is signed this day of , 2022 by:
JEFFERSON COUNTY WASHINGTON
Board of County Commissioners
Jefferson County, Washington
By:
Heidi Eisenhour, Chair Date
SEAL:
ATTEST:
Carolyn Galloway Date
Clerk of the Board
Approved as to form only:
0' March 21, 2022
Philip C. Hunsucker, Date
Chief Civil Deputy Prosecuting Attorney
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