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Home My WebLink About _ 4.14(a)--Participation in Nation-Wide Opioid Litigation CITY OF REDDING REPORT TO THE CITY COUNCIL Recommendation Adopt Resolution that authorizes the City of Redding to participate in the settlement of the nation-wide opioid litigation against defendants Teva, Allergan, CVS, Walgreens, and Walmart; delegates authority to the City Attorney to execute all documents necessary to accomplish settlement on behalf of the City of Redding; and authorizes the City Attorney to notify the national settlement administrator of the City of Redding’s intent to receive a direct distribution of settlement funds. Fiscal Impact Assuming full participation by California cities and counties qualified to participate in the settlement, the fiscal impact to the City of Redding (City) is a positive cashflow in the range of approximately $1,306,240 to $3,190,947 distributed over the course of a period of time ranging from six (6) to fifteen (15) years depending on the individual defendant. Amounts will be less if there is not full participation. If the City Council (Council) authorizes the City Attorney to inform the national settlement administrator of its desire to receive direct distributions of the settlement funds, the City of Redding would undertake some de minimis costs for purposes of annual reporting on its use of funds. Alternative Action The Council could decide to not adopt the resolution. Should this occur, the City would not be eligible to receive settlement funds. Background/Analysis At its regular meeting on November 16, 2021, the Council authorized the City Attorney to inform the national settlement administrator of its desire to receive direct distributions of settlement funds resulting from litigation against defendants McKesson, Cardinal Health, MEETING DATE: March 21, 2023 ITEM NO. 4.14(a) FROM: ***APPROVED BY*** bdewalt@cityofredding.org btippin@cityofredding.org SUBJECT: 4.14(a)--Participation in Nation-Wide Opioid Litigation Barry DeWalt, City Attorney Report to Redding City Council March 13, 2023 Re: 4.14(a)--Participation in Nation-Wide Opioid Litigation Page 2 AmericansourceBergen, and Janssen Pharmaceuticals, Inc. Year 1 distributions have already been received. During the last several years, states, counties and cities have also engaged in litigation against manufacturers Teva and Allergan and against retailers Walmart, Walgreens, and CVS (collectively, “Defendants”). This litigation is separate and apart from the litigation that resulted in the Distribution of settlement funds from defendants McKesson, Cardinal Health, AmericansourceBergen, and Janssen Pharmaceuticals, Inc. Although the specific allegations with each lawsuit will differ, generally it is alleged that the named Defendants failed to properly monitor suspicious orders of prescription opioids and/or misrepresented the risks of long-term use of opioid medications to the public. This alleged activity would lead to increase in addiction and harmful negative impacts on state and local jurisdictions. This litigation is now being settled on a nation-wide basis. After deduction of some offsets, this amount is being shared among 50 states and includes all eligible counties and cities across the country. The settlement is accomplished by the execution of separate settlement agreements. The amount of distribution between the 50 states has already been determined by their respective attorneys general. The State of California will receive 9.92138 percent of the national distribution of settlements with the retailers. Notwithstanding, the amount of settlement proceeds to the State of California, and therefore the City is variable because the amount of distribution is subject to the level of participation by the receiving public entities. There is also a “bonus” structure whereby more money will flow to the states if more states, cities, and counties participate. The bonus structure is intended to encourage participation in the settlement. The California Attorney General has been negotiating with certain cities and counties that are named plaintiffs as to how to distribute these funds (the “Abatement Fund”) between all eligible cities and counties. At present, the rough estimation of receipts to the City is as follows: Teva $260,990 to $579,977 distributed over a term of 13 years Allergan $159,417 to $354,261 distributed over a term of 7 years Walmart $179,109 to $471,340 distributed over a term of 6 years Walgreens $386,546 to $942,795 distributed over a term of 15 years CVS $320,177 to $842,571 distributed over a term of 10 years Each city and county in the State of California must decide to opt -in to these settlements no later than April 18, 2023. Failure to do so will mean that the City will not share in the settlement. Should the Council adopt the attached resolution, and thereby give the City Attorney the authority to execute all necessary settlement agreements, the Council would also be authorizing the City Attorney to opt for a direct distribution to the City. The default distribution is for the national settlement administrator to distribute to counties. Without notification of the City’s intent to receive a direct distribution of settlement funds, the funds will flow to the County of Shasta. In such a case, the County of Shasta would direct distribution of the settlement funds. It should be noted that the settlement funds received by the City are restricted funds. They may not be used for any general purpose. Funds must generally be used for purposes best generally described as “opioid abatement.” City staff will monitor the use of the settlement proceeds to ensure that the use is consistent with the settlement documents. Report to Redding City Council March 13, 2023 Re: 4.14(a)--Participation in Nation-Wide Opioid Litigation Page 3 In summary, adoption of the attached resolution will opt the City into receipt of settlement funds in accord with its established allocation share. It will authorize the City Attorney to execute all settlement documents and any other ancillary document needed to accomplish the settlement. Lastly, it will authorize the City Attorney to notify the national settlement administrator of the Council’s intent to receive a direct distribution of funds. Environmental Review Approval to engage in this litigation is not a project within the meaning of the California Environmental Quality Act. No further action is required. Council Priority/City Manager Goals • This is a routine operational item. Attachments ^Resolution RESOLUTION NO. 2023-_____ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDDING ELECTING TO PARTICIPATE IN THE SETTLEMENT OF THE NATION-WIDE OPIOID LITIGATION AGAINST DEFENDANTS TEVA, ALLERGAN, CVS, WALGREENS, AND WALMART, DIRECTING THE CITY ATTORNEY TO EXECUTE ALL DOCUMENTS NECESSARY TO ACCOMPLISH SETTLEMENT ON BEHALF OF THE CITY OF REDDING AND AUTHORIZING THE CITY ATTORNEY TO NOTIFY THE NATIONAL SETTLEMENT ADMINISTRATOR OF THE CITY OF REDDING’S INTENT TO RECEIVE A DIRECT DISTRIBUTION OF SETTLEMENT FUNDS WHEREAS, states, counties and cities throughout the United States have joined as litigants against pharmaceutical manufacturers Teva and Allergan and retailers CVS, Walgreens, and Walmart (collectively, the “Defendants”); and WHEREAS, in this litigation, the litigating plaintiff public entities have generally alleged that the Defendants have generally failed to properly monitor suspicious orders of prescription opioids and that one or more of the Defendants have grossly misrepresented the risks of long-term use of its opioid medications to the public, and specifically users of its opioid medications; and WHEREAS, the City of Redding has been negatively impacted by the “opioid crisis” in that addiction has taxed its public safety resources; and WHEREAS, the parties to said litigation have negotiated a nationwide settlement whereby the State of California will receive approximately 9.9% of the total settlement amount; and WHEREAS, by means of a settlement allocation agreement negotiated between the litigating California counties and cities and the State of California Attorney General, the distribution to eligible cities and counties has been determined; and WHEREAS, the City of Redding was a non-participant in the litigation, but may participate in distribution of settlement funds if it elects to do so; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL THAT: 1. The recitals set forth herein are true and correct. 2. The City of Redding hereby elects to participate in the settlement of the nation-wide opioid litigation against the Defendants and receive settlement funds in accord with its established allocation percentage. 3. The City Attorney is authorized to execute all documents necessary to participate in the settlement and to execute all documents necessary to accomplish settlement on behalf of the City of Redding. 4. The City Attorney is authorized to notify the settlement administrator of the City of Redding’s intent to receive a direct distribution of settlement funds. 5. This Resolution shall take effect immediately upon its adoption by the City Council. I HEREBY CERTIFY that the foregoing resolution was introduced and adopted at a regular meeting of the City Council of the City of Redding on the 21st day of March, 2023, by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: MICHAEL DACQUISTO, Mayor ATTEST: FORM APPROVED: PAMELA MIZE, City Clerk BARRY E. DeWALT, City Attorney