HomeMy WebLinkAboutAgreements/Contracts - BOCC (002)i ZZ
ALLOCATION AGREEMENT GOVERNING THE ALLOCATION OF FUNDS PAID
BY THE SETTLING OPIOID DISTRIBUTORS IN WASHINGTON STATE
AUGUST 8, 2022
This Allocation Agreement Governing the Allocation of Funds Paid by the Settling
Opioid Distributors in Washington State (the "Allocation Agreement") governs the distribution
of funds obtained from AmerisourceBergen Corporation, Cardinal Health, Inc., and McKesson
Corporation (the "Settling Distributors") in connection with its resolution of any and all claims
by the State of Washington and the counties, cities, and towns in Washington State ("Local
Governments") against the Settling Distributors (the "Distributors Settlement"). The Distributors
Settlement including any amendments are attached hereto as Exhibit 1.
1. This Allocation Agreement is intended to be a State -Subdivision Agreement as
defined in Section I.VVV of the Global Settlement (the "Global Settlement"),
which is Exhibit H of the Distributors Settlement. This Allocation Agreement
shall be interpreted to be consistent with the requirements of a State -Subdivision
Agreement in the Global Settlement.
2. This Allocation Agreement shall become effective only if all of the following
occur:
A. All Litigating Subdivisions in Washington and 90% of Non -Litigating
Primary Subdivisions in Washington as the terms are used in Section
II.C.1 of the Distributors Settlement must execute and return the
Subdivision Settlement Participation Form, Exhibit F of the Distributors
Settlement (the "Participation Form") by,September 23, 2022. This form
is also attached hereto as Exhibit 2.
B. The Consent Judgment and Stipulation of Dismissal with Prejudice,
Exhibit G of the Distributors Settlement, is filed and approved by the
Court.
C. The number of Local Governments that execute and return this Allocation
Agreement satisfies the participation requirements for a State -Subdivision
Agreement as specified in Exhibit O of the Global Settlement.
3. Requirements to become a Participating- Local Government. To become a
Participating Local Government that can participate in this Allocation Agreement,
a Local Government must do all of the following:
A. The Local Government must execute and return this Allocation
Agreement.
APPRoVEIT e Local Government must release their claims against the Settling
D stributors and agree to by bound by the terms of the Distributors
AUG'3O 2Q22 S ttlement by timely executing and returning the Participation Form. This
f rm is attached hereto as Exhibit 2.
C. Litigating Subdivisions must dismiss the Settling Distributors with
prejudice from their lawsuits. The Litigating Subdivisions are listed on
Exhibit B of the Distributors Settlement.
D. The Local Government must execute and return the One Washington
Memorandum of Understanding Between Washington Municipalities
("MOU") agreed to by the Participating Local Governments in
Washington State, which is attached hereto as Exhibit 3. As specified in
Paragraph 10.A of this Allocation Agreement, the Local Government may
elect in its discretion to execute the MOU for purposes of this Allocation
Agreement only.
A Local Government that meets all of the conditions in this paragraph shall be
deemed a "Participating Local Government." Alternatively, if the requirements of
Paragraphs 2(A), 2(B), and 2(C) of this Allocation Agreement are satisfied and
this Allocation Agreement becomes effective, then all Local Governments that
comply with Paragraph 3(B) of. this Allocation Agreement shall be deemed a
"Participating Local Government."
4. This Allocation Agreement applies to the Washington Abatement Amount as
defined in Section IV.A of the Distributors Settlement. The maximum possible
Washington Abatement Amount for the Distributors Settlement is
$430,249,769.02. As specified in the Global Settlement, the Washington
Abatement Amount varies dependent on the percentage of Primary Subdivisions
that choose to become Participating Local Governments and whether there are
any Later Litigating Subdivisions as defined in Section I.EE of the Global
Settlement.
5. This Allocation Agreement does not apply to the Washington Fees and Costs as
defined in Section V of the Distributors Settlement. After satisfying its obligations
to its outside counsel for attorneys' fees and costs, the State estimates that it will
receive approximately $46 million for its own attorneys' fees and costs pursuant
to Section V.B.1 of the Distributors Settlement. The State shall utilize any and all
amounts it receives for its own attorneys' fees and costs pursuant to Section V.B.1
of the Distributors Settlement to provide statewide programs and services for
Opioid Remediation as defined in Section I.SS of the Global Settlement.
6. While this Allocation Agreement does not apply to the Washington Fees and
Costs as defined in Section V of the Distributors Settlement, Section V.B.2 of the
Distributors Settlement estimates that the Settling Distributors shall pay
$10,920,914.70 to Participating Litigating Subdivisions' attorneys for fees and
costs. The actual amount may be greater or less. This Allocation Agreement and
the MOU are a State Back -Stop Agreement. The total contingent fees an attorney
receives from the Contingency Fee Fund pursuant to Section II. D in Exhibit R
the Global Settlement, the MOU, and this Allocation Agreement combined cannot
exceed 15% of the portion of the LG Share paid to the Litigating Local
Government that retained that firm (i.e., if City X filed suit with outside counsel
2
on a contingency fee contract and City X receives $1,000,000 from the
Distributors Settlement, then the maximum that the firm can receive is $150,000
for fees.)
7. No portion of the Washington Fees and Costs as defined in Section V of the
Distributors Settlement and/or the State Share as defined in Paragraph 8.A of this
Allocation Agreement shall be used to fund the Government Fee Fund ("GFF")
referred to in Paragraph 10 of this Allocation Agreement and Section D of the
MOU, or in any other way to fund any Participating Local Government's
attorneys' fees, costs, or common benefit tax other than the aforementioned
payment by the Settling Distributors to Participating Litigating Subdivisions'
attorneys for fees and costs in Section V.B.2 of the Distributors Settlement.
8. The Washington Abatement Amount shall and must be used by the State and
Participating Local Governments for Opioid Remediation as defined in Section
I.SS of the Global Settlement, except as allowed by Section V of the Global
Settlement. Exhibit 4 is a non -exhaustive list of expenditures that qualify as
Opioid Remediation. Further, the Washington Abatement Amount shall and must
be, used by the State and Participating Local Governments as provided for in the
Distributors Settlement.
9. The State and the Participating Local Governments agree to divide the
Washington Abatement Amount as follows:
A. Fifty percent (50%) to the State of Washington ("State Share").
B. Fifty percent (50%) to the Participating Local Governments ("LG Share").
10. The LG Share shall be distributed pursuant to the MOU attached hereto as Exhibit
3 as amended and modified in this Allocation Agreement.
11. For purposes of this Allocation Agreement only, the MOU is modified as follows
and any contrary provisions in the MOU are struck:
A. The MOU is amended to add new Section EA which provides as follows:
A Local Government may elect in its discretion to execute the
MOU for purposes of this Allocation Agreement only. If a Local
Governments executes the MOU for purposes of this Allocation
Agreement only, then the MOU will only bind such Local
Government and be effective with respect to this Allocation
.Agreement and the Distributors Settlement, and not any other
Settlement as that term is defined in Section A.14 of the MOU. To
execute the MOU for purposes of this Allocation Agreement only,
the Local Government may either (a) check the applicable box on
its signature page of this Allocation Agreement that is returned or
(b) add language below its signature lines in the MOU that is
returned indicating that the Local Government is executing or has
executed the MOU only for purposes of the Allocation Agreement
Governing the Allocation of Funds Paid by the Settling Opioid
Distributors in Washington State.
B. Exhibit A of the MOU is replaced by Exhibit E of the Global Settlement,
which is attached as Exhibit 4 to this Agreement.
C. The definition of "Litigating Local Governments" in Section A.4 of the
MOU shall mean Local Governments that filed suit against one or more of
the Settling Defendants prior to May 3, 2022. The Litigating Local
Governments are listed on Exhibit B of the Distributors Settlement, and
are referred to as Litigating Subdivisions in the Distributors Settlement.
D. The definition of "National Settlement Agreement" in Section A.6 of the
MOU shall mean the Global Settlement.
E. The definition of "Settlement" in Section A.14 of the MOU shall mean the
Distributors Settlement.
F. The MOU is amended to add new Section C.4.g.vii, which provides as
follows:
"If a Participating Local Government receiving a direct payment
(a) uses Opioid Funds other than as provided for in the Distributors
Settlement, (b) does not comply with conditions for receiving
direct payments under the MOU, or (c) does not promptly submit
necessary reporting and compliance information to its Regional
Opioid Abatement Counsel ("Regional OAC") as defined at
Section C.4.h of the MOU, then the Regional OAC may suspend
direct payments to the Participating Local Government after
notice, an opportunity to cure, and sufficient due process. If direct
payments to Participating Local Government are suspended, the
payments shall be treated as if the Participating Local Government
is foregoing their allocation of Opioid Funds pursuant to Section
C.4.d and C.4.j*.iii of the MOU. In the event of a suspension, the
Regional OAC shall give prompt notice to the suspended
Participating Local Government and the Settlement Fund
Administrator specifying the reasons for the suspension, the
process for reinstatement, the factors that will be considered for
reinstatement, and the due process that will be provided. A
suspended Participating Local Government may apply to the
Regional OAC to be reinstated for direct payments no earlier than
five years after the suspension."
G. Consistent with how attorney fee funds for outside counsel for
Participating Local Subdivisions are being administered in most states
across the country, the Government Fee Fund ("GFF") set forth in the
11
MOU shall be overseen by the MDL Fee Panel (David R. Cohen, Randi S.
Ellis and Hon. David R. Herndon (ret.)). The Fee Panel will preside over
allocation and disbursement of attorney's fees in a manner consistent with
the Motion to Appoint the Fee Panel to Allocate and Disburse Attorney's
Fees Provided for in State Back -Stop Agreements and the Order
Appointing the Fee Panel to Allocate and Disburse A tto rn ey 's Fees
Providedfor in State Back -Stop Agreements, Case No. 1: 17-md-02804-
DAP Doc #: 4543 (June 17, 2022).
H. The GFF set forth in the MOU shall be funded by the LG Share of the
Washington Abatement Amount only. To the extent the common benefit
tax is not already payable by the Settling Distributors as contemplated by
Section D.8 of the MOU, the GFF shall be used to pay Litigating Local
Government contingency fee agreements and any common benefit tax
referred to in Section D of the MOU, which shall be paid on a pro rata
basis to eligible law firms as determined by the Fee Panel.
I. To fund the GFF, fifteen percent (15 %) of the LG Share shall be deposited
in the GFF from each LG Share settlement payment until the Litigating
Subdivisions contingency fee agreements. and common benefit tax (if any)
referred to in Section D of the MOU are satisfied. Under no circumstances
will any Non -Litigating Primary Subdivision -or Litigating Local
Government be required to contribute to the GFF more than 15% of the
portion of the LG Share allocated to such Non -Litigating Primary
Subdivision or Litigating Local Government. In addition, under no
circumstances will any portion of the LG Share allocated to a Litigating
Local Government be used to pay the contingency fees or litigation
expenses of counsel for some other Litigating Local Government.
J. The maximum amount of any Litigating Local Government contingency
fee agreement (from the Contingency Fee Fund pursuant to Section 11. D
in Exhibit R the Global Settlement) payable to a law firm permitted for
compensation shall be fifteen percent (15%) of the portion of the LG
Share paid to the Litigating Local Government that retained that firm (i.e.,
if City X filed suit with outside counsel on a contingency fee contract and
City X receives $ 1,000,000 from the Distributors Settlement, then the
maximum that the firm can receive is $150,000 for fees.) The firms also
shall be paid documented expenses due under their contingency fee
agreements that have been paid by the law firm attributable to that
Litigating Local Government. Consistent with the Distributors Settlement
and Exhibit R of the Global Settlement, amounts due to Participating
Litigating Subdivisions' attorneys under this Allocation Agreement shall
not impact (i) costs paid by the subdivisions to their attorneys pursuant to
a State Back -Stop agreement, (ii) fees paid to subdivision attorneys from
the Common Benefit Fund for common benefit work performed by the
attorneys pursuant to Section II.0 of Exhibit R of the Global Settlement,
or (iii) costs paid to subdivision attorneys from the MDL Expense Fund
5
for expenses incurred by the attorneys pursuant to Section ME of the
Global Settlement.
K. Under no circumstances may counsel receive more for its work on behalf
of a Litigating Local Government than it would under its contingency
agreement with that Litigating Local Government. To the extent a law
firm was retained by a Litigating Local Government on a contingency fee
agreement that provides for compensation at a rate that is less than fifteen
percent (15 %) of that Litigating Local Government's recovery, the
maximum amount payable to that law firm referred to in Section D.3 of
the MOU shall be the percentage set forth in that contingency fee
agreement.
L. For the avoidance of doubt, both payments from the GFF and the payment
to the Participating Litigating Local Governments' attorneys for fees and
costs referred to in Paragraph 6 of this Allocation Agreement and Section
V.B.2 Distributors Settlement shall be included when calculating whether
the aforementioned fifteen percent (15%) maximum percentage (or less if
the provisions of Paragraph 10X of this Allocation Agreement apply) of
any Litigating Local Government contingency fee agreement referred to
above has been met.
M. To the extent there are any excess funds in the GFF, the Fee Panel and the
Settlement Administrator shall facilitate the return of those funds to the
Participating Local Governments as provided for in Section D.6 of the
MOU.
12. In connection with the execution and administration of this Allocation
Agreement, the State and the Participating Local Governments agree to abide by
the Public Records Act, RCW 42.56 eq seq.
13. All Participating Local Governments, Regional OACs, and the State shall
maintain all non -transitory records related to this Allocation Agreement as well as
the receipt and expenditure of the funds from the Distributors Settlement for no
less than five (5) years.
14. If any party to this Allocation Agreement believes that a Participating Local
Government, Regional OAC, the State, an entity, or individual involved in the
receipt, distribution, or administration of the funds from the Distributors
Settlement has violated any applicable ethics codes or rules, a complaint shall be
lodged with the appropriate forum for handling such matters, with a copy of the
complaint promptly sent to the Washington Attorney General, Complex Litigation
Division, Division Chief, 800 Fifth Avenue, Suite 2000, Seattle, Washington
98104.
15. To the extent (i) a region utilizes a pre-existing regional body to establish its
Opioid Abatement Council pursuant to the Section 4.h of the MOU, and (ii) that
no
pre-existing regional body is subject to the requirements of the Community
Behavioral Health Services Act, RCW 71.24 et seq., the State and the
Participating Local Governments agree that the Opioid Funds paid by the Settling
Distributors are subject to the requirements of the MOU and this Allocation
Agreement.
16. Upon request by the Settling Distributors, the Participating Local Governments
must comply with the Tax Cooperation and Reporting provisions of the
Distributors Settlement and the Global Settlement.
17. Venue for any legal action related to this Allocation Agreement (separate and
apart from the MOU, the Distributors Settlement, or the Global Settlement) shall
be in King, County, Washington.
18. Each party represents that all procedures necessary to authorize such party's
execution of this Allocation Agreement have been performed and that such person
signing for such party has been authorized to execute this Allocation Agreement.
7
FOR THE STATE OF WASHINGTON:
ROBERT W. FERGUSON
Attorney General
JEFFREY G. RUPERT
Division Chief
Date:
F®R THE PARTICIPATING LOCAL GOVERNMENT:
Name of Participating Local Government: 6 rdn 6ZW4 /1"�
Authorized signature: Ae
Name: Danny E Stone,
Title: BOCC Chair
A Local Government may elect in its discretion to execute the MOU for purposes of this
Allocation Agreement only by checking this box (see Paragraph 10.A of this Allocation
Agreement):
El Local Government is executing the MOU in the form attached hereto as Exhibit 3, but
which is further amended and modified as set forth in this Allocation Agreement, only for
purposes of this Allocation Agreement.
Approved as to, form:
e j 'C
(PrintedIme)
(Signed)
thWtKy Prosecuting Attorney
Date:— , 1' 2 ._ f � �-
W-It