Breaking down the proposed $665 million tribal government opioid settlement
We cover the players, the formulas and the timelines.
Top legal experts directly involved with a new $665-million proposed opioid-related settlement from drug companies and distributors to all federally-recognized tribal governments have shared several important details with Indigenous Wire.
Below we list the various legal components of the deal, including the players involved, the potential distribution formulas and timelines that tribal governments and Native citizens need to know:
While the overall proposal is worth $665 million, $75 million of that is set aside for the Cherokee Nation to address that tribe’s own opioid-based litigation, which was at a critical juncture in December. The $75 million is viewed by the lawyers involved as an “off ramp” to that litigation, both for the tribe and for the drug companies involved.
$150 million of the settlement comes from the Janssen family of pharmaceutical companies, including Johnson & Johnson. The Johnson & Johnson money is to be paid over 2 years, much faster than the 9 years over which they are paying a separate state and city/county opioid settlement.
The remaining monies, from the drug distributors involved in the litigation, is to be paid to tribal governments over 6½ years, which is much faster than the 18 years for the distributors to pay in their separate state and city/county settlement.
“I admire the states and cities and counties for achieving the victory that they did – and breaking trail, but this is an even better settlement,” Lloyd Miller, an Indian affairs lawyer with Sonosky, Chambers, Sachse, Miller & Monkman, LLP, told Indigenous Wire. He has served as one of the lead negotiators on the case.
All federally recognized tribes are eligible to participate in the settlement, even if they were not part of the 409 litigating tribes. More monies will not go to litigating tribes; all tribes will be subject to the same formulas of distribution.
The settlement is technically a recommendation to tribal governments from the many lawyers representing tribal governments in the litigation. All of the lawyers involved in the Tribal Leadership Committee in the case — ranging from those from well-known Indian law firms to unknowns in the field of Native law — signed a document recommending the settlement.
The Tribal Leadership Committee represents about 80 percent of the population of all the litigating tribes. In other words, the lawyers who represent a majority of the populations of the litigating tribes think this is a reasonable deal.
The settlement would go into effect when 95 percent of the tribes that are litigating – by enrollment population – sign off on it via a participation agreement. That is true of both the Janssen portion of the settlement and the distributor portion. For the distributor settlement, at least 14 of the 17 non-litigating tribes with populations exceeding 5,000 tribal members must agree to the settlement for it to happen.
When and if the settlement goes into effect, monies will start moving out to the tribes, first in escrow, then on a rolling basis.
The allocation of the settlement will be overseen by special master David Cohen and former Oklahoma federal judge Layn Phillips. They were both deeply involved in mediating the two settlements being proposed. They will be in charge of hearing any issues from tribes about the allocation process if the settlement is accepted.
The allocation matrix for the settlement factors in a number of elements, balancing them based on various formulas and then yields a percentage of the monies per tribe.
The allocation matrix in the Perdue Pharma bankruptcy of 2019 – the first case in which an amount of money had to be allocated out to all tribes – played a role in the development of the opioid settlement allocation matrix here. The elements that went into the Perdue allocation were based on how much prescription opioids penetrated local tribal markets.
The Drug Enforcement Administration (DEA) maintains the Automated Reports and Consolidated Ordering System (ARCOS) database that can be used to extrapolate tribal opioid use. ARCOS data was in this case enhanced with data from the Centers for Disease Control and Prevention (CDC) and other health resources to specifically address tribal opioid use. Opioid overdose data and drug overdose data were also included, as were poverty rates. Relative health-care costs were another factor considered.
The biggest element that the allocation matrix relies on is tribal service enrollment population. The Indian Health Service (IHS) user population database was used to derive these numbers. 85% of the overall matrix was weighted by the IHS user population per tribe. 15% was weighted by overall tribal citizenship per tribe.
Federal government data exist for every matrix component, except for tribal citizenship data. Such data was leaked by the federal government during the CARES Act pandemic funding process, but these numbers were also contained within the Perdue bankruptcy’s tribal verification process. Every tribe was also asked to verify their enrollment data in this litigation, and almost every litigating tribe responded, but a minority of non-litigating tribes responded.
It reportedly took 3½ years, using the expertise of tribal health experts, statisticians and others to collect the data to develop the allocation matrix for this settlement plan.
The allocation matrix was reportedly developed by a group of lawyers who represented all different kinds of tribes – small ones, large ones, urban ones, and geographically-diverse tribal nations.
“We had an enormous diversity of tribes represented by lawyers,” Miller said. “It was very important to get it right.”
The allocation matrix was explained to all lawyers representing the 409 litigating tribes in the case.
Tribes that did not respond during a data verification process when the matrix was developed will receive letters from former Assistant Secretary of Indian Affairs Kevin Washburn; current General Counsel of the Illinois Department of Insurance Mary Smith; and Kathy Hannan, the president and chairman of the Board of Directors for Girl Scouts of the USA.
Washburn, Smith and Hannan will be in charge of collecting enrollment data and other information from tribes, but not for deciding any allocation issues. Those issues will ultimately be decided by the aforementioned David Cohen and Layn Phillips.
Washburn, Smith and Hannan will be charged with sending out the final, approved checks to the tribal governments.
“We thought it was important that the tribal trust be controlled by tribal people of impeccable credentials,” Miller said.
The funds that go to tribes must be spent on abatement treatment strategies, which are broadly defined in the settlement plan. They include spirit camps, traditional healing and sweat lodges, as well as traditional treatment plans.
If, after 3 years, in the Johnson & Johnson portion of the settlement, or 4 after years in the distributor settlement, a tribe has not taken action to participate in settlement, then that tribe’s share will be reallocated to all of the other tribes.
15 percent of the distributor settlement will be put in escrow for lawyers’ fees; 14 percent of the Johnson & Johnson settlement will be put in escrow for lawyers’ fees.
Expect more tribal and Native lawsuits to continue against opioid manufacturers and consultants and pharmacy chains.
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