Texas AG Reaches Deal With 254 Counties Ahead of Global Opioid Settlement

By Amanda Bronstad

Texas Attorney General Ken Paxton announced a deal Thursday that would help distribute up to $1.5 billion to the state and its cities and counties from a potential nationwide opioid settlement.

The May 13 agreement, which also involved six law firms representing Texas and its cities and counties in their separate opioid lawsuits, attempts to resolve some of the key sticking points in bringing a myriad assortment of governments into the negotiations over a nationwide opioid settlement, estimated to be at least $19.2 billion.

Although a nationwide settlement is not a done deal, “we are very close,” said Mikal Watts, of Watts Guerra, whose firm represented more than a dozen counties in the Texas agreement.

“This is an important precondition for that to be able to happen,” he said. “Today’s announcement is a precursor to an agreement between the attorneys general, the state court litigants and the federal MDL, all of which must agree before the defendants will pay tens of billions of dollars that they are prepared to pay.”

Thursday’s agreement, which said it was “in preparation for settlement with opioid defendants,” comes as attorneys general from more than 20 states, and the plaintiffs’ executive committee for 2,600 cities, counties and other governments in the multidistrict litigation in federal court in Ohio, are attempting to hammer out a global deal. The negotiations have focused on the distributor defendants, AmerisourceBergen Corp., McKesson Corp. and Cardinal Health Inc., and manufacturer Johnson & Johnson.

“The opioids crisis is an ongoing epidemic that impacts countless families throughout Texas and our nation,” said Paxton on Thursday. “Families around Texas—from large urban areas to small farming and ranching communities—will benefit from this collaborative effort between my office and local leaders across our state. This agreement provides Texans in all 254 counties with desperately needed funding for education, prevention and treatment in our fight against opioid abuse.”

Under the Texas deal, 15% of a potential nationwide settlement’s share going to Texas would go to the legislature, with 15% directly to the counties and cities. A newly formed Texas Opioid Council, using the metrics of Christopher Ruhm, professor of public policy and economics at the University of Virginia, would distribute 70% of the funds.

Law firms representing Texas cities and counties agreed to accept contingency fees of less than 9.4%, a sharp reduction from the 35% promised under many of their outside counsel contracts. They plan to seek their fees from the MDL’s common benefit fund first, followed by funds that go to their clients and the state abatement fund.

“The idea is Texas lawyers have done a ton of work, so we intend to go try to get compensated for the work from the national common benefit fund,” Watts said.

Texas was among several states that opposed a proposed 7% holdback paid by the defendants in any possible nationwide deal that would contribute a common benefit fund for the plaintiffs’ executive committee in the MDL. They called the MDL leadership “non-transparent and uncooperative” and said such a holdback would violate a Texas statute, passed last year, requiring the attorney general to approve all contingency fees.

The agreement included San Antonio’s Watts Guerra, which, along with The Gallagher Law Firm and Fibich Leebron Copeland Briggs, represented 13 counties, including Bexar County. Don Downey PC also joined them in representing Harris County, while The Lanier Law Firm represented the city of Houston and five other counties.

Simon Greenstone Panatier represented 44 counties and, with The Lanier Law Firm, represented three others including Dallas County.

“In the aftermath of the Big Tobacco settlement there was a general sense among the individual cities and counties that the funds were not allocated equitably—that not enough money got to the right places. This agreement will help prevent that from happening with respect to opioid-related settlement monies,” said Jeffrey Simon, of Simon Greenstone. “Having an allocation plan in place allows us to now focus squarely on the common goal of holding opioid manufacturers and distributors accountable for their misconduct in creating and fueling this scourge that has cost so many lives and too much taxpayer money throughout Texas.”

Thursday’s agreement also attempted to resolve disputes among the various counties, many of which are political opposites, and involved the participation of several local judges.

“In making this agreement with the state, we set aside all political differences of opinion to do what’s best for the citizens of Dallas County, and we are proud to share this important news,” said Dallas County Judge Clay Jenkins.