The text provided here of the MOU and exhibits is also available as a downloadable 54 page PDF from our Archives. This PDF does not meet WCAG 2.2 AA accessibility standards, but it is made available for its historical and legal value as it has the inked signatures of Assistant Attorney General Brendan O'Neil and Shayna E. Sacks, Esq. It contains the following materials:
- Amendment to Maine State-Subdivision Memorandum of Understanding and Agreement Regarding Use of Settlement Funds (pages 1-8 of PDF)- see text below
- Exhibit MOU 1: Schedules A and B, pages 193-206 of 1021 page court filing dated 7/8/21 (pages 9-22 of PDF)
- Exhibit MOU 2: Exhibit E, Distributors' 7.30.21 Exhibit Updates (pages 23-37 of PDF)
- Exhibit MOU 3: Subdivisions with Consolidated Allocations- Qualified Subdivisions Only (page 38 of PDF)
- Exhibit MOU 4: United States District Court Northern District of Ohio Eastern Division (pages 39-54 of PDF)
- Amendment to Maine State-Subdivision Memorandum of Understanding and Agreement Regarding Use of Settlement Funds
Amendment to Maine State-Subdivision Memorandum of Understanding and Agreement Regarding Use of Settlement Funds
Whereas, the State of Maine, through its Attorney General, and certain Subdivisions, through their elected representatives and counsel, entered into a Memorandum of Understanding (“MOU”), dated January 26, 2022, entitled “Maine State-Subdivision Memorandum of Understanding and Agreement Regarding Use of Settlement Funds”; and
Whereas the State and its Subdivisions desire to amend the MOU;
Now therefore, the State and its Subdivisions hereby agree to amend the MOU in its entirety, to read as follows:
Maine State-Subdivision Memorandum of Understanding and Agreement Regarding Use of Settlement Funds
Whereas, the people of the State of Maine and its communities have been harmed by misfeasance, nonfeasance and malfeasance committed by certain entities within the Pharmaceutical Supply Chain; and,
Whereas, the State of Maine, though its Attorney General, and certain Subdivisions, through their elected representatives and counsel, are separately engaged in litigation seeking to hold Pharmaceutical Supply Chain Participants accountable for the damage caused by their misfeasance, nonfeasance and malfeasance; and,
Whereas, the State of Maine, through its Attorney General, and its Subdivisions share a common desire to abate and alleviate the impacts of that misfeasance, nonfeasance and malfeasance throughout the State of Maine;
Now therefore, the State and its Subdivisions, subject to completion of formal documents effectuating the Parties' agreements, enter into this Memorandum of Understanding ("MOU") relating to the allocation and use of the proceeds of Settlements described.
This agreement is subject to the requirements of the National Opioid Settlement, as well as applicable law. Terms used in this MOU have the same meaning as in those used in the National Opioid Settlement unless otherwise defined herein.
- I. Definitions
I. Definitions
A. "Approved Uses" shall mean those uses identified in the List of Opioid Remediation Uses, attached as Exhibit E to the National Opioid Settlement, and those uses identified as "Approved Opioid Abatement Uses" in Schedules A and B to Exhibit G to the Notice of Filing of Eighth Plan Supplement Pursuant to the Fifth Amended Joint Chapter 11 Plan of Reorganization of Purdue Pharma L.P. and its Affiliated Debtors, In re: Purdue Pharma L.P., et al., Case No. 19-23649-RDD, Dkt. 3121 (Bankr. S.D. N.Y. July 8, 2021), and attached as Exhibits I and 2 to this Memorandum of Understanding.
B. "Direct Share Subdivisions" means a plaintiff subdivision that has filed a complaint against a Pharmaceutical Supply Chain entity and/or a subdivision with a population equal to or greater than 10,000. For the avoidance of doubt, the 39 eligible Direct Share Subdivisions are as identified on Exhibit 3 hereto.
C. "Effective Date" means 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 the formation of the Recovery Council.
D. The "Maine Recovery Fund" means the fund created by this Agreement, the funds of which will be used for the purposes of opioid abatement.
E. The "National Opioid Settlement" means the National Distributor and J&J Settlements Agreement, dated as of July 21, 2021, and any revision thereto.
F. "Pharmaceutical Supply Chain" shall mean the process and channels through which Controlled Substances are manufactured, marketed, promoted, distributed or dispensed.
G. "Recovery Fund Council" means the Council created in Section III of this MOU.
- II. Distribution of Funds
II. Distribution of Funds
A. Applicability of Agreement. These terms shall apply to the National Distributor Settlement, the Purdue Pharma and Mallinckrodt bankruptcy settlements.
B. Approved Uses. All Opioid Funds, regardless of allocation, shall be utilized for approved uses.
C. Division of Funds. All Opioids Funds allocated to the State of Maine and the Subdivisions are to be distributed as follows:
20% to the State of Maine Attorney General to be used on Approved Uses.
30% to the Direct Share Subdivisions for spending on Approved Uses to be allocated in accordance with Exhibit 3.
50% to be placed in the Maine Recovery Fund which are to be spent on Approved Uses as directed by the Recovery Council.
D. The Direct Share Subdivisions' shares shall be distributed directly to each Direct Share Subdivision by the National Settlement Administrator. Monies in the Maine Recovery Fund shall be distributed by the Treasurer of the State as described below. Any Direct Share Subdivision may form agreements or ventures or otherwise work in collaboration with federal, state. local, tribal or private sector entities in pursuing Opioid Remediation activities funded from their direct share distribution or funded by the Recovery Fund.
- III. The Maine Recovery Council
III. The Maine Recovery Council
A Recovery Fund Council (the "Council") consisting of representatives appointed by the State and subdivisions, shall be created to direct the disbursement of recovery funds for recovery purposes on a statewide basis for the uses allowed by this MOU.
Membership: The Recovery Council shall consist of eleven (11) members, who shall serve in their official capacity only.
Subdivision Members: The Recovery Council shall include at least 4 members from the plaintiff cities or counties to be selected by them.
State Members. Four (4) members shall be appointed by the State as follows:
a. The Governor shall appoint two members
b. The Speaker of the House or his designee
c. The President of the Senate or his designee
Public Members. The Attorney General shall appoint three (3) public members from among the following:
a. Individuals or family members impacted by the Opioid Crisis
b. Individuals with substance use disorder and recovery community experience,
c. Public health experts in treatment and or prevention.
The Legislature may add members to the Council for up to a maximum of fifteen (15).
Terms: The Recovery Council shall be established within ninety (90) days of the Effective Date and initial members appointed. Members may serve no more than two (2) consecutive two-year terms, for a total of four (4) consecutive years.
Duties: The Recovery Council is primarily responsible for ensuring that the distribution of Recovery Funds complies with the terms of the MOU and the Agreement entitled “Maine School Administrative Units’ Inclusion in Maine’s Recovery Fund”.. It shall meet at least twice within each calendar year either in person or via a remote meeting method as allowed by Maine law.
Governance: The Recovery Council shall draft its own bylaws or other governing documents, which must include appropriate conflict of interest provisions, in accordance with this MOU and the following principles:
a. Authority: The Recovery Council does not have any rulemaking authority. The terms of the MOU and Agreement and any Settlement, as entered by a Court of competent jurisdiction control the authority of the Recovery Council and the Recovery Council shall not stray outside the bounds of the authority and power vested by this MOU and any Court approved Settlement.
b. Administration: The Recovery Council is responsible for accounting of all Recovery Funds. and for releasing Recovery Funds.
Transparency: The Recovery Council shall operate with all reasonable transparency and in compliance with Maine's Freedom of Access Law 1 MRS sections 401 et seq.
A. The Recovery Council shall develop a centralized public dashboard or other repository for publication of expenditure data from any party or Regional Council that receives Recovery Funds. The Council may require outcome related data from any entity that receives Recovery Funds. For purposes of funding the centralized dashboard, the Council shall make every effort to use existing state resources.
Collaboration: The Recovery Council shall facilitate collaboration among the State, subdivisions, Regional Councils and other stakeholders for the purposes of sharing data, outcomes, strategies and other relevant information related to abating the opioid crisis in Maine.
Decision Making: The Recovery Council shall make all decisions by consensus. In the event consensus cannot be achieved, unless otherwise required by this MOU, the Council shall make decisions by 3/5 vote of its members.
Legal Representation: The Attorney General shall provide legal counsel and administrative support to the Recovery Council. The Council may use funds to hire additional administration support if necessary.
Compensation: No member of the Recovery Council shall be compensated for their work related to the Abatement Council.
- IV. The Maine Recovery Fund
IV. The Maine Recovery Fund
A. Fund Established. The Maine Recovery Fund is established for the purposes specified in this chapter as a separate and distinct fund for accounting and budgetary reporting purposes.
B. Sources of Fund. The State Controller shall credit to the fund:
All money designated to the Maine Recovery Fund for abatement in this agreement in settlement of litigation by the state or one of its subdivisions against Johnson & Johnson, Janssen Pharmaceuticals, Inc., Purdue Pharma L.P., Mallinckrodt, PLC, Cardinal Health, Inc., AmerisourceBergen Corporation, and McKesson Corporation.
Money from any other source, whether public or private, designated for deposit into or credited to the fund; and
Interest earned or other investment income on balances in the fund.
C. Unencumbered Balances. Any unencumbered balance remaining at the end of any fiscal year lapses back to the Maine Recovery Fund, the account within the Office of the Attorney General established pursuant to this section, and may not be made available for expenditure without specific legislative approval.
D. General Fund Limitation. Notwithstanding any provision to the contrary in this section, any program, expansion of a program, expenditure or transfer authorized by the Legislature using the Maine Recovery Fund may not be transferred to the General Fund without specific legislative approval.
E. Report by Attorney General. The Attorney General shall report at least annually on or before the 2nd Friday in December to the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs and the joint standing committee of the Legislature having jurisdiction over health and human services matters. The report must summarize the activity in any funds or accounts directly related to this section.
F. Restricted Accounts.The State Controller is authorized to establish separate accounts within the fund in order to segregate money received by the fund from any source, whether public or private, that requires as a condition of the contribution to the fund that the use of the money contributed be restricted to approved uses. Money credited to a restricted account established under this subsection may be applied only to the purposes to which the account is restricted.
G. Adjustment to Allocations. For state fiscal years beginning on or after July 1, the State Budget Officer is authorized to adjust allocations if actual revenue collections for the fiscal year are less than the approved legislative allocations. The State Budget Officer shall review the programs receiving funds from the fund and shall adjust the funding in the All Other line category to stay within available resources. These adjustments must be calculated in proportion to each account's allocation in the All Other line category in relation to the total All Other allocation for fund programs. Notwithstanding any other provision of law, the allocation for the identified amounts may be reduced by financial order upon the recommendation of the State Budget Officer and approval of the Governor. The State Budget Officer shall report annually on the allocation adjustments made pursuant to this subsection to the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs and the joint standing committee of the Legislature having jurisdiction over health and human services matters by May 15th.
H. Separate Accounts; Annual Reporting. A state agency that receives allocations from the fund, and a county, a city, and a contractor or vendor that receives funding allocated from the fund shall maintain that money in a separate account and shall report by September 1st of each year to the Recovery Council providing a description of how those funds for the prior state fiscal year were targeted to the Approved Uses. The Attorney General shall by October 1st of each year compile the reports provided under this subsection and forward the information in a report to the Legislature.
I. Legislative Committee Review of Legislation. Whenever a proposal in a resolve or bill before the Legislature, including but not limited to a budget bill, affects the fund, the joint standing committee of the Legislature having jurisdiction over the proposal shall hold a public hearing and determine the level of support for the proposal among members of the committee. If there is support for the proposal among a majority of the members of the committee, the committee shall request the joint standing committee of the Legislature having jurisdiction over health and human services matters to review and evaluate the proposal as it pertains to the fund. The joint standing committee of the Legislature having jurisdiction over health and human services matters shall conduct the review and report to the committee of jurisdiction and to the joint standing committee of the Legislature having jurisdiction over appropriations and financial affairs.
- V. Payment of Counsel and Litigation Expenses.
V. Payment of Counsel and Litigation Expenses.
National Attorney Fee Fund. The National Settlement Agreements provide for the payment of all or a portion of the attorney fees and costs owed by the litigating subdivisions to private attorneys retained to file suit in the national opioid litigation. Private attorneys for subdivisions must waive enforcement of their contingent fee agreements to receive payment from the National Attorney Fee Fund. Judge Polster recognized that a state backstop fund can be designed to incentivize private attorneys to waive their right to enforce contingent fee agreements and instead apply to the National Attorney Fee Fund, with the goal of achieving greater subdivision participation and higher total payouts to Maine. Accordingly, in order to seek payment from the Backstop Fund, Counsel must agree to waive enforcement of their contingency fee agreements with the subdivisions and first apply to the National Attorneys Fee Fund.
The Parties agree that the litigation and nonlitigating (i.e., participating) subdivisions will create a supplemental attorney fees fund (the "Backstop Fund") to be used to compensate private attorneys that filed opioid lawsuits on or before December 31, 2019.
Backstop Fund Source. The Backstop Fund will be funded by seven percent (7%) of the share of each payment made to the participating subdivisions from the National Opioid settlement agreements. Counsel for Participating Subdivisions may apply to the Backstop Fund for only a shortfall, that is, the difference between what their fee agreements would entitle them to as set forth in Judge Polster's order dated August 6, 2021 Exhibit 4 hereto, minus what they have been awarded from the Common Benefit Fund (including both the "common benefit" and "contingency fee" calculations, if any). If they are awarded fees/costs for common benefit work in the national fee fund, these fees/costs will be allocated proportionally across all their local government opioid clients based on the allocation model used in the Negotiation Class website to allocate the appropriate portion to the specific litigating Maine client represented by the law firm.
Special Master. A Special Master will administer the Backstop Fund, including overseeing any distribution, evaluating requests of counsel for payment and determining the amount of any payment. The Special Master will be compensated from the backstop fund. The Special Master shall be selected jointly as follows. The participating subdivisions shall provide a list of at least (3) three candidates for the Special Master position to the Attorney General. The Attorney General shall select the Special Master from those names provided by the subdivisions. The Attorney General may ask the subdivisions to provide additional names. Any successor backstop special master will be selected in the same manner.
Special Master Determinations. The Special Master will determine the amount and timing of any payment to Counsel from the Backstop Fund. The Special Master shall make one determination regarding payment of attorney's fees to Counsel, which will apply through the term of the recovery from the National Opioid Settlement. In making such determinations, the Special Master will consider the amounts that have been or will be received by the private attorney's firm from the National Opioid Settlement common benefit and contingency fee funds relating to subdivisions, the dollar amount of recovery for the Maine subdivisions, the complexity of the legal issues involved in the opioid litigation, and work done to directly benefit the Maine subdivisions. In the interest of transparency, Counsel shall provide information in their initial fee application about the total amount of fees that Counsel have received or will receive from the National Attorney Fee common benefit and contingency fee funds related to litigating subdivisions. For subdivisions that have not entered into contingency fee agreements, the total fees paid to counsel, including from the National Opioid Settlement's Contingency Fee and Common Benefit Funds, may not exceed fifteen 15% of the total gross recovery of the subdivisions' share of funds from the National Opioid Settlement. Counsel seeking payment from the Backstop Fund may also provide written submissions to the Special Master, which may include declarations from counsel, summaries relating to the factors described above, and/or attestation regarding total payments awarded or anticipated from the National Settlement Agreements'contingency fee and common benefit funds. Private attorneys shall not be required to disclose work product, proprietary or confidential information, included but not limited to detailed billing or lodestar records. Any documents filed with the Special Master shall be public and the special master's fee awards shall be transparent, public, final and not appealable.
To the extent the Special Master determines that the Backstop Fund exceeds the amount necessary for payment to Counsel, the special master shall distribute any excess amount to the subdivisions according to the percentages set forth in Exhibit 3.
The Backstop Fund will be administered for (a) the length of the National Litigation Settlement Payments; or (b) until all Counsel for the litigating subdivisions have either (i) received payments equal to the Backstop Fund payment cap, above or (ii) received the full amount determined by the Special Master, whichever occurs first.
For the avoidance of doubt no portion of the State recovery fund will be used to Fund the Backstop Fund or in any other way to fund any subdivisions' attorney's fees and expenses.
Dated: June 13, 2022
AARON M. FREY
ATTORNEY GENERAL
Brendan O'Neil
Assistant Attorney General
6 State House Station
Augusta, ME 04333
207 626 8800
Attorney for the State of Maine
Shayna E. Sacks, Esq.
Napoli Shkolnik Law
360 Lexington Ave. Eleventh Floor
New York, NY 10017
Adam Lee, Esq.
Trafton, Matzen, Belleau & Frenette, LLP
10 Minot Ave.
Auburn, ME 04212-0470
Attorneys for the Maine Subdivisions
- Exhibits
- Exhibit MOU 1: Schedules A and B, pages 193-206 of 1021 page court filing dated 7/8/21 (pages 9-22 of PDF)
- Exhibit MOU 2: Exhibit E, Distributors' 7.30.21 Exhibit Updates (pages 23-37 of PDF)
- Exhibit MOU 3: Subdivisions with Consolidated Allocations- Qualified Subdivisions Only (page 38 of PDF)
- Exhibit MOU 4: United States District Court Northern District of Ohio Eastern Division (pages 39-54 of PDF)