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Election Year Politics Fuel AGs Fee Opposition in Opioid MDL

October 20, 2020 | Posted in : Expenses / Costs, Fee Award, Fee Award Factors, Fee Dispute, Fee Request, Legislation / Politics, Practice Area: Class Action / Mass Tort / MDL, Settlement Data / Terms

A recent Law 360 story by Jeff Overley, “Opioid Settlements Stymied By Atty Fee Demands, AGs Say,” reports that massive fee demands from plaintiffs attorneys in multidistrict opioid litigation are the main reason settlements haven't been finalized with major drug companies in a broader wave of opioid cases, two state attorneys general said, a provocative claim that drew a fast and fiery backlash.

Pennsylvania Attorney General Josh Shapiro, a lead negotiator in efforts to resolve thousands of opioid-crisis lawsuits, was the first AG to deliver the bare-knuckle assertion.  He did so during a speech in Dauphin County — home to the Keystone State's capital city of Harrisburg — about an addiction-treatment initiative.

"If the private attorneys involved in these negotiations were a bit less worried about the amount of money going into their own pockets, and more worried about the unnecessary lives being lost in Pennsylvania and the other states across our country, I'd be able to stand here in Dauphin County today and talk about the resources that we were bringing back for treatment to Pennsylvania," Shapiro said.  "We'll get there soon," the Democratic attorney general added, "but sadly, too many of those private attorneys are standing in the way of progress right now."

Shapiro, who is up for reelection next month, largely echoed those comments at a subsequent speech in Northumberland County.  He has been working with the attorneys general of Tennessee, Texas and North Carolina to broker settlements with pharmaceutical companies facing thousands of lawsuits that accuse them of fueling a catastrophic epidemic of painkiller addiction.

In a statement provided to Law360, Tennessee Attorney General Herbert H. Slatery III, a Republican, said that he was "in total agreement with General Shapiro."  "There is nothing to indicate that the opioid crisis has abated in any way.  The AGs recognize the urgency.  We wish the plaintiff attorneys did too," Slatery said.  "Then we could finalize some things and get significant help on the ground to alleviate the crisis.  Instead, we are spending too much time arguing about attorney fees and costs."

Several top lawyers for local-government plaintiffs in the opioid MDL pushed back on Shapiro's remarks shortly after he delivered them.  "The aggressive and untiring efforts of plaintiffs attorneys against the opioid companies over the last six years are the main reason there even are settlement negotiations," Paul Hanly Jr. of Simmons Hanly Conroy LLC told Law360. "We seek justice and abatement funds for all communities across the nation.  As for ourselves, we seek only fair compensation for a job superbly done."

Paul Geller of Robbins Geller Rudman & Dowd LLP, another top lawyer for the MDL plaintiffs, suggested that Shapiro was claiming credit for settlement offers that only exist because of work done by MDL lawyers.  Geller likened Shapiro to Rosie Ruiz, who infamously snuck into the homestretch of the Boston Marathon in 1980 and claimed to have won the race.  "The AG's actions remind me of Rosie Ruiz," Geller said.  "She jumped in near the end … and hurried to 'win' a race that others actually ran for the long and grueling entire 26 miles."

These developments were the latest examples of infighting that first emerged when the attorneys general in October 2019 unveiled several deals with drug companies.  One of the proposed settlements was a $4 billion accord with Johnson & Johnson; the drugmaker last week upped its offer to $5 billion, and the MDL attorneys reacted favorably.

The other proposed settlements would cover drug distributors McKesson Corp., Cardinal Health Inc. and AmerisourceBergen Drug Corp., which last year tentatively reached an $18 billion deal with the attorneys general.  Multiple sources said that the distributors are now offering more money, although they declined to provide a precise value.  "I will confirm that we wouldn't be talking to them if they weren't offering substantially more than they had offered under the original deal presented by the four AGs," Motley Rice LLC co-founder Joe Rice, a lead lawyer for the opioid MDL plaintiffs, told Law360.

Hunter Shkolnik of Napoli Shkolnik PLLC, another MDL plaintiffs attorney, told Law360 that Shapiro last year "said the plaintiffs were at fault for rejecting the $18 billion settlement they negotiated, [but] it's one year later and billions more have been offered because of our work and our rejection."  It's unclear how far apart the AGs and the plaintiffs lawyers are on attorney fees and costs.  Some AGs and drug companies have said plaintiffs attorneys could reap more than $3 billion in the MDL, which targets several other large companies beyond J&J and the distributors.

"There's a dispute about asking the distributors and Johnson & Johnson to pay the out-of-pocket litigation costs for the municipalities," Rice told Law360.  "The attorney generals got all of their out-of-pocket litigation costs paid.  But they refuse to add the same type [of] costs for the municipalities that have been litigating for years, and there's a dispute over that.  But it's in the tens of millions of dollars.  It's not huge."

The MDL contains roughly 3,000 cases filed mostly by cities and counties that want money for health care and law enforcement costs related to opioid abuse.  Some MDL attorneys also represent cities and counties with similar cases in state courts.  The attorneys general of virtually every state have also filed cases in state courts, sometimes with the assistance of lawyers in private practice.  A source close to the negotiations, speaking with Law360 on condition of anonymity, said that the attorney fees are "a real sticking point" because attorneys general fear they would siphon away badly needed funds for addiction treatment and prevention.