Dispute Among Pennington County & State Over Opioid Money

Dispute Among Pennington County & State Over Opioid Money

Introduction

In order to cover the county's legal expenses, Pennington County is requesting that the state adjust its national opioid settlement amounts in court.

The nationwide opioid settlement resulted from two legal avenues: state attorneys general suing opioid makers and distributors for their involvement in the opioid crisis and a multidistrict lawsuit filed against them.

In 2018, the South Dakota attorney general brought a claim against distributors and producers. In April 2021, Pennington County, the first local government from South Dakota to take part in the federal opioid multidistrict litigation, filed their complaint. When a court decided the multidistrict case would become a class action lawsuit and encompass all subdivisions in all states, those two legal paths converged.

The announcement that South Dakota will join the federal settlement came three months after Pennington County entered the multidistrict litigation.  

The result was that South Dakota counties and cities, including Sioux Falls and Rapid City, got settlement funds without taking part in the legal action.

The counsel for Pennington County has filed two challenges to have Janssen Pharmaceuticals, one of the corporations that reached a settlement in court, recalculate the first three years of South Dakota's local government settlement allotments.

The lawyer also argued that the state ought to have included a "backstop" requiring all state subdivisions to contribute to the costs of Pennington County's legal fees. The settlement stated that backstops are at the states' discretion, hence, it is not necessary.

In the first two years of the Janssen settlement allocations, Pennington County earned close to $50,000. According to court records, it will earn an additional $43,713 in the third year of allocations and hundreds of thousands more in the following years.

As of the third phase of settlements, it owes 15% of the total Janssen settlement in legal expenses, which, without accounting for future allocations, comes to almost $14,000. The county requests an increase in its allocations of that amount in order to pay the fees and establish the backstop while also accounting for its legal costs. The additional money would be taken from the settlements given to all the other South Dakota counties and towns. 

The state contends that it is not compelled to implement a backstop since one was not included in the South Dakota opioid settlement memorandum agreement at the time Pennington County agreed to it. In a letter in response to the disagreement, South Dakota's Chief Deputy Attorney General claims that state law forbids the use of opioid settlement monies to pay for legal expenses.

The Janssen settlement gave litigating parties a means to request compensation for legal expenses, the deputy attorney general adds. However, because Pennington County filed three months after the deadline, the county cannot get a reimbursement for its legal expenses from the settlement.

Pennington County's final resort is a backstop, he said. Even after the county agreed to a memorandum of agreement with the state, he claimed it asked for a backstop, but nothing was done. The fight before Hughes County Court is the county's most recent attempt, despite a resolution it approved earlier this year asking the backstop.