KY OAG 23-11 2023-12-19

Do Kentucky counties have to give half of their own opioid settlements to the state opioid abatement commission?

Short answer: Yes. The Attorney General concluded that KRS 15.293(3)(a) requires 50 percent of the proceeds from any settlement, judgment, or bankruptcy against the named opioid defendants to go to the Kentucky Opioid Abatement Advisory Commission's trust fund, with the other 50 percent staying with local governments. That split applies even to smaller regional or local settlements that counties reach on their own, as long as the defendants are among those named in the statute.

Disclaimer: This is an official Kentucky Attorney General opinion. AG opinions are persuasive authority in Kentucky courts but are not binding precedent like a court ruling. This summary is for informational purposes only and is not legal advice. Consult a licensed Kentucky attorney for advice on your specific situation.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official AG opinion. The original opinion (linked at the bottom of this page, or PDF in the sidebar) is the authoritative source for any reliance.

View original AG opinion (PDF)

Plain-English summary

Kentucky and its local governments sued the companies blamed for the opioid epidemic, recovering more than $800 million. To manage that money, the legislature passed House Bill 427 in 2021 and House Bill 92 in 2022. Together they set a 50/50 split: half of the proceeds go to a trust fund for the Kentucky Opioid Abatement Advisory Commission, and half go to counties, cities, and other local governments.

The Boone and Campbell County Attorneys asked a narrower question. Some counties expected to reach their own smaller, regional settlements with defendants named in the big national opioid case. Did they have to send half of those local settlement dollars to the Commission's trust fund, or could they keep all of it because the state was not a party to their deal?

The Attorney General said the 50/50 split still applies. The opinion treated this as a plain-language reading of KRS 15.293(3)(a), which directs that the trust fund receive 50 percent of "all proceeds received by the Commonwealth, counties, consolidated local governments, urban-county governments, and cities" in "any settlement or judgment or bankruptcy proceeding" against the listed defendants (McKesson, Cardinal Health, AmerisourceBergen, Johnson & Johnson, and any named defendants in the national prescription-opiate litigation). Because the statute says "any" such settlement and lists local governments as recipients, the split applies even when the county settles on its own and the Commonwealth is not a party. The opinion also noted that Kentucky's 50 percent local share is more generous than what many other states gave their local governments, so keeping half of a regional settlement still tends to leave counties with a significant net benefit.

What this means for you

County attorneys and county officials

Under this opinion, if your county reaches its own settlement, judgment, or bankruptcy recovery against a defendant named in KRS 15.293(3)(a) or in the national prescription-opiate litigation, 50 percent of the proceeds must go to the Commission's trust fund, even if the Commonwealth is not a party. The county keeps the other 50 percent.

City officials and local government finance officers

The opinion reads the same 50/50 split to apply to consolidated local governments, urban-county governments, and cities, not just counties, for settlements against the named defendants.

Public health administrators

For those tracking abatement funding, the opinion confirms that half of qualifying settlement dollars flow to the statewide Opioid Abatement Advisory Commission's trust fund rather than staying entirely local.

Common questions

Q: If my county settles its own opioid case, do we have to share the money with the state?
A: Yes, according to this opinion, if the defendant is one named in KRS 15.293(3)(a) or the national prescription-opiate litigation. The Attorney General read the statute to require 50 percent of the proceeds to go to the Commission's trust fund even for local or regional settlements.

Q: Which defendants trigger the 50/50 split?
A: The opinion lists McKesson, Cardinal Health, AmerisourceBergen, Johnson & Johnson, and any named defendants in In re National Prescription Opiate Litigation, plus their affiliates or subsidiaries related to opioid manufacturing or distribution to the extent included in a settlement.

Q: Does it matter that the state isn't a party to our settlement?
A: No. The opinion reads KRS 15.293(3)(a) to apply to "any" qualifying settlement, judgment, or bankruptcy proceeding, including ones where the Commonwealth is not itself a party.

Q: Is keeping only half a bad deal for counties?
A: The opinion observes that Kentucky's 50 percent local share is larger than what many other states gave local governments (it cites West Virginia at 24.5% and Ohio at 30% for certain settlements), so the split still tends to leave counties with a significant net benefit.

Background and statutory framework

House Bill 427 (2021) and House Bill 92 (2022) established how opioid settlement proceeds are divided in Kentucky. KRS 15.293(3)(a) directs that the Kentucky Opioid Abatement Advisory Commission's trust fund receive 50 percent of all proceeds received by the Commonwealth and local governments "in any settlement or judgment or bankruptcy proceeding" against McKesson, Cardinal Health, AmerisourceBergen, Johnson & Johnson, and any named defendants in In re National Prescription Opiate Litigation, MDL No. 2804. The Commission is administratively attached to the Office of the Attorney General. Applying the rule that clear and unambiguous statutory language is accepted as written (Commonwealth v. Holloway, quoting Griffin v. City of Bowling Green), the opinion concluded the 50/50 split governs qualifying local and regional settlements regardless of whether the Commonwealth is a party.

Citations and references

Statutes:
- KRS 15.293(3)(a) (50% to the Commission's trust fund); KRS 15.293 (allocation framework)
- House Bill 427 (2021 Regular Session); House Bill 92 (2022 Regular Session)

Cases:
- Commonwealth v. Holloway, 225 S.W.3d 404 (Ky. Ct. App. 2007)
- Griffin v. City of Bowling Green, 458 S.W.2d 456 (Ky. 1970)

Source

Landing page: https://www.ag.ky.gov/Opinions/Pages/default.aspx
Original PDF: https://www.ag.ky.gov/Resources/Opinions/Opinions/Opinion%20of%20the%20Attorney%20General%2023-11.pdf

Original opinion text

The full opinion as issued by the Office of the Kentucky Attorney General:

Commonwealth of Kentucky
Office of the Attorney General
Daniel Cameron, Attorney General
Capitol Building, Suite 118, 700 Capital Avenue, Frankfort, Kentucky 40601
December 19, 2023
OAG 23-11
Subject: Whether Kentucky law requires counties to split certain opioid-related settlements with the Kentucky Opioid Abatement Advisory Commission.
Requested by: Jordan Dallas Turner, Boone County Attorney; Steven J. Franzen, Campbell County Attorney
Written by: Jeremy J. Sylvester, Assistant Attorney General
Syllabus: KRS 15.293(3)(a) mandates that 50% of the funds from any settlement, judgment, or bankruptcy proceeding against certain defendants goes to the Kentucky Opioid Abatement Advisory Commission's trust fund.

Opinion of the Attorney General

The opioid epidemic is the public safety challenge of our lifetimes. In response, Attorney General Daniel Cameron and local governments across the Commonwealth filed lawsuits against the companies that contributed to and exacerbated the epidemic. To date, over $800 million has been secured from such lawsuits.

During the 2021 and 2022 Regular Sessions, the General Assembly enacted House Bill 427 and House Bill 92, respectively, to manage the proceeds from a subset of these lawsuits. Together, the bills provide that 50 percent of the proceeds goes to a trust fund for the Kentucky Opioid Abatement Advisory Commission (the Commission), and 50 percent goes to counties, consolidated local governments, urban-county governments, and cities of the Commonwealth. [The Kentucky Opioid Abatement Advisory Commission is administratively attached to the Office of the Kentucky Attorney General.] Specifically, the General Assembly said that the Commission's trust fund shall receive:

Fifty percent (50%) of all proceeds received by the Commonwealth, counties, consolidated local governments, urban-county governments, and cities of the Commonwealth in any settlement or judgment or bankruptcy proceeding against McKesson Corporations, Cardinal Health 5, LLC, Amerisource Drug Corporation, Johnson & Johnson, and any named defendants in the In re National Prescription Opiate Litigation, MDL No. 2804, Case No. 1:17-md-02804, in the United States District Court for the Northern District of Ohio, any of their affiliates or subsidiaries related to opioid manufacturing or distribution to the extent included in a settlement agreement.

KRS 15.293(3)(a) (emphasis added). The legislature's unanimous decision to split evenly the proceeds from the lawsuits described under this statute brought by the Commonwealth and its political subdivisions had support from, among others, the Kentucky League of Cities and the Kentucky Association of Counties. [See Office Press Release, Attorney General Cameron, Legislators, KLC Join Forces in Support of Bill to Share Opioid Settlement Dollars (Feb. 23, 2021).]

Now, several counties have informed the Office that they anticipate entering into smaller, regional settlements with named defendants in In re National Prescription Opiate Litigation. These counties ask whether KRS 15.293(3)(a) requires them to deliver 50% of the settlement proceeds to the Commission's trust fund. The answer is a straightforward matter of statutory construction.

"Where the words used in a statute are clear and unambiguous and express the legislative intent, there is no room for construction and the statute must be accepted as it is written." Commonwealth v. Holloway, 225 S.W.3d. 404, 406 (Ky. Ct. App. 2007) (quoting Griffin v. City of Bowling Green, 458 S.W.2d 456, 457 (Ky. 1970)). The legislature was clear in House Bill 427 and House Bill 92. It apportioned settlements recovered through efforts of the Attorney General's office equally between the Commonwealth and local governments. This 50% share that the General Assembly allocated to local governments is much more than other states typically apportioned to their local governments from opioid settlements obtained by their respective Attorneys General. [For example, West Virginia only apportioned 24.5% of the settlement it reached with certain opioid distributors to local governments. As another example, Ohio only allocated 30% of certain opioid settlements to local governments.] This 50/50 apportionment of settlement funds likely provides local governments with a significant net financial benefit despite retaining only 50% of the settlement funds received from smaller settlements that they reach with other defendants in the In re National Prescription Opiate Litigation.

Thus, where funds are realized as the result of any settlement, judgment, or bankruptcy proceeding against named defendants in In re National Prescription Opiate Litigation to which the Commonwealth is not itself a party, the proceeds must still be shared according to the plan reflected in KRS 15.293, i.e., 50 percent must be paid to the Commission's trust fund and 50 percent may remain with the counties, consolidated local governments, urban-county governments, or cities that are parties to the subject regional or local settlements.

Daniel Cameron
ATTORNEY GENERAL
Jeremy J. Sylvester
Assistant Attorney General