This Memorandum of Understanding controls how opioid settlement funds received from wholesale distributors and manufacturers will be allocated in Ohio and who will control it.
ONE OHIO MEMORANDUM OF UNDERSTANDING
Whereas, the people of the State of Ohio 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 Ohio, though its Attorney General, and certain Local Governments,
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 Ohio, through its Governor and Attorney General, and its Local
Governments share a common desire to abate and alleviate the impacts of that misfeasance,
nonfeasance and malfeasance throughout the State of Ohio;
Now therefore, the State and its Local Governments, subject to completing 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.
As used in this MOU:
- “The State” shall mean the State of Ohio acting through its Governor and Attorney
- “Local Government(s)” shall mean all counties, townships, cities and villages
within the geographic boundaries of the State of Ohio.
- “The Parties” shall mean the State of Ohio, the Local Governments and the
Plaintiffs’ Executive Committee of the National Prescription Opiate Multidistrict
- “Negotiating Committee” shall mean a three-member group comprising one
representative for each of (1) the State; (2) the Plaintiffs’ Executive Committee of
the National Prescription Opiate Multidistrict Litigation (“PEC”); and (3) Ohio
Local Governments (collectively, “Members”). The State shall be represented by
the Ohio Attorney General or his designee. The PEC shall be represented by
attorney Joe Rice or his designee. Ohio Local Governments shall be represented by
attorney Frank Gallucci, or attorney Russell Budd or their designee.
- “Settlement” shall mean the negotiated resolution of legal or equitable claims
against a Pharmaceutical Supply Chain Participant when that resolution has been
jointly entered into by the State, PEC and the Local Governments.
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- “Opioid Funds” shall mean monetary amounts obtained through a Settlement as
defined in this Memorandum of Understanding.
- “Approved Purpose(s)” shall mean evidence-based forward-looking strategies,
programming and services used to (i) expand the availability of treatment for
individuals affected by substance use disorders, (ii) develop, promote and provide
evidence-based substance use prevention strategies, (iii) provide substance use
avoidance and awareness education, (iv) decrease the oversupply of licit and illicit
opioids, and (v) support recovery from addiction services performed by qualified
and appropriately licensed providers, as is further set forth in the agreed Opioid
Abatement Strategies attached as Exhibit A.For purposes of the Local Government
Share, “Approved Purpose(s)” will also include past expenditures.
- “Pharmaceutical Supply Chain” shall mean the process and channels through which
Controlled Substances are manufactured, marketed, promoted, distributed or
- “Pharmaceutical Supply Chain Participant” shall mean any entity that engages in
or has engaged in the manufacture, marketing, promotion, distribution or
dispensing of an opioid analgesic.
B. Allocation of Settlement Proceeds
- All Opioid Funds shall be divided with 30% going to Local Governments (“LG
Share”), 55% to the Foundation (structure described below) (“Foundation Share”),
and 15% to the Office of the Ohio Attorney General as Counsel for the State of
Ohio (“State Share”).
- All Opioid Funds, regardless of allocation, shall be utilized in a manner consistent
with the Approved Purposes definition. The LG Share may also be used for past
expenditures so long as the expenditures were made for purposes consistent with
the remaining provisions of the Approved Purposes definition. Prior to using any
portion of the LG Share as restitution for past expenditures, a Local Government
shall pass a resolution or take equivalent governmental action that explains its
determination that its prior expenditures for Approved Purposes are greater than or
equal to the amount of the LG Share that the Local Government seeks to use for
- The division of Opioid Funds paid to Local Governments participating in an
individual settlement shall be based on the allocation created and agreed to by the
Local Governments which assigns each Local Government a percentage share of
Opioid Funds. The allocations are set forth in Exhibit B. With respect to Opioid
Funds, the allocation shall be static.
- In the event a Local Government merges, dissolves, or ceases to exist, the allocation
percentage for that Local Government shall be redistributed equitably based on the
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composition of the successor Local Government. If a Local Government for any
reason is excluded from a specific settlement, the allocation percentage for that
Local Government shall be redistributed equitably among the participating Local
- If the LG Share is less than $500, then that amount will instead be distributed to the
county in which the Local Government lies to allow practical application of the
- Funds obtained from parties unrelated to the Litigation, via grant, bequest, gift or
the like, separate and distinct from the Litigation, may be directed to the Foundation
and disbursed as set forth below.
- The LG Share shall be paid in cash and directly to Local Governments under a
settlement or judgment, or through an administrator designated in the settlement
documents who shall hold the funds in trust in a segregated account to benefit the
Local Governments to be promptly distributed as set forth herein.
- Nothing in this MOU should alter or change any Local Government’s rights to
pursue its own claim. Rather, the intent of this MOU is to join all parties to seek
and negotiate binding settlement or settlements with one or more defendants for all
parties within Ohio.
- Opioid Funds directed to the Foundation shall be used to benefit the local
community consistent with the by-laws of the Foundation documents and disbursed
as set forth below.
- The State of Ohio and the Local Governments understand and acknowledge that
additional steps should be undertaken to assist the Foundation in its mission, at a
predictable level of funding, regardless of external factors.
- The Parties will take the necessary steps to ensure there is the ability of a direct
right of action under the expedited docket rules to the Ohio Supreme Court relative
to any alleged abuse of discretion by the Foundation.
C. Payment of Counsel and Litigation Expenses
- The Parties agree to establish a Local Government Fee Fund (“LGFF”) to
compensate counsel for Local Governmentsif the Parties cannot secure the separate
payment of fees and associated litigation expenses for their counsel from a settling
- The LGFF shall be calculated by taking 11.05% of the total monetary component
of any settlement accepted (“LGFF Amount”). Fees related to product or other
items of value shall be addressed case by case.
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- The first 45% of the LGFF amount shall be drawn from the LG Share. The
remaining 55% shall be drawn from the Foundation Share. No portion of the LGFF
Amount may be assessed against or drawn from the State Share.
- To the extent the Parties can secure the separate payment of fees and associated
litigation expenses from a settling entity, the amount to be drawn for the LGFF will
be proportionally reduced.
- This LGFF Amount will be deposited into the LGFF and shall be divided with 60%
being allocated to the National Prescription Opiate MDL (“M.D.L.”) Common
Benefit fund for fees and expenses and 40% to contingency fees.
- Local Government contingent fee contracts shall be capped at 25% or the actual
contract rate whichever is less. Eligible contingent fee contracts shall be executed
as of March 6, 2020 and subject to review by the committee designated to oversee
the Local Government Fee Fund.
- Common Benefit awards will be coordinated as set forth in the M.D.L. Common
Benefit Fee Order. Expenses will be addressed consistent with the manner utilized
in the M.D.L.
- Any balance left in the LGFF following the payment of fees shall revert to the
- Any attorney fees related to representation of the State of Ohio shall not be paid
from the LGFF but paid directly from the State Share or through other sources.
D. The Foundation
- The State of Ohio will be divided into 19 Regions (See attached Exhibit C). Eight
of the regions will be single or two county metropolitan regions. Eleven of the
regions will be multi-county, non-metropolitan regions.
- Each Region shall create their own governance structure so it ensures all Local
Governments have input and equitable representation regarding regional decisions
including representation on the board and selection of projects to be funded from
the region’s Regional Share. The Expert Panel (defined below) may consult with
and may make recommendations to Regions on projects to be funded. Regions shall
have the responsibility to make decisions that will allocate funds to projects that
will equitably serve the needs of the entire Region.
- The Parties shall create a private 501(c)(3) foundation (“Foundation”) with a
governing board (“Board”), a panel of experts (“Expert Panel”), and such other
regional entities as may be necessary for the purpose of receiving and disbursing
Opioid Funds and other purposes as set forth both herein and in the documents
establishing the Foundation. The Foundation will allow Local Governments to take
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advantage of economies of scale and will partner with the State of Ohio to increase
- Board Composition
a. The Board will consist of 29 members comprising representation from four
• Six members selected by the State (five selected by the
Governor and one selected by the Attorney General);
• Four members drawn from the Legislature
o One representative selected by the President of the
o One representative selected by the Ohio Senate
o One representative selected by the Speaker of the
Ohio House of Representatives; and,
o One representative selected by the Ohio House
• Eleven members with one member selected from each non-
metropolitan Regions; and
• Eight members, with one member selected from each
b. All board members shall serve as fiduciaries of the Foundation as required
by Ohio Revised Code § 1702.30(B) governing directors of nonprofit
- Board terms will be staggered. Five members, (one from each of the first three
classes above, and two from the metropolitan class) will be appointed for an initial
three-year term, eight members of the Board (two from the first class, including the
Attorney General’s representative, one from the second class, four from the third
class, and one from the fourth class) will be appointed for an initial term of one
year. The remaining members will be appointed for a two-year term. Board
members may be reappointed. All subsequent terms will be for two years.
- Eighteen members of the Board shall constitute a quorum. Members of the Board
may participate in meetings by telephone or video conference or may select a
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designee to attend and vote if the Board member is unavailable to attend a board
- In all votes of the Board, a measure shall pass if a quorum is present, the measure
receives the affirmative votes from a majority of those board members voting, and
at least one member from each of the four classes of Board members votes in the
- The Foundation shall have an Executive Director appointed by the Governor.
a. The Governor shall appoint the Executive Director at his or her discretion
from a list of three candidates provided to the Governor by the Board. If
the Governor finds all three candidates to be unsatisfactory, the Governor
may reject all three candidates and request the Board to provide three new
persons to select from.
b. In choosing candidates to be submitted to the Governor, the Board shall
seek candidates with at least six (6) years of experience in addiction, mental
health and/or public health and who shall have management experience in
c. No funds derived from the Foundation Share shall be used to pay the
Executive Director or any of the foundation staff in excess of the maximum
range (range 42) of the Department of Administrative Services Exempt
Schedule E2 or that schedule’s successor.
d. The Executive Director shall serve as an ex officio, non-voting member of
both the Board and the Expert Panel.
- The Board shall appoint the Expert Panel. The Expert Panel shall consist of six
members submitted by the Board Members representing the Local Governments,
two members submitted by the Governor and one member submitted by the
Attorney General. Expert Panel members may be members of Local Governments
or the State. The Expert Panel will utilize experts in addiction, pain management,
public health and other opioid related fields to make recommendations that will
seek to ensure that all 19 regions can address the opioid epidemic both locally and
statewide. Expert Panel members may also be members of the Foundation Board,
but need not be.
- The Foundation Board and the Regions shall be guided by the recognition that
expenditures should ensure both the efficient and effective abatement of the opioid
epidemic and the prevention of future addiction and substance misuse. In
recognition of these core principles, the Board and the Regions shall endeavor to
assure there are funds disbursed each year to support evidence-based substance
abuse/misuse prevention efforts.
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- Disbursement of Foundation Funds by the Board
a. The Foundation Board shall develop and approve procedures for the
disbursement of Opioid Funds of the Foundation consistent with this
Memorandum of Understanding.
b. Funds for statewide programs, innovation, research, and education may also
be expended by the Foundation. Any statewide programs funded from the
Foundation Share would be only as directed by an affirmative vote of the
Board as set forth in paragraph D(7) above. Expenditures for these purposes
may also be funded by the Foundation with funds received from either the
State Share (as directed by the State) or from sources other than Opioid
Funds as provided in paragraph 14 below.
c. Funds approved for disbursement to the nineteen Regions shall be allocated
based on each Region’s share of Opioid Funds (“Regional Share”). Each
Regional Share shall be calculated by summing the individual percentage
shares of the Local Governments within that Region as set forth in Exhibit
B. The Regional Shares for each Region are set forth in Exhibit D.
d. Regions may collaborate with other Regions to submit joint proposals to be
paid for from the Regional Shares of two or more Regions for the use of
e. The Foundation’s procedures shall set forth the role of the Expert Panel and
the Board in advising, determining, and/or approving disbursements of
Opioid Funds for Approved Purposes by either the Board or the Regions.
Proposed disbursements to Regions of Regional Shares shall be reviewed
only to determine whether the proposed disbursement meets the criteria for
f. Within 90 days of the first receipt of any Opioid Funds and annually
thereafter, the Board, assisted by its investment advisors and Expert Panel,
shall determine the amount and timing of Foundation funds to be distributed
as Regional Shares. In making this determination, the Board shall consider:
(a) Pending requests for Opioid Funds from Regions; (b) the total Opioid
Funds available; (c) the timing of anticipated receipts of future Opioid
Funds; (d) non-Opioid Funds received by the Foundation; and (e)
investment income. The Foundation may disburse its principal and interest
with the aim towards an efficient, expeditious abatement of the Opioid crisis
considering long term and short term strategies.
g. Votes of the Board on the disbursement and expenditure of funds shall, as
with all board votes, be subject to the voting procedures in Section D(7)
above. The proposed procedures should provide for the Board to hear
appeals by Local Governments from any denials of requested use of funds.
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- The Foundation, Expert Panel, and any other entities under the supervision of the
Foundation shall operate in a transparent manner. Meetings shall be open, and
documents shall be public to the same extent they would be if the Foundation was
a public entity. All operations of the Foundation and all Foundation supervised
entities shall be subject to audit. The bylaws of the Foundation Board regarding
governance of the Board as adopted by the Board, may clarify any other provisions
in this MOU except this subsection. This substantive portion of this subsection shall
be restated in the bylaws.
- The Foundation shall consult with a professional investment advisor to adopt a
Foundation investment policy that will seek to assure that the Foundation’s
investments are appropriate, prudent, and consistent with best practices for
investments of public funds. The investment policy shall be be designed to meet the
Foundation’s long and short-term goals.
- The Foundation and any Foundation supervised entity may receive funds including
stocks, bonds, real property and cash in addition to the proceeds of the
Litigation. These additional funds shall be subject only to the limitations, if any,
contained in the individual award, grant, donation, gift, bequest or deposit
consistent with the mission of the foundation.
E. Settlement Negotiations
- All Members of the Negotiating Committee, and their respective representatives,
shall be notified of and provided the opportunity to participate in all negotiations
relating to any Ohio-specific Settlement with a Pharmaceutical Supply Chain
- No Settlement Proposal can be accepted for presentation to Local Governments or
the State under this MOU over the objection of any of the three Members of the
Negotiating Committee. The Chair shall poll the Committee Members at the
conclusion of discussions of any potential settlement proposal to determine whether
such objections exist. Although multiple individuals may be present on a Member’s
behalf, for polling purposes each Member is a single entity with a single voice.
- Any Settlement Proposal accepted by the Negotiating Committee shall be subject
to appoval by Local Governments and the State.
- As this is an “All Ohio” effort, the Committee shall be Chaired by the Attorney
General. However, no one member of the Negotiating Committee is authorized to
speak publicly on behalf of the Negotiating Committee without consent from the
other Committee Members.
- The State of Ohio, the PEC or the Local Governments may withdraw from
coordinated Settlement discussions detailed in this Section upon 5 days’ written
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notice to the remaining Committee Members and counsel for any affected
Pharmaceutical Supply Chain Participant. The withdrawal of any Member releases
the remaining Committee Members from the restrictions and obligations in this
- The obligations in this Section shall not affect any Party’s right to proceed with
trial or, within 30 days of the date upon which a trial involving that Party’s claims
against a specific Pharmaceutical Supply Chain Participant is scheduled to begin,
reach a case specific resolution with that particular Pharmaceutical Supply Chain
Acknowledgment of Agreement
We the undersigned have participated in the drafting of the above Memorandum of
Understanding including consideration based on comments solicited from Local
Governments. This document has been collaboratively drafted to maintain all individual claims
while allowing the State and Local Governments to cooperate in exploring all possible means of
resolution. Nothing in this agreement binds any party to a specific outcome. Any resolution under
this document will require acceptance by the State of Ohio and the Local Governments.
FOR THE STATE OF OHIO:
Mike DeWine, Governor Dave Yost, Attorney General
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FOR THE LOCAL GOVERNMENTS AND
PLAINTIFFS’ EXECUTIVE COMMITTEE:
Frank L Gallucci III
Plevin & Gallucci Co., LPA
Anthony J. Majestro
Powell & Majestro PLLC
Zoll & Kranz, LLC
Donald W. Davis, Jr.
Brennan, Manna & Diamond, LLC
Motley Rice, LLC
Baron & Budd, PC
Robert R. Miller
Oths, Heiser, Miller, Waigland
& Clagg, LLC
D. Dale Seif, Jr.
Seif & McNamee, LLC
Lowe, Eklund & Wakefield Co., LPA
Peter H. Weinberger
Spangenberg, Shibley & Liber LLP
Kevin M. Butler
Law Offices of Kevin M. Butler
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We the undersigned ACCEPT / REJECT (Circle One) the One Ohio Memorandum of
Understanding (“MOU”). We understand that the purpose of this MOU is to permit collaboration
between the State of Ohio and Local Governments to explore and potentially effectuating earlier
resolution of the Opioid Litigation against Pharmaceutical Supply Chain Participants. We also
understand that an additional purpose is to create an effective means of distributing any potential
settlement funds obtained under this MOU between the State of Ohio and Local Governments in
a manner and means that would promote an effective and meaningful use of the funds in abating
the opioid epidemic throughout Ohio.