Opioid settlement: Allegheny County won’t receive a $479,000 penalty after questions from WESA and Spotlight PA

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MCKEESPORT — When Allegheny County government received its first opioid settlement payment last year, it missed out on nearly $328,000. Then, for its second payment, it missed out on another $494,000.

And it stood to lose out on hundreds of thousands of dollars more with this year’s payment, scheduled for mid-December.

Not anymore.

Following questions from WESA and Spotlight PA, all of the required municipalities in Allegheny County have approved signing onto an opioid settlement deal that is expected to bring about $1 billion to Pennsylvania over 18 years, including tens of millions of dollars to Allegheny County.

With all of them signed up, Allegheny County can receive its full estimated $6 million payment for this year. Otherwise, the county would have lost an estimated $479,000. An official in the city of McKeesport — which was one of three municipalities that the county said it still needed to sign on in late September — cited Spotlight PA and WESA’s reporting before city officials approved a resolution to join the settlement.

“Thank you for alerting us to the fact that we were missing a step in this settlement process,” Jennifer Vertullo, an official with the city of McKeesport, wrote to WESA on Oct. 25. “The mayor has requested that this item be included on council’s agenda for the November 1 meeting.”

The next week, Vertullo provided a copy of a Nov. 1 resolution, stating that the mayor and City Council signed onto the deal that involves Johnson & Johnson and three major drug distributors: AmerisourceBergen, Cardinal Health, and McKesson.

State Rep. Jim Gregory (R., Blair), a member of the trust that is responsible for distributing and overseeing opioid settlement funds, welcomed the news that Allegheny County will receive a full payment for this year.

“I’m glad to know that everyone’s recognizing they play a role in getting this money out,” Gregory said. “And if there was a delay … we’re moving past that. The delay is done. Everybody’s on board. And now everybody recognizes that this money is meant to get out to the people of Pennsylvania.”

So far, Allegheny County has spent its settlement funds on telehealth services, mobile treatment and recovery services, and harm-reduction efforts, among other things, according to its public dashboard.

Slow to sign

Allegheny County needed McKeesport and other municipalities to sign on to receive the full amount possible from the settlement fund. This condition goes back to the lengthy negotiations that took place with drug companies regarding what they owed for their role in allegedly fueling the opioid epidemic.

In 2021, a bipartisan coalition of state attorneys general announced a $26 billion deal with Johnson & Johnson and three major drug distributors to settle opioid claims. In order to reduce the risk of future lawsuits against the companies, the settlements offered incentives to states if they obtained the participation of a range of public agencies, including municipalities with a population over 10,000.

Pennsylvania’s attorney general’s office spent months convincing counties and municipalities to join the deal, arguing that not doing so was risky and could deny “Pennsylvanians the resources they need.” By January 2022, all of the state’s 67 counties and hundreds of its local governments with a population above 10,000 had done so. The first round of payments began in the state the following August, with the second round starting that December.

Pennsylvania’s distribution system offers extra payments to any county where all municipalities with more than 10,000 residents signed onto the deal. Nearly all Pennsylvania counties met that requirement before the first opioid settlement payments last year.

But both Montgomery and Allegheny Counties did not. Montgomery County lost out on $143,000 for its first payment for 2022, Spotlight PA and WESA previously reported, based on records obtained through the state’s Right-to-Know Law. The county later received the required participation for the second payment period of December 2022, according to officials with the opioid trust and the state attorney general’s office.

Under Pennsylvania’s distribution system, the extra money counties could have received instead went to an account controlled by the legislature and governor. Even though both counties now have the required participation, the order creating the trust does not describe any mechanism to regain the money they already lost out on — the money stays under the state’s control.

Obtaining the required sign-on in Allegheny County posed inherent challenges. It has 130 municipalities — more than any other county in the state. And more than two dozen of its cities and towns have a population of more than 10,000 people.

The county conducted outreach to municipalities via phone calls, emails, and presentations at municipal association meetings, said Allegheny County spokesperson Amie Downs. She told reporters the effort reduced the number of required municipalities who weren’t participating from 13 in March to three by late September.

Besides McKeesport, the two other municipalities that needed to sign on were South Fayette Township and Plum Borough, according to Downs and a spokesperson for the attorney general’s office. Officials in each municipality told Spotlight PA and WESA that they had already approved a relevant resolution for the settlements months earlier, and they were either taking steps to verify the required paperwork was received or to finalize their participation.

Exactly why McKeesport didn’t initially sign on wasn’t clear from public official comments.

“We certainly have regret, but I don’t think we were aware of it,” J. Jason Elash, an attorney for McKeesport, told Spotlight PA and WESA in late November. “It was not something that we were made aware of that we needed to opt into.”

Brett Hambright, a spokesperson for the state attorney general’s office, said the office did contact municipalities to help counties achieve unanimous participation.

“We initially reached out to McKeesport, specifically, in September 2021,” Hambright told Spotlight PA and WESA. “Since then, we primarily communicated with county attorneys and solicitors on status/delinquent municipalities within their respective counties.”

Asked about Elash’s statement that city officials only recently became aware that they needed to opt into the settlement, Downs described multiple outreach attempts to city officials prior to the fall: a phone call and email on March 21 and emails on March 27 and May 5.

The details of what prompted McKeesport’s final action weren’t clear.

Vertullo’s response indicated it was the news organizations that showed the city it needed to take action to opt into the settlements. Elash told Spotlight PA and WESA that he believed the information came from the county, but he didn’t elaborate. On Nov. 9, Downs told Spotlight PA and WESA that the county had “numerous individuals and departments involved in the reach-out to the city.”

On Nov. 13, the attorney general’s office confirmed that it had received full sign-on for all required municipalities in Allegheny County.

During the opioid trust’s meeting in November, trust Chairperson Tom VanKirk acknowledged the change in Allegheny County, saying that no counties would receive penalties for not having enough municipal participation this time.

The trust has no formal responsibilities to convince municipalities to sign onto the deal. VanKirk told Spotlight PA and WESA after that meeting that “we want everybody to get as much money as possible.”

Some DAs object

While the delay in getting full participation in Allegheny appears to be largely procedural, some public agencies have refused to sign onto the Johnson & Johnson and drug distributors deal due to objections to its content.

The district attorneys in both Allegheny County and Philadelphia refused to sign. They argued that local judges should decide how much these companies owe, and said their residents “deserve deep, sustained compensation in the form of billions of dollars from these companies.” They have a case pending before the state’s Commonwealth Court over whether the state attorney general’s office had the power to release opioid-related claims their offices brought.

Under Pennsylvania’s opioid settlement distribution system, neither Allegheny County’s government nor Philadelphia’s city government are penalized for district attorneys not participating.

For the 2022 payments, the state’s opioid trust allocated more than $86 million for counties and other local governments, plus $16 million to the state. For the 2023 payments, the trust expects to pay more than $56 million to counties and other local governments.

This year’s payments from the opioid trust include funding from Johnson & Johnson and the three drug distributors, plus bankruptcy proceedings for drugmaker Mallinckrodt.

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