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State of California Department of Justice
Rob Bonta
Attorney General
Attorney General
The State entered into an allocation agreement with certain local governments that governs how funds from the Mallinckrodt bankruptcy will be allocated within California. The California Mallinckrodt allocation agreement provides for direct payments to cities and counties that elected direct payment in the National Opioid Settlement with the Distributors.
The Mallinckrodt allocation applies to funds from the Endo bankruptcy. Cities and counties that received direct payment from the Mallinckrodt bankruptcy received payment from the Endo bankruptcy.
No. Bankruptcy courts confirmed plans of allocation that provided for payment to states and certain local entities for opioid abatement. The California Mallinckrodt allocation agreement further provides how payments to the state will be allocated within California. The California Mallinckrodt allocation agreement provides for payments to cities and counties that elected direct payment in the National Opioid Settlement with the Distributors. The Mallinckrodt allocation applies to funds from the Endo bankruptcy, and cities and counties that received direct payment from the Mallinckrodt bankruptcy received payment from the Endo bankruptcy.
The Mallinckrodt bankruptcy involved two payments to eligible cities and counties. No further payments are expected. The amounts distributed to each eligible city and county are listed in the Notices of Abatement Distribution, which can be found on the National Opioid Abatement Trust II (NOAT II) website at https://www.nationalopioidabatementtrust.com/Home/StateTerritoryDetail?ID=14206. The allocated amounts are based on the abatement percentage listed in Appendix 1 to the State-Subdivision Agreements.
The Endo bankruptcy involved one payment to eligible cities and counties. No further payments are expected. The amounts distributed to each eligible city and county are listed in the Notice of Distribution, which can be found on the Endo Public Opioid Trust Website at https://endotrust.com/. The allocated amounts are similarly based on the abatement percentage listed in Appendix 1 to the State-Subdivision Agreements.
Yes. Funds received from the Mallinckrodt bankruptcy are required to be used pursuant to the Mallinckrodt bankruptcy plan and related documents, including the NOAT II Trust Distribution Procedures which can be found here https://www.nationalopioidabatementtrust.com/Docs/NOAT%20II%20Trust%20Distribution%20Procedures.pdf Please see Section 2 of the NOAT II Trust Distribution Procedures.
Funds received from the Endo bankruptcy are required to be used pursuant to the Endo bankruptcy plan and related documents, including the Endo Public Opioid Trust Agreement, which can be found on the Endo Public Opioid Trust Website at https://endotrust.com/. Please see Section 4.2(d) of the NOAT II Trust Distribution Procedures.
The Department of Health Care Services (DHCS) provides technical assistance and other resources to cities and counties on allowable uses of funds from the opioid bankruptcies.
For the Mallinckrodt bankruptcy, yes. The Mallinckrodt bankruptcy plan documents, including the NOAT II Trust Distribution Procedures, require the State and local governments that receive an Abatement Distribution from NOAT II to report on the use of such funds. See Section 7 of the NOAT II Trust Distribution Procedures. https://www.nationalopioidabatementtrust.com/Docs/NOAT%20II%20Trust%20Distribution%20Procedures.pdf. The State has elected to submit one report on behalf of itself and its local government that receive an Abatement Distribution. Cities and counties that receive an Abatement Distribution from NOAT II must report on use of those funds to DHCS. DHCS will then report the State’s, including cities’ and counties’, use of Mallinckrodt Abatement Funds to NOAT II. Individual cities and counties do not need to report directly to NOAT II.
For the Endo bankruptcy, no. The Endo bankruptcy plan documents do not require the State or local governments to report on the use of funds received from the Endo bankruptcy.
The Mallinckrodt bankruptcy plan documents provide for the establishment of the Opioid Attorneys’ Fee Fund, which shall be used to pay qualifying costs and expenses, including attorneys’ fees, for certain state, municipal, and Tribal claims holders. Similarly, the Endo bankruptcy plan documents provide for the establishment of the State Opioid Costs and Fees Allocation and Political Subdivisions Costs and Fees Allocation to reimburse states and political subdivisions for attorneys’ fees and costs.
Cities/counties should first consult with their respective city attorney/county counsel. Cities and counties that retained attorneys to file opioid litigation may also wish to consult those attorneys.
Cities and counties may also contact the Attorney General’s opioids team via email at OpioidSettlement-LocalGovernment@doj.ca.gov.
Additional Mallinckrodt bankruptcy information is available at https://www.nationalopioidabatementtrust.com/Mallinckrodt/Documents.
Additional Endo bankruptcy information is available at https://endotrust.com/.
Additional information regarding reporting and use requirements can be found on DHCS’s Opioid Settlements website at https://www.dhcs.ca.gov/provgovpart/Pages/California-Opioid-Settlements.aspx.
Disclaimer: To the extent any of the answers in this FAQ are inconsistent with the Settlement Agreements, California State-Subdivision Agreements, documents filed in the Mallinckrodt bankruptcy matter, or documents filed in the Endo bankruptcy matter, those documents will govern over any inconsistent responses in this FAQ.