Guest Post: While Congress Tackles Opioid Crisis, Lawyers Seek Payday

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By Rob McKenna

Rob McKenna is a consultant to the U.S. Chamber Institute for Legal Reform, and a former Attorney General of Washington State. He was President of the National Association of Attorneys General (NAAG), and also served for three years as Co-Chair of the NAAG Tobacco Committee.

Bipartisanship is rare in Washington these days but there was overwhelming bipartisan support as Congress adopted and the President signed legislation in October to address the opioid epidemic.

The Opioid Crisis Response Act includes a sweeping set of measures which will expand access to addiction treatment, limit the strength of opioid pills, incentivize development of non-addictive painkillers, and crack down on the mailing of synthetic opioids from abroad.

The Act crossed the finish line not a moment too soon. The Centers for Disease Control and Prevention report that prescription drug overdoses killed a record 72,000 Americans in 2017, compared to approximately 40,000 who died in car accidents.

Even as our national leaders reminded us they are still capable of consensus-driven action, plaintiffs’ lawyers around the country have dusted off the “tobacco playbook” to enlist state and local officials to cash in on the opioid epidemic.

Twenty-five years ago, Congress was not acting to halt and reverse rising teen smoking rates or stop blatant marketing to underage audiences. There was no Underage Smoking Response Act.

A few state Attorneys General hired private plaintiffs’ lawyers to sue the tobacco industry on a contingency-fee basis. Combining the clout of government lawyers with the legal and financial capacity of private law firms caught fire. Within four years, the 46 state AGs signed record settlements with the tobacco industry worth some $246 billion, including as much as $30 billion in attorneys’ fees, in its first three decades. The perpetual stream of annual settlement payments goes to the states’ treasuries, not to any local governments.

The 1998 tobacco settlement reined in marketing to youth and made smoking much more expensive, reducing teenage smoking rates. Unfortunately, however, it did not deliver the state-level anti-smoking programs it promised. Over time, most state tobacco money has been diverted to fund other priorities and backfill budget holes. 

Notwithstanding those disappointments, the public/private litigation model has endured, partly because it has been so lucrative for the trial lawyers and states. State legislatures divert settlement dollars — around $7 billion every year — to non-tobacco purposes.

Now the opioid crisis has triggered the biggest increase in contingency-fee government litigation since 1998. Trial lawyers are again in a feeding frenzy, suing opioid manufacturers, distributors, and pharmacies. Unlike the 1990s, however, they’re suing on behalf of cities and counties — not just state attorneys general. According to a Forbes report, at least 1,700 lawsuits are already pending. Cities and counties apparently have decided they want their own recoveries so they won’t depend on funding passed down from statewide settlements.

Plaintiffs’ firms are inundating county commissioners and city council members with unsolicited offers to represent them in opioid lawsuits. In a March 2018 article, The Texas Tribune reported how one county administrator had been approached by 10 to 15 law firms. Law firm presentations and informational packets obtained for the report show lawyers urging local officials to act quickly, describing it as a “race to the courthouse.” 

Months ago, a large number of state AGs joined a multi-state investigation of companies allegedly liable for damages caused by the opioid crisis. Now, some of them have filed their own lawsuits while others have signed up trial lawyer firms to sue on their behalf.

Unlike state AGs, local governments typically lack the expertise to file their own suits or to closely manage outside law firms. Local lawsuits duplicate and may even interfere with statewide efforts mounted by attorneys general. Trial lawyers pushing lawsuits with municipalities can extract up to 25% in fees on recoveries, whereas most AGs will not allow such high contingency fees.

As the CDC numbers show, the opioid crisis is an unfolding human tragedy. But while trial lawyers and some politicians sell the idea that litigation is the answer, legislative solutions like the Opioid Crisis Response Act hold more promise. Congress and state legislatures must provide more resources for addiction treatment, for example.

Government litigation and settlements may produce some funding and regulation of opioids marketing. State AGs and local officials, though, should heed the lessons from tobacco litigation. For one, the portion of recoveries going to trial lawyer contingency fees should be as small as possible, not anywhere near the 25 percent most law firms seek.

Furthermore, local governments should yield to state attorneys general and dismiss their separate lawsuits. At 1,700 separate lawsuits and counting, the spiraling number of cases makes settling with responsible companies enormously difficult. Just defending the ballooning claims could drive some into bankruptcy. Funding the extraordinary costs of endless litigation will drain resources that will then not be available for recoveries to compensate governments for the high costs of the opioids crisis.

Elected officials — including state legislators and attorneys general — ought to advance real world solutions to this public health crisis, not spend billions on contingency fee lawyers.

December 19, 2018