Over the summer, Maryland county coffers will grow by a collective $13.6 million — their second annual payout from last year’s landmark national court settlement against opioid industry giants — companies whose drugs, plaintiffs contended, helped fuel a nationwide addiction crisis.
But Baltimore City won’t get a dime.
Baltimore is the only Maryland jurisdiction that opted out of the settlement, in which drug companies agreed to pay the state $400 million in damages over 18 years. Instead, the city is taking them to court on its own, a gamble with the potential to land a bigger payout. A trial is set to begin in September 2024.
Hundreds of thousands of people have died from opioid overdoses involving illicit drugs such as heroin or prescription painkillers such as OxyContin over the last decade in the U.S., while millions more are left struggling with an addiction that is notoriously difficult to overcome. In 2021, a bipartisan group of state attorneys general sued opioid manufacturer Johnson & Johnson and the “big three” wholesalers — AmerisourceBergen, Cardinal Health and McKesson — arguing the companies’ harmful marketing and distributing practices helped fuel the opioid crisis. The parties negotiated a $26 billion total settlement to be divided among states, and in turn localities, in exchange for resolving thousands of lawsuits filed against them nationwide.
Baltimore “rejected” the state settlement as “woefully inadequate in addressing the multibillion-dollar problem,” of the opioid crisis, the city law office said in an emailed statement. The city saw overdoses and related deaths skyrocket at many times the national average starting around 2012, with an overdose fatality rate higher than any other city in the nation.
The amount the city would have received had it joined the state settlement is unclear, though its portion certainly would have been larger than any other county’s on account of Baltimore’s population. The settlement was reduced significantly as a result of Baltimore’s abstention — some estimate by around $100 million. The city law office said it would have received “just a few million dollars a year,” spread over nearly two decades.
Baltimore’s decision to go it alone is unusual and potentially risky. Localities nationwide that were poised to do the same have backed down one by one — begrudgingly, in some cases — in favor of receiving a portion of state funds.
Not all smaller lawsuits have ended favorably; in the case of Cabell County, West Virginia, and its seat, Huntington, for example, a particularly hard-hit area in a state devastated by the opioid epidemic, a federal judge ruled in favor of the big three distributors, arguing that they were simply fulfilling their basic function by shipping what pharmacies ordered.
These companies are also named in Baltimore’s suit, along with Johnson & Johnson and a long list of other manufacturers — some of whom have since filed bankruptcy — and large pharmacy chains, plus one notorious Baltimore County pill mill whose owners were already convicted of opioid-related charges.
“The City is determined to achieve a resolution that will hold the defendants accountable and force them to meaningfully address the devastating harms they have inflicted,” the Baltimore law office said. If the city gets a payout, the statement said, “it is committed to channel the funds toward addressing the myriad harms resulting from the opioid epidemic in Baltimore,” and will provide more specifics about the planned use of any funds once the case is resolved.
But the city has more on the line than just money, said Liza Vertinsky, law professor at the University of Maryland Francis King Carey School of Law, who has studied opioid settlements. There are likely other factors playing an even larger role in its decision to opt out, she said.
One of these is “reputation claiming,” Vertinsky said. City leaders want to “look like they’re really doing something, and they’re not going to necessarily get much credit from being part of the settlement, not in the same way” as they would by taking definitive legal action on their own terms, she said.
The profound impact of the opioid epidemic on Baltimore means that state funds may represent a “drop in the bucket” in terms of rectifying damages, Vertinsky said. The city may stand to gain more, at least in a political sense, simply by “battling for some bigger things,” she said. If Baltimore wins a settlement or damages in court, it could then take charge of how it’s spent, within federal and state constraints, versus tolerating state control of all but 25% of funds.
City leaders’ personalities and their propensity for taking risks also come into play, Vertinsky said, although Baltimore assumes little financial risk by moving forward with its case. It is co-litigated by the city law office and prominent Houston-headquartered firm Susman Godfrey, known for winning large payouts in several high-profile cases, including on behalf of Flint, Michigan, residents impacted by the city’s water crisis, and for Dominion Voting Systems in its defamation suit against Fox News related to the 2020 election.
Susman Godfrey was one of the first large corporate firms to embrace the use of contingency fee arrangements — where the attorneys get paid only if the plaintiff does and will often absorb upfront costs as well — for most of the high-stakes commercial cases it takes on. This paid off big in the Dominion case, when the firm won $787.5 million from Fox News. Its fee was not disclosed but likely amounted to hundreds of millions of dollars.
The city’s opioid lawsuit, which names former Mayor Catherine Pugh and City Council as plaintiffs, was filed in early 2018, around the same time that several other Maryland counties filed their own suits, only to drop them later in favor of joining the state settlement.
Maryland gets 15% of its $400 million share outright, and another 15% in “discretionary funds” it will distribute via a competitive grant application process to state and local government agencies or community organizations working to address the opioid crisis. Forty-five percent of funds are funneled to localities by the state in the form of block grants which must be directed toward locally established opioid “abatement plans.” The remaining 25% of funds go directly to localities from the settlement administrator; up to 60% of these funds may be used for purposes other than future opioid abatement.
Community organizations in Baltimore City have one avenue for obtaining these funds. They can apply for grants from the state’s discretionary dollars. These funds currently total $25.5 million, with another $7 million coming shortly, according to the state attorney general’s office, but none of the money has been distributed. The Maryland Department of Health is awaiting recommendations from the state’s Opioid Restitution Fund Advisory Council on how funds should be allocated before accepting grant proposals, said Michael Coury, director of communications for Maryland’s Opioid Operational Command Center, in an email.
In June, another $17.3 billion settlement was reached between Teva, Allergan, CVS, Walgreens and the attorneys general of 22 participating states — Maryland among them — with funds expected to start flowing to state and local governments by the end of this year. Presumably, Baltimore will opt out of that settlement as well, since Teva and Allergan are also named as defendants in its lawsuit.