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H3. Opioid settlement agreementCITY OF City of Kalispell KTALISPELL post Office Box 1997 -Kalispell, Montana 59903-1997 elephone (406) 758-7700 Fax - (406) 758-7758 MEMORANDUM To: Honorable Mayor Johnson and City Council From: Doug Russell, City Manager Re: Opioid Settlement Agreements Meeting Date: December 20, 2021 BACKGROUND: Attached to this memo is an email from the Office of the Attorney General providing a background and summary of settlement agreements in lawsuits that were filed against opioid distributers. The email is soliciting involvement by local governments and outlines the settlement agreement, including the attached Memorandum of Understanding that participants are being asked to execute. Under terms of the settlement, local governments are eligible to receive funding for opioid mitigation efforts over a period of 9 and 18 years respectively (per terms of 2 separate settlement agreements). These funds would not come to the City of Kalispell, but rather to the City -County Health Department. The amount of the funding is dependent upon the participation of local governments across the state. Hence a specific breakdown will not be available until it is determined how many local governments choose to participate. This topic was brought up at the last work session, with ultimate direction to place it on the December 20 agenda for further discussion. We have also reached out to the City -County Health Department and the County for any respective thoughts they have related to the settlement. FISCAL IMPACTS: Participation in the settlement will not include a cost to the City of Kalispell. Proceeds from the settlement will not go to the City of Kalispell, but to the City - County Health Department for use in opioid mitigation efforts per the terms of the settlement. RECOMMENDATION: It is recommended that Council review and discuss the settlement agreement and decide if they desire to move for participation by the City of Kalispell in the settlement agreements. ATTACHMENTS: Email from Attorney General's Office Settlement MOU Doug Russell Subject: FW: EXTERNAL January 2, 2022, Deadline to Join Distributor and Janssen Settlement Agreements and Attached MOU Attachments: 2021_11_26 Distributors MT MOU.pdf Greetings, Your County or City is receiving this email as a follow up to an earlier NOTICE informing you of your eligibility to receive payments from two separate Settlement Agreements with (1) the three major opioid Distributors (McKesson Corporation, Cardinal Health, Inc., and Amerisource Bergen) and (2) with Janssen. Lit Though your local government is eligible, in order to receive direct payments and benefits you need to join the Settlement Agreements. Although the Settlement Agreements are complex, for present purposes it is extremely important that you know the following: • The monetary payments to the States depend on the level of local government participation: Montana and its Local Governments will receive up to $80 million in total payments (over a period of years) only if ALL fifty-six counties and Montana's six largest cities by population join. This is because the Settlement Agreements provide for bonus payments to each State as the level of local government participation goes up. • January 2, 2022 is the Local Government Participation Deadline: The deadline for joining is fast approaching. According to the Settlement Agreements, local governments have until January 2, 2022, to join. After that date, the States, including the State of Montana, have until January 17, 2022, to determine whether the level of local government participation is sufficient to proceed forward with the settlement process. • Please but this matter on your Commission/Council A-'enda ASAP: Given the short timeframe involved, we recommend and respectfully request that you place this matter on the agenda for a December Commission/Council meeting prior to January 2, 2022, so that your city/county can determine whether to participate by January 2, 2022. • Please Register ASAP on the national settlement website: The NOTICE earlier sent to all fifty-six counties and the six largest cities invited your city/county to register on the national settlement website. So far, very few local governments have registered. To receive the two Distributor and Jannsen sign -on forms electronically, your city/county must register first. Please do that as soon as possible. The link to the website to register is National Opioid Settlement. 1 • You will soon receive two emails from the national Notice Administrator. As discussed below, now that the attached Memorandum of Understanding (MOU) has been approved by the Attorney General, the national notice administrator will be sending you a Second Notice. There are two separate settlements. Consequently, you will receive notices for each settlement. Once you are registered, you will also receive two sign -on forms, one for each settlement. With the January 2, 2022, deadline fast approaching, the purpose of this email is to provide you with a broad summary of the settlement, important deadlines, and to assist you in evaluating and joining the Settlement Agreements so that together the State of Montana and your local governments can begin the work of addressing and abating the opioid epidemic. BACKGROUND AND SUMMARY OF THE SETTLEMENTS AND ATTACHED MOU The State of Montana has been investigating and litigating opioid claims in state court for several years. Seven Montana local governments have also filed claims in the federal multidistrict litigation (MDL) in the Northern District of Ohio, Judge Polster presiding. The Janssen and Distributor settlements —payable over 9 years and almost 18 years, respectively --comprise $26 Billion in payments to States, Local Governments and other entities to provide for opioid abatement, attorney fees, a portion of litigating costs, and administrative burdens. Many States, including Montana, have decided to participate in this settlement process. The Janssen and Distributor Settlement Agreements, which largely overlap, are available for review on the national settlement website at National Opioid Settlement. This is the same website you will access to register your county/city (registration is required for you to receive sign -on forms electronically). Montana's share of the settlement was determined by interstate allocation metrics based upon population and the intensity of opioid impacts in the state. Again, although Montana stands to receive up to approximately $80 million, maximum payments require full local government participation. There are substantial economic incentives and benefits from full or nearly full local government participation in these Settlement Agreements. The monetary incentives contained in the Settlement Agreements are a function of the Distributors' and Janssen's desire to obtain global peace by extinguishing significant liabilities or litigation risks. As such, the Settlement Agreements include broad release of liability provisions. A Memorandum of Understanding (MOU) that the Attorney General has approved is attached. The purpose of the MOU is to determine governance; intrastate allocation between the State, Abatement regions, and Local Governments; attorney fees, and other administrative issues, such as effectuating the important requirement that the settlement monies be used only for approved opioid abatement strategies or programs. Though Montana's seven litigating local governments have not decided to join the Settlement Agreements and the MOU, we encourage them to join because the MOU provides very substantial benefits to all regions of Montana and all of the sixty-two local governments entitled to payments, whether litigating or not. In particular, the attached MOU directs the vast majority of resources to regional and community -based abatement efforts. If you decide to agree to sign on to the Settlements -utilizing the two sign -on forms your city/county will be receiving-- your local government will also need to sign on to the MOU. The key points and principles of the MOU are: Funds will be allocated between the State and Local Governments with 15% to the State, 15% to local governments, and 70% to a Statewide Abatement Trust that is administered by a Trust Advisory Committee comprising equal representation from the State and local governments. • 80% of the funds going into the Abatement Trust (which itself comprises 70% of the total abatement funds) shall be allocated for use by local governments. Consequently, at least 7 1 % of the total settlement funds will be disbursed locally. Local government participation in the Trust and Trust Council will be through Abatement Regions based primarily on the existing Department of Health and Human Services Health Planning regions. Exhibit A of the attached MOU. The allocation of funds for use by the Abatement Regions is based on the percentages shown in Exhibit B which are derived from population and opioid impact on those regions. Distribution of funds from the Abatement Trust will be reviewed and approved by the Trust Advisory Committee based on proposals submitted through the Abatement Regions or from the State. The MOU also provides the Attorney General with the ability to develop abatement programs and strategies intended to encourage Local Governments, particularly rural areas, to pool their resources in support of the most cost-effective abatement programs and strategies. To summarize, please put this matter on your Commission/Council agenda as soon as possible and register on the website at National Opioid Settlement. Rather than have you execute the MOU electronically, we invite you to provide a hard -copy signature page to the MOU executed by your authorized representative. Also, if you have difficulty signing the two sign -on forms electronically on the settlement website, above, please let us know and we will assist you with a hard -copy process. If you have any questions or concerns please call Emily Nichols at 444-9405 or email at emily.nichols2@mt.yov or call Assistant Attorney General Mark Mattioli at 444-5791 or email mmattioli@mt.gov or opioidsettleement@mt.gov. Mark W. Mattioli Consumer Protection Section Chief Solicitor's Office Office of Montana Attorney General Austin Knudsen Office: 406-444-5791 mmattioli@mt.�-,ov ['l Including Johnson & Johnson, Janssen Pharmaceuticals, Inc., OrthoMcNeil-Janssen Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc. MONTANA DISTRIBUTORS' AND JANSSEN OPIOIDS SETTLEMENT MEMORANDUM OF UNDERSTANDING ("MOU99) WHEREAS the people of the State of Montana and its communities have been harmed by serious and substantial wrongdoing committed by certain entities within the Pharmaceutical Supply Chain; and, WHEREAS the State of Montana, through the State's Attorney's Office of the Montana Attorney General, and certain litigating cities and counties, through their elected representatives and counsel, are separately engaged in litigation seeking to hold manufacturers, distributors, and others in the Pharmaceutical Supply Chain accountable for the harms caused by their wrongdoing; and, WHEREAS the State of Montana and Montana's cities and counties (hereafter Local Governments) share a common desire to abate and remediate the impacts of that wrongdoing throughout the State of Montana and to maximize the resources devoted to combatting the opioid crisis; and, WHEREAS researchers and clinicians in Montana and elsewhere have now built a substantial body of evidence demonstrating which opioid abatement strategies work and which do not and there are public health leaders in the State and at the local level with expertise in addiction and substance use available to guide determinations for the use of any settlement funds; and, WHEREAS recently the State of Montana agreed to join a settlement agreement process (hereafter Settlement Agreements) which, if finalized, will resolve litigation against certain specific defendants in the Pharmaceutical Supply Chain, namely the opioid distributors McKesson Corporation, Cardinal Health, Inc., and Amerisource Bergen Corporation and also Janssen and the related entities listed in the Section I. 32 of the Janssen Settlement Agreement' (hereafter the Opioid Settlement Defendants) for harms caused by their wrongdoing that require — with limited exception-- that all settlement funds be used for forward - looking remediation and abatement of opioid associated harms; and WHEREAS maximum monetary payments available to the State of Montana and its Local Governments depend upon maximum Local Government participation in the Settlement Agreements and in this Memorandum of Understanding (MOU); NOW THEREFORE the State of Montana and its Local Governments, subject to completing any additional documents needed to effectuate their agreement, enter into this MOU for the allocation, management, and use of the proceeds of the Settlement Agreements: (a) to develop a fair and transparent process for making decisions based on medical and scientific evidence concerning where and how to spend the funds from the Settlement Agreements to effectuate forward -looking abatement strategies and to supplement rather than replace existing spending; (b) to establish a dedicated Montana Abatement Trust with representation that reflects the public health expertise and diversity of affected communities when allocating settlement funds that meets the requirements of Section V.E.2d. of the Settlement Agreements; and (c) to provide a framework for equitable distribution of funds from the Settlement Agreements among all participating Local Governments within the 1 "Janssen" means Johnson & Johnson, Janssen Pharmaceuticals, Inc., OrthoMcNeil- Janssen Pharmaceuticals, Inc., and Janssen Pharmaceutica, Inc. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 12 State of Montana that agree to be bound by this MOU and forego pursuing separate litigation against any of the settling defendants named above. A. DEFINITIONS AND DESCRIPTIONS "The State" shall mean the State of Montana acting through the Attorney General. 2. "Participating Local Governments" shall mean any Montana county or city that has chosen to participate in this MOU and the Settlement Agreements, including execution of all documents required to effectuate the Settlement Agreements and this MOU. 3. "The Parties" shall mean the State of Montana and the Participating Local Governments. 4. "Settlement Agreements" shall mean the Distributor Settlement Agreement dated as of July 21, 2021, and the Janssen Settlement Agreement dated as of July 21, 2021. "Settlement Funds" shall mean all monetary amounts obtained through the Settlement Agreements as defined herein, according to the allocation percentage to the State provided for in Section F of the Settlement Agreements, and as determined by the Settlement Fund Administrator. 6. The "Settlement Funds Administrator" shall mean the person or entity in I. MMM of the Definitions section of the Settlement Agreements chosen by the settling defendants and the national plaintiffs' enforcement committee to determine the proper allocation of funds from the Settlement Agreements to each MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 13 participating state and to manage the distribution of the Settlement Funds to all participating states. 7. "Opioid Remediation" as defined or referenced in the Settlement Agreements shall include care, treatment, and other forward -looking programs and expenditures for Approved Purposes, including: to (1) address the misuse and abuse of prescription opioid products, (2) treat or mitigate opioid misuse or related disorders, or (3) mitigate other injuries or harms resulting from the overprescribing of opioids, including diversion and the misuse or abuse of Fentanyl or Fentanyl- containing products or substances. Opioid Remediation efforts shall involve evidence -based strategies, programming, and services used to: expand the availability of treatment for individuals affected by opioid use or polysubstance use disorders; develop, promote, and provide opioid-related or polysubstance use prevention strategies; provide opioid-related or polysubstance use avoidance and awareness education; decrease the oversupply of licit and illicit opioids, including Fentanyl or products or substances containing Fentanyl; support recovery through addiction services performed by qualified and appropriately licensed providers of persons suffering from opioid-related use disorder, polysubstance abuse, or chronic - pain patients and others who suffer from or are at substantial risk of opioid abuse or dependency; and support for law enforcements addressing the impact of opioid- related substance abuse in the communities they serve, including misuse or illicit use of heroin and/or Fentanyl. Exhibit E in the Settlements Agreements provides a non -exhaustive list of expenditures that qualify as Opioid Remediation. Qualifying expenditures may include reasonably related administrative expenses. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 14 "Approved Purposes" shall mean forward -looking strategies, programming, and services to abate the opioid epidemic as identified by the terms of the Settlement Agreements. 9. "Opioid Settlement Defendants" shall mean McKesson Corporation, Cardinal Health Inc., Amerisource Bergen Corporation, and Janssen and their related entities and affiliates as delineated in the Settlement Agreements. B. MONTANA ABATEMENT REGIONS 1. Local and regional use of Opioid Settlement Funds shall be implemented through Abatement Regions and the Local Governments within those regions. The Abatement Regions shall comprise nine Metropolitan Abatement Regions —consisting of the nine Montana counties with populations exceeding 30,000—and five Multi -County Abatement Regions —utilizing the five existing Health Planning Regions established by the Montana Department of Public Health and Human Services. See Montana Abatement Regions Map, attached as Exhibit 0 2. The Nine Metropolitan Regions having populations of 30,000 or more are Yellowstone, Missoula, Gallatin, Flathead, Cascade, Lewis & Clark, Silver Bow, Ravalli, and Lake Counties, provided they participate in this Agreement. Each of the nine Metropolitan Regions have consolidated city -county health departments with substantial public health expertise that can serve as the lead or co -lead agencies within their respective regions for administration and use of settlement funds. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 15 The Multi -County Abatement Regions derived from the five existing Montana Department of Health and Human Services Health Planning Regions exclude any local governments not participating in this MOU and the Settlement Agreements. The five Multi -County Abatement Regions also exclude the nine Metropolitan Regions and all Local Governments within the nine Metropolitan Regions. See Exhibit A. 4. All the Metropolitan Regions that agree to the Settlement Agreements and this MOU as well as all the constituent Participating Local Governments comprising a Multi -County Abatement Region that have chosen to enter into this MOU and the Settlement Agreements shall be treated as Participating Abatement Regions. For the sake of clarification, any county or city listed in the MOU Abatement Region Allocation, attached as Exhibit B2, within a Multi -County Region that does not enter into this MOU and the Settlement Agreements shall not be included in the Abatement Region where it is geographically located and shall not be entitled to receive any funds from the Settlement. Rather, the share(s) of the funds that a nonparticipating city or county would be allocated according to Exhibit B shall instead be allocated to the Abatement Trust. C. THE MONTANA ABATEMENT TRUST 1. The Attorney General shall create a private, non-profit Abatement Trust ("Trust") with an Advisory Committee ("Committee"), as required by the Settlement Agreements for the purpose of receiving and disbursing Settlement Funds allocated to the Abatement Trust and to Participating Abatement Regions, 2 Exhibit B of this MOU is comprised of the Montana Local Governments listed in Exhibit G of the Settlement Agreements. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 16 Participating Local Governments and to the State of Montana for Opioid Remediation and Approved Purposes, which are to be distributed as set forth in this MOU, in the Settlement Agreements, and in the documents establishing the Trust. 2. The Trust shall be governed by the Advisory Committee consisting of ten voting members and an Executive Director appointed by the Attorney General who will only vote in the event of a tie. 3. The ten voting members of the Advisory Committee shall provide equal representation between the State and local governments as follows: three members chosen by the Metropolitan Regions, two members chosen by the Multi -County Regions, two members chosen by the Director of the Department of Health and Human Services (DPHHS), and three members chosen by the Attorney General. 4. At least one of the ten members of the Committee shall be a law - enforcement representative from the Montana Department of Justice's Division of Criminal Investigation (DCI) and/or Montana Highway Patrol (MHP). One of the ten members of the Advisory Committee may be, but is not required to be, a family member of a person who had or has suffered from opioid use disorder. All other Committee members must come from the fields of medicine, public health, mental health, or addiction. 5. Committee terms will be three years and initially staggered. Committee members may serve more than one term. In the first year, two members from the Metropolitan Regions and one member from the Multi -County Regions will have a one-year term, one member representing the Department of MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 17 Health and Human Services and one member representing the Attorney General will have two-year terms, and the remaining members will have three-year terms. Six members of the Committee shall constitute a quorum. Unless the Committee determines otherwise, the Metropolitan and Multi -County Abatement Regions shall determine for themselves how to choose their member representatives. No Committee member shall receive compensation but may be reimbursed for reasonable costs expended for work on the Committee. 6. To provide for health security and reduce expense, members of the Committee shall participate in meetings by telephone or video conference at least every three months, except, if feasible, one annual in -person meeting per year shall be set by consensus of the Committee. If a member of the Committee is unable to attend in -person or remotely, s/he may designate a proxy. A quorum exists if six members are voting in -person, remotely, or by proxy. 7. In all votes of the Committee, a measure shall pass if a quorum is present and the measure receives the affirmative votes from a majority of those Committee members voting. The Executive Director may vote to break a tie. The Attorney General shall appoint the Executive Director at his/her discretion from a list of three candidates provided to the Attorney General by the Committee. If the Attorney General finds all three candidates to be unsatisfactory, the Attorney General may reject all three candidates and request that the Committee provide three new persons to select from. 9. In choosing candidates to be submitted to the Attorney General, with the exception of the one member who is a family member of a victim of the opioid MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 18 crisis, if applicable, and representative(s) from DCI and/or MHP, the Committee shall seek candidates with at least six years of experience in issues related to addiction, mental health, and/or public health and who have management experience in those fields. 10. The Executive Director shall serve as an ex officio, non -voting member of the Committee unless there is a tie vote, in which case the Executive Director may cast the tie breaking vote. 11. The Attorney General shall set a date for a first in -person meeting of the Committee. Once the Abatement Regions, the Attorney General, and the Director of the Department of Health and Human Services have designated their respective members of the Committee, the Attorney General shall designate an Interim Executive Director to conduct the meeting and other scheduled meetings until a permanent Executive Director can be named. 12. At the first meeting the Committee shall develop written guidelines for receiving input from the State of Montana, Abatement Regions, Local Governments, and others regarding how the opioid crisis is affecting their jurisdictions or communities and their respective abatement needs. These written guidelines shall provide procedures for Regions and Local Governments or communities to develop and submit proposals for distribution of funds from the Abatement Trust for Opioid Remediation programs for the Regions and/or throughout Montana. 13. The Committee shall draft its own bylaws or other governing documents, which must include appropriate conflict of interest and dispute MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 19 resolution provisions, in accordance with the terms of this MOU and Montana law. It shall not have rulemaking authority under Montana law. The Committee shall utilize the legal advice and assistance of the State's Attorney's Office and legal counsel for the Local Governments and Regions, who will work collaboratively to draft and finalize necessary bylaws, procedures and other governing documents with the goal of minimizing red tape and maximizing the efficient flow of funds to abate the opioid problem. 14. The Committee shall be responsible for accounting of all Opioid Funds it distributes. The Committee shall be responsible for releasing Opioid Funds in accordance with Approved Purposes, the Settlement Agreements, and this MOU and, with the help of the State's Attorney's Office and Local Government counsel, shall develop policies and procedures for the release and oversight of such funds. 15. The Committee may also require outcome related data from any Party or Local Government that receives Opioid Funds and may publish such outcome related data. In determining which outcome related data may be required, the Committee shall work with all Parties, Regions, and Local Governments to identify appropriate data sets and develop reasonable procedures for collecting such data sets so that the administrative burden does not outweigh the benefit of producing such outcome related data. 16. The Committee shall facilitate collaboration between the State, Regions, and Participating Local Governments regarding sharing information related to abating the opioid crisis in Montana. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 110 D. ALLOCATION OF AND USE OF SETTLEMENT PAYMENTS TO THE STATE 1. According to the terms of the Settlement Agreements, when all requirements of the Settlement Agreements have been met to allow direct payments of Settlement Funds to the State of Montana, Local Governments, and Abatement Regions the Settlement Fund Administrator will determine the total amount of Settlement Funds to allocate and pay to the State of Montana, including base payments and incentive payments. 2. The funds from the Settlement Agreements for the State of Montana shall be direct -deposited into three separate funds: the State of Montana Fund, the Abatement Trust, and the Local Government Fund. 3. Of the total paid to the State of Montana, including incentive payments: a. Fifteen percent (15%) shall be allocated to directly to the State of Montana Fund; b. Seventy percent (70%) shall be allocated directly to the Abatement Trust, from which funds may be disbursed from the Trust, with approval of the Advisory Committee, for Opioid Remediation at the State, Regional, or Local Government levels; and, c. Fifteen percent (15%) shall be allocated directly to the Local Government Fund. 4. The Settlement Funds allocated to the State of Montana Fund shall be used by the State for Approved Purposes as determined by a separate committee MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 111 made up of representatives from the Attorney General and the Montana Department of Health and Human Services. The Settlement Funds allocated to the Abatement Trust shall be paid into the Abatement Trust for Approved Purposes administered by the Advisory Committee and Executive Director as described herein. 6. The Abatement Trust, administered by the Advisory Committee, shall be designated the lead single point of contact for Montana's communications with the Settlement Fund Administrator. As lead agency it shall have primary responsibility for evaluating and distributing funds for evidence based Opioid Remediation proposals and programs for opioid-related substance abuse disorder services. 7. Of the amount apportioned to the Abatement Trust for Opioid Remediation as outlined in 3(b) above, eighty percent (80%) shall be allocated to the Participating Abatement Regions according to the Subdivision Allocation Percentages in Exhibit B, on the assumption that all Subdivisions within each region become Participating Subdivisions. The allocation of 80% of the Abatement Trust to the Participating Abatement Regions, however, does not change the calculation of attorneys' fees for Outside Counsel for Local Governments described in Section E below. That calculation, which is set forth in the Settlement Agreements Exhibit R, is based on dividing and allocating the total settlement funds received by the State, half to the State and half to Local Governments. Attorneys' fees are then calculated by multiplying the Local Government half MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 112 times the allocation percentage in Exhibit B to determine amount allocated to their respective Local Governments upon which the attorneys' fees is based. 8. Amounts apportioned to the Local Government Fund shall be distributed to Participating Local Governments included on Exhibit B per the Subdivision or Local Government Allocation Percentage listed in Exhibit B. No Non -Participating Local Government will receive any amount from the Settlement Funds allocated to the State of Montana, regardless of whether such Local Government is included on Exhibit B. Rather, any funds allocated to the Local Government Fund for Non -Participating Local Governments shall be transferred to the Abatement Trust for Approved Purposes by the Region in which that Non - Participating Local Government is geographically located. 9. Each Abatement Region shall create its own governance structure for the administration, management, and use of Opioid Remediation funds to ensure all Participating Local Governments within that Region have input and equitable representation regarding regional Opioid Remediation administration and decisions, including representation on the Montana Opioid Abatement Trust Committee, and selection of projects to be funded from the Region's share. That governance structure shall include designation of a fiscal agent within the Region to receive and distribute Settlement Funds allocated to it. 10. All Participating Abatement Regions shall have the responsibility to make decisions about planning, budgeting, and disbursement of funds for projects that will equitably and appropriately serve the needs of the entire Region and be MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 113 consistent with this MOU and the Settlement Agreements' definition and description of appropriate Opioid Remediation and Approved Purposes. 11. The Trust Committee and all the Regions shall be guided by the recognition that budgeting for operating expenditures should be conservative and carefully limited to ensure that the maximum funds are preserved for forward - looking abatement of the opioid epidemic and the prevention of future opioid- related addiction and substance misuse. In recognition of these core principles, the Committee and the Regions shall endeavor to assure the funds are disbursed only to support evidence -based Opioid Remediation for opioid-related substance abuse/misuse abatement, education, and prevention efforts as described in detail in this MOU and the Settlement Agreements. 12. Funds from the Abatement Trust may also be expended by the Trust for statewide programs, innovation, research, and education. Any statewide programs funded from the Trust would be only as directed by an affirmative majority vote of the Committee. Expenditures for these purposes may also be funded by the Trust with funds received from either the State of Montana's share (as directed by the Attorney General in consultation with DPHHS) or from sources other than Opioid Settlement Funds as provided for below. 13. Participating Abatement Regions may collaborate with other Participating Abatement Regions to submit joint proposals to be paid for from the Regional Shares of two or more Participating Abatement Regions for the use of those Regions. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 114 14. Disbursements for proposed Opioid Remediation programs and services to Participating Abatement Regions shall be reviewed by the Committee to determine whether the proposed disbursements meet the criteria for Opioid Remediation and Approved Purposes. 15. The Trust and any entities receiving Opioid Remediation funds shall operate in a transparent manner. Meetings shall follow Montana constitutional and statutory law and be open and all documents shall be public to the same extent they would be if the Trust were a public, governmental entity. All operations of the Trust and all entities receiving Trust Funds shall, with respect to the receipt and use of such funds, be subject to audit. The bylaws of the Trust regarding governance of the Committee, as adopted by the Committee, may clarify any other provisions in this MOU, except this subsection. Rather, the substantive portion of this subsection shall be restated in the bylaws. 16. The Trust's financial resources shall be invested through the Montana Board of Investments to assure the Trust's investments are appropriate, prudent, and consistent with best practices for investments of public funds. The investment policy shall be designed to meet the Trust's long-term and short-term goals. 17. Any other matter concerning the allocation, management, and use of Settlement Funds from the Settlement Agreements not covered by this MOU, shall be controlled by the terms of the Settlement Agreements. E. ATTORNEYS' FEES AND COSTS The Settlement Agreements each provide very substantial separate funds for payment of fees for both outside counsel for litigating local MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 115 governments and outside counsel for litigating states such as Montana. If any Settlement is insufficient to cover the fee obligations owed to outside counsel representing the State of Montana and to outside counsel representing Local Governments (collectively, "Outside Counsel"), the deficiencies may be covered as set forth in further detail below. 2. Regarding attorneys' fees for local governments that filed suit, United States District Judge Dan Polster who is responsible for the MultiDistrict Litigation (MDL 2804) IN RE. NATIONAL PRESCRIPTION OPIATE LITIGATION, on August 6, 2021 (Docket No. 3804) notified: ... all eligible participants to the July 21, 2021 Settlement Agreements, and ... their private counsel, that a contingent fee in excess of 15% of the participant's award under the Settlement Agreements is presumptively unreasonable. Accordingly, the Court caps all applicable contingent fee agreements at 15%. 3. As such, total attorney fees to outside counsel collected from the Settlement Agreement attorney fee funds and the Montana Back Stop shall be capped at a 15% contingency fee of the amount allocated to their respective governmental entities. 4. Fees claimed and collected for common benefit work under the Settlement Agreements shall be calculated pursuant to the specific requirements of Exhibit R to the Settlement Agreements and shall not be utilized to reduce fees otherwise recoverable from the Montana Attorney Fee Back Stop Fund. The State of Montana and Litigating Local Governments shall first seek to have their attorneys' fees and expenses paid through the attorneys' fee funds created by the Settlement Agreements. The Local Governments litigating in MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 116 the MDL proceeding in the Northern District of Ohio, the Honorable Judge Dan Polster presiding, shall endeavor to obtain the maximum recovery from the Settlement Agreements attorney fee fund. In addition, as a means of covering any deficiencies in paying Outside Counsel, a supplemental Montana Attorney Fee Back -Stop Fund shall be established. 6. The Montana Attorney Fee Back -Stop Fund shall be funded by 5.5% of the total settlement funds paid to the State of Montana. The Mathematical Model described in Exhibit R of the Settlement Agreements for calculation of attorneys' fees provides that each Settling State shall attribute 50% of the settlement funds it receives to its Local Governments. Therefore, Fifty percent (50%) of the Montana Attorney Fee Back -Stop Fund shall be allocated to the Montana Attorney General's Back -Stop Sub -fund and fifty percent (50%) to the Litigating Local Government Attorney Fee Back Stop Sub -fund. The Attorney General's Fund shall shall be used in the Attorney General's sole discretion to (a) reimburse the State of Montana for opioid-related investigation and litigation costs; (b) offset the costs of the legal and administrative burdens imposed upon the Attorney General's Office by the Settlement Agreements as well as future settlements or disbursements by bankruptcy courts; and (3) for approved remediation or abatement purposes including, without limitation, the development of plans or projects whereby the State of Montana and the Local Governments may pool their respective recoveries and resources to fund efficient and effective statewide or regional abatement programs or strategies. MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 117 The remaining Fifty percent (50%) of the Montana Attorney Fee Back -Stop Fund shall be allocated to the Montana Litigating Local Governments' Attorney Fee Back - Stop Sub -fund for payment of Outside Counsel attorneys' fees incurred by Participating Local Governments. As provided above, fifty percent (50%) of the total settlements funds the State receives from these settlements shall be attributed to Local Governments. The amount upon which the fees for Litigating Local Government Attorneys shall be based is calculated by multiplying the fifty percent Local Government share of all settlement funds by the allocation percentage for each respective Litigating Local Governmentas listed in Exhibit B to this MOU. 7. Outside Counsel for Litigating Local Governments may apply to the Montana Attorney Fee Back -Stop Fund only after applying to any contingency fee fund created pursuant to the Settlement Agreements. 8. Subject to the 15% cap, above, Outside Counsel for Litigating Local Governments may apply to the Montana Attorney Fee Back -Stop Fund for only a shortfall, that is, the difference between what their fee agreements would entitle them to minus what they have already collected from any contingency fee fund created pursuant to the Settlement Agreements. Payments out of the Montana Litigating Local Governments' Attorney Fee Back -Stop Sub -fund shall be fairly allocated by a neutral committee consisting of one representative from each Litigating Local Government. 9. Any funds remaining in the Montana Litigating Local Governments' Attorney Fee Back -Stop Sub -fund in excess of the amounts needed to cover the MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 118 fees and litigation expenses to Outside Counsel for Litigating Local Governments shall revert to the allocations described in Section (D). 10. Payments to Outside Counsel shall be made from the Montana Attorney Fee Back -Stop Fund in the same percentages and over the same period of time as the national Contingency Fee Fund for each settlement. The Attorneys' Fees and Costs schedule for the Settling Distributors is listed in the Exhibit R §(II)(A)(1) of the Distributor Settlement Agreement. The Attorneys' Fees and Costs schedule for Janssen is listed in Exhibit R §(II)(A)(1) of the Janssen Settlement Agreement. F. INSTRUCTIONS FOR SIGNING THIS MOU AND THE SIGN -ON FORMS. You have already received a NOTICE relating to the Settlement Agreements. To join this MOU and to execute sign -on forms for the Settlement Agreement you must FIRST go to the national settlement website at https:Hnationalopioidsettlement.com/ in order to register. SECOND, once you are at the website please register your Local Government, county or city. Registration will only take a minute. This requires knowing who is authorized to sign -on the Settlements for your Local Government and an email address to which the sign -on form will be sent. With that information you can register your Local Government using the registration code MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 119 in the NOTICE you have received. If you do not register, your Local Government will not receive the sign -on form for the Settlements electronically. DATED this 26th day of November, 2021. MONTANA ATTORNEY GENERAL Austin Knudsen Montana Attorney General MONTANA DISTRIBUTORS AND JANSSEN OPIOID SETTLEMENT MEMORANDUM OF UNDERSTANDING 120 Exhibit A Montana Abatement Regions // • Metropolitan Regions Glacier Hill + inuuln Liberty �undrfll /Zj Teton Chnuteau .Sa n ders Mineral e NI ranib B ad ffe rse-n / fit 0 Rerun Madison Blaine Valley Phillips Baatii-� Ro( McCune Fergus Garfield BE Adith Basin Petroleum Pridlrle Musselshell Reg i od w 4ter ' aSU re Custer Sweet Grassy e ark Big Horn Powder Ri Caton