New York Establishes an Opioid Settlement Fund

Farrell Fritz, P.C.
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By legislation enacted last month, on June 9, 2021, amending the New York Finance Law, Mental Hygiene Law and Executive Law, New York State established an opioid settlement fund (“OSF”).  Finance Law §99-nn(1).  The purpose of the OSF and the OSF advisory board created by the statute is to ensure that all opioid settlement monies are dedicated to the prevention and treatment of substance use disorders, and the recovery of substance use victims.  OSF will include money paid to NYS as the result of (i) the settlement or other resolution of litigation against manufacturers, distributors, dispensers or promoters of opioids on claims arising from the manufacture, distribution, dispensing or promotion of opioids and (ii) any judgment, decree or other resolution of claims against those and “related” entities “arising out of activities alleged to have contributed to increases in opioid addiction.”  Finance Law, §99-nn(4).  OSF monies will include the proceeds of these claims, whether the claims were filed or unfiled, actual or potential, legal or equitable.  Id. 

The NYS Comptroller and NYS Commissioner of Taxation will be joint custodians of the OSF.  OSF monies are required to be segregated and not commingled with any other funds held by the Comptroller.  Finance Law §99-nn(2).  OSF expenditures “shall be used to supplement and not to supplant or replace” any other federal or NYS funds which would other otherwise be used for substance use prevention, treatment, recovery and harm reduction services. Finance Law §99-nn(3).  The law specifies that general operating funds or baseline funding for substance use prevention, treatment and recovery will not be reduced due to amounts expended from OSF.  Id.  All amounts received by the OSF will remain there “unless and until directed by statute or appropriation.”  Finance Law, §99-nn(4).  Funding must be disbursed to provide adequate geographic distribution across NYS.  In addition to programs administered by the Office of Addiction Services and Supports (OASAS), OSF dollars may be used for programs of NYS agencies other than OASAS which oversee programs and services that are considered eligible OSF expenditures.  §99-nn(5).  Local governments and school districts may apply for OSF funding to the appropriate NYS agency. Mental Hygiene Law, §25.18(b).

The legislature may appropriate OSF monies for the purposes spelled out in the amended Mental Hygiene Law, which include programs to:

  • Prevent substance abuse disorders through youth-focused and school-focused public health education.
  • Develop public health campaigns to reduce the stigma against individuals with a substance use disorder, and provide information about the risks of substance abuse and how to locate services to treat it.
  • Provide substance use disorder treatment, emphasizing programs that include a continuum of care from screening and assessment, active treatment (such as medication-assisted, psychiatric medication, psychotherapy and family therapy), case management and relapse management for use disorders and co-occurring disorders, and related services such as vocational, literacy and family counseling.
  • Provide harm reduction counseling to reduce adverse health consequences such as overdoses and communicable diseases.
  • Provide housing services for people recovering from substance abuse.
  • Support community-based programs that reduce the likelihood of criminal justice involvement for individuals with substance abuse disorders.
  • Provide programs for pregnant women and new parents who have, or had, a substance abuse disorder, and newborns with neonatal abstinence syndrome.
  • Provide for educational and vocational training for those with or at risk of a substance abuse disorder.

Mental Hygiene Law, §25.18.

The statute creates an opioid settlement board under OASAS to make recommendations on how to allocate OSF funding, and recommendations to the legislature about adding or removing categories of expenditures eligible for funding.  Mental Hygiene Law, §25.18(c). The settlement board will have 19 members, including two appointed by the governor, four by the speaker of the Assembly and president of the Senate, two by the NYS Attorney General, one by the mayor of New York City and seven representing counties throughout NYS, plus the commissioners of OASAS, the Department of Health and the Office of Mental Health as ex officio, non-voting members.  The voting members will serve three-year terms without compensation but with payment of actual and necessary expenses.  Mental Hygiene Law, §25.18(c)(3).  The statute contains conflict of interest prohibitions for members. §25.18(c)(7).  The advisory board will meet quarterly, and make its recommendations for the appropriation of OSF funds on or before November 1 each year, starting this year, to the governor and the legislature, in a written report. §25.18(c)(9).  Beginning one year after the first deposit of amounts into OSF, the relevant agency commissioners, in consultation with the advisory board, are required to provide an annual report on OSF funding detailing, among other things, which entities received funding, the criteria used to make the awards, how the funds were used, and how effectively they were used. Id. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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