A growing number of towns, cities and counties in West Virginia are opting out of any potential settlement with the drug companies that they’re suing in a landmark opioid case that’s scheduled to go to trial in two weeks. 

The local governments, especially those hardest hit by the opioid epidemic, are dissatisfied with the share of settlement dollars that they stand to receive, if a national deal is reached.

Instead, they’re gambling they’ll collect more cash from a settlement in state court, where they’re hoping their cases will be returned.

One such town is Kermit, in Mingo County. In three years, out-of-state drug distributors shipped more than 12 million prescription opioid painkillers to the tiny town of 400 people. Nearly everyone in Kermit knows someone who has died of a drug overdose.

Yet Kermit would receive $2,175 for every billion dollars the drug companies agree to pay to resolve the national case, under a proposed settlement formula posted online. Los Angeles would get $12 million, while Chicago would collect $8 million for each billion of settlement funds.

Kermit was one of the first towns in America to sue opioid distributors and manufacturers. Now, more than 2,000 government bodies across the nation have filed lawsuits that blame the drug companies for starting the opioid crisis by flooding communities with prescription pain pills. The companies have denied wrongdoing.

“Nobody talks about the opioid crisis without mentioning Kermit,” said Truman Chafin, a Mingo County lawyer representing the town in the opioid litigation. “The town is a good example of how unjust this settlement formula is for some communities.”

Under the proposal, every town, city and county in the U.S. — some 34,000 municipalities — would share any settlement funds, even places that didn’t file lawsuits. They have until Nov. 22 to decide whether to be part of the group — called the “negotiating class” — that could potentially receive settlement monies from the national opioid litigation, which has been consolidated in federal court in Cleveland.

Local governments that stay in the national case can distribute the settlement funds any way they see fit.

In West Virginia, the state Supreme Court has set up a “Mass Litigation Panel” for towns, cities and counties that want their lawsuits against drug manufacturers and distributors heard in state court. Barbour/Taylor County Circuit Judge Alan Moats is leading the panel.

More than half of West Virginia’s 55 counties — including, Lincoln, McDowell, Clay, Mason and Mingo — are expected to opt out of any national settlement in hopes of resolving their suits against the companies in state court for more money, according to lawyers representing the counties. Many of West Virginia’s towns and cities are likely to follow suit.

West Virginia has the highest drug overdose death rate in the nation. More than 900 people fatally overdosed last year.

“We’ve always believed it was better for them to stay in West Virginia,” said Chafin, a former state senator. “The only way to get a fair and equitable settlement is to try the case in West Virginia, so for our clients, it’s an easy decision.”

The national settlement formula aims to help communities most affected by the opioid crisis. The formula gives more weight to places that were saturated with the highest number of opioids on a per-person basis. It also takes into account overdose death and addiction rates. But big cities stand to collect the most settlement monies because of their larger populations.

Under the formula, Charleston would receive $496,878 for every billion dollars of a national settlement, and Kanawha County $266,226. Meanwhile, Huntington stands to get $436,827, and Cabell County $263,877 for every billion.

Elected officials from those cities and counties are discussing options with their lawyers.

The state panel has yet to develop a similar formula for dividing up any potential settlement funds.

Last week, six Ohio cities filed a petition with the 6th Circuit Court of Appeals in Cincinnati, challenging the proposed settlement process, which U.S. District Judge Dan Polster approved Sept. 11.

The system forces local governments to decide whether to opt out “without knowing whether the settlement will be for anything between millions and tens of billions of dollars,” according to the cities.

To see how much your town or county will collect if the federal court case settles, go to https://allocationmap.iclaimsonline.com/, and subtract 25 percent, money that will be set aside for attorneys’ fees (10 percent) and a “special needs fund” (15 percent). Local governments can apply for money through the special fund, if they believe they’re entitled to a higher share of any settlement.

“Despite the incredible efforts of Judge Polster and the plaintiffs executive committee overseeing the litigation, the proposed settlement metrics just don’t take into account how deep rooted and impactful the opioid epidemic has damaged West Virginia and its people,” Chafin said.

The companies being sued in the national case are Purdue Pharma, Endo, Cephalon, Mallinckrodt, Janssen, McKesson, Cardinal Health, AmerisourceBergen, CVS, Rite-Aid, Walgreens, Actavis and Walmart.

Last month, Purdue Pharma filed for bankruptcy protection as part of a plan to settle its lawsuits for $10 billion. The settlement has not been approved. Mallinckrodt recently agreed to resolve lawsuits with two Ohio counties for $30 million, allowing the company to avoid the landmark opioid trial set to start Oct. 21 in Cleveland.

Reach Eric Eyre at ericeyre@wvgazettemail.com, 304-348-4869 or follow @ericeyre on Twitter.