BP Oil Spill Holds Settlement Payout Clues for Opioid Litigation

A sprawling opioids lawsuit draws surprising parallels to the Deepwater Horizon oil spill litigation, offering clues to how the roughly 2,600 opioid cases could play out in federal court.

The opioid litigation is often compared to the Big Tobacco lawsuits of the 1990s. But veterans from the tobacco and Deepwater Horizon settlements say the tools developed to calculate damages from the oil spill offer better insights for the current opioid lawsuits targeting Purdue, Teva, AmeriSource Bergen, Mallinckrodt, and other manufacturers and distributors.

The opioid manufacturers “spilled pills, so to speak,” said Mike Moore, the former attorney general of Mississippi who participated in both the tobacco and Deepwater Horizon cases. He is currently working for plaintiffs on the opioid litigation.

“They should have put 100 million pills out in America, and they put several billions of pills into America,” Moore said. “But for the pill spill, we wouldn’t have this opioid epidemic.”

Similarly, BP could have taken any number of additional safety and maintenance steps to prevent or mitigate the oil spill, Moore said.

As in opioids, “it’s the only other case where cities and counties have brought cases along with states,” he said.

However, many state attorneys general in the opioids case—playing out in Cleveland—are fighting a proposed settlement plan for a class of cities, counties, and tribes that the court approved Sept. 11. If they’re successful in blocking it, it would be an important departure from Deepwater Horizon.

Damage Done

The April 20, 2010, explosion on the Deepwater Horizon oil rig led to the largest marine oil spill in history. The rig sent as much as 60,000 barrels of oil a day into the Gulf of Mexico for weeks. Ultimately, BP put $20 billion into a compensation fund for an estimated 100,000 affected individuals and businesses.

By comparison, an estimated 400,000 Americans died of an opioid overdose from 1999-2017, according to the Centers for Disease Control and Prevention. The damage has ricocheted across the lives of millions more.

“The ramifications of the opioid epidemic’s economic impact, particularly to the rural communities, has an overlap with BP,” said Joe Rice, co-lead counsel in the opioid litigation. He was also a co-lead negotiator in the BP litigation and co-lead counsel in the Big Tobacco case.

City and county governments, Native American tribes, and states all racked up costs for providing addiction treatment and care for children abandoned or neglected by those addicted. That’s on top of the overall decline in local economies caused by unemployment related to addiction.

Similarly, “in Deepwater Horizon, obviously you had communities having to clean up the mess on their beaches, and then you had terrible damage to the wildlife,” said Paul J. Hanly, a co-lead counsel in the opioid litigation. “Then you had the guy who owns a motel losing a whole bunch of business because his guests didn’t show up.”

One big difference is that the opioids case involves a complex network of defendants, while Deepwater Horizon had just one primary defendant in BP. Transocean, the owner of the rig, and Halliburton Co., which provided the cement to seal off the well, also had some culpability. BP paid $13 billion in economic and medical claims and established a $20 million victims’ fund. Halliburton and Transocean shared a $1.24 billion settlement.

The distinction is important because the plaintiffs hurt by opioids will have more companies and health providers to go after, even as some—such as Purdue—pursue bankruptcy to limit their liability. The result could be a longer, more complicated litigation process.

The Sooner the Better

The biggest lesson learned from the BP case could be a way to calculate payouts that saves court time, Rice said. “In BP, we cut through potentially years of litigation by establishing models to show the damage.”

The BP model found those whose revenues were hit in the immediate aftermath of the oil spill and multiplied those costs over a period of time to calculate the intensity of harm—or damages—in each community, Rice said.

Rice’s team devised a similar system in the opioid litigation, instead calculating how they would break down settlement payouts for virtually every community in the U.S. Local governments as class members would divide settlement dollars based on a pre-determined formula.

The three key factors in the equation are: the milligram equivalents of morphine that were delivered to each municipality by drug distributors, the number of opioid-related deaths, and the number of people diagnosed with opioid addiction, Rice said.

However, states and some cities remain divided as they both pursue money from opioid makers and distributors. More than a dozen attorneys general are challenging the authority of local governments to seek claims they believe belong to the states. If that challenge is successful, the negotiators have to go back to the drawing board.

Hanly said the cost estimates to states and counties across the country range from $75 billion to $500 billion annually, with as many as 150 million people affected.

Any settlement or judgment probably won’t reach those figures. “The culpable entities don’t have the money to completely eradicate the epidemic,” Hanly said. “Having said that, some money is better than no money, and we’re working very hard to pursue these companies for basically everything they’re worth.”

More Than Purdue

Purdue has already proposed paying a $10 billion settlement to limit its liability going forward as part of a bankruptcy filing.

Purdue is often viewed as the face of the opioid crisis given its role in manufacturing and marketing OxyContin, but companies at every level of the supply chain are potentially on the hook. If Purdue’s bankruptcy goes through, the plaintiffs could go after a seemingly endless supply of manufacturers, distributors, and pharmacies.

The case could drag on much longer than Deepwater Horizon, and the costs will likely be much higher because the reach of the damage goes further, sometimes afflicting generations of the same family, said Michael S. Burg of the Colorado-based law firm Burg Simpson Eldredge Hersh & Jardine PC.

“$20 billion? That doesn’t even scratch the surface of this,” said Burg, who also litigated the Big Tobacco case.

“Even if they settle today, what are we going to do about the millions of people getting addicted, or addicted already, that are 15 years old?” he said.

Limited Liability

Many of the defendants in the opioids case argue they have less or no liability compared to other parties, Burg said.

For example, in a separate case that Oklahoma’s attorney general brought against Johnson & Johnson, the company argued its two products accounted for less than 1% market share in that state.

“We have all kinds of different levels of responsibility: The pill-pushing doctor, the pharmacy that’s not checking volume, the distributor, the manufacturers,” Burg said.

As a result, a global settlement encompassing all defendants is unlikely. Assuming the jury in Ohio finds the companies liable, the challenge remains calculating and negotiating varying levels of financial culpability for each player in the opioid market.

The case is In re: National Prescription Opiate Litigation, N.D. Ohio, No. 1:17-MD-2804, 9/11/19.