Lawsuit over state's control of $1B in opioid settlements dismissed

ALBANY — A federal court has dismissed a lawsuit by nine towns to stop the state from controlling more than $1 billion in court settlements from opioid manufacturers accused of contributing to a statewide addiction crisis. Eight of the towns are on Long Island.

The municipalities sued the state over a 2021 state law that consolidated any settlement funds won from opioid companies under lawsuits initiated by state Attorney General Letitia James. James settled her case in July 2022 for $1.1 billion. Under the state law, an opioid fund and an advisory board were created to “insure that any settlement money [is] dedicated toward substance use disorder prevention, treatment and recovery.”

The towns had begun suing the drug companies as early as 2019 and intended the settlement to be “unrestricted funds” for any purpose the local officials decided on, although some towns planned to use some of the money for costs created by the opioid epidemic such as ambulance service.

The towns’ attorney, David Grossman of Huntington, said he plans an appeal. The towns had accused the state of violating the “home rule” provision of the state constitution, which limits the state’s power to overrule local governments on local issues. The towns also accused the state of violating the towns' right of free speech under the U.S. Constitution, because the state prohibited towns from filing their own lawsuits to assert their rights.

Grossman represents Babylon, Brookhaven, Hempstead, Islip, Oyster Bay, North Hempstead, Huntington, Smithtown, and Ramapo in Rockland County.

U.S. District Court Judge Kiyo Matsumoto in Brooklyn dismissed the towns’ lawsuit in the decision dated Dec. 19. She upheld the state law that required settlement money be used only for addiction-related services. The judge determined the law met the legal standard of addressing a “substantial statewide concern.”

But the judge said the towns could press their arguments in a state court in which the state’s action could be challenged under the state constitution.

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.