Judge sanctions Ottawa County, former lawyer over 'frivolous' opioid settlement challenge

WAYNE COUNTY — A judge for the Wayne County Circuit Court sanctioned Ottawa County and its former corporate counsel Tuesday for filing what she called a frivolous lawsuit that temporarily delayed the distribution of $81 million in opioid settlement monies earlier this year.

Judge Patricia Fresard on April 11 ruled the county had an unreasonable interpretation of the settlement and that its lawyer, Doug Van Essen, lied about who was overseeing the funds, according to Law360, a subscription-based legal news service based in New York City.

More: Michigan's opioid settlement money is being held up by a lawsuit from Ottawa County

More: Judge dismisses lawsuit holding up $81M in Michigan opioid settlement money

Fresard scheduled an evidentiary hearing in May to determine the monetary amount of sanctions.

Fresard dismissed the county's lawsuit — filed in November — in January after it held up the first installments in the state's share of a $26 billion national settlement with three drug distributors and one drug manufacturer. The payments were scheduled to start in the waning months of last year.

Ottawa County has appealed that dismissal.

"The frivolous challenge by Ottawa County delayed millions of dollars from being put to good use to help Michigan residents and our communities recover,” Michigan Attorney General Dana Nessel said after the lawsuit was dismissed.

Ottawa County is among 269 counties, municipalities and townships across Michigan that signed onto the settlement, which will distribute roughly $388 million to local governments over the span of 18 years.

But after it signed onto the settlement, Ottawa County challenged the agreement. It sued the state and Nessel, saying the money is being disbursed wrongly and that Ottawa County residents deserve more than the $2.6 million the county is set to receive.

Van Essen argued local governments shouldn't be disbursing money at all, because they don't run substance abuse treatment centers. He said the state alone should distribute settlement money to individual programs.

“Ottawa County is scheduled to get $2.6 million. … It’s the seventh-largest county in Michigan, behind Washtenaw and ahead of Ingham. We have 300,000 people. Montcalm, which is just north of Grand Rapids has, I don’t know, 50,000 people … it’s getting $2.2 million," he said. "So, on its face, it didn’t seem logical."

Fresard granted the sanctions, ruling the intervening complaint was a "frivolous position" and that Van Essen misled the court and the county by telling them the settlement agency, BrownGreer, was "the federal court," and that "the federal court" was directing how the funds were distributed.

"Based on a sworn statement of its representative, Ottawa County was fully aware it did have authority to spend [settlement funds], therefore allegations in the Ottawa County lawsuit were frivolous," Fresard said Tuesday, according to Law360. "This court further agrees that Ottawa's mischaracterization of the settlement administrator as the federal court is a flagrant violation of Michigan court rule and warrants sanctions."

Van Essen said he and the county are "deeply disappointed" with the ruling. He reiterated his argument that counties, townships or cities cannot distribute the settlement funds because the funds were directed to be spent on substance use disorder treatment, and those local governments do not have the legal authority to provide that care.

"Ottawa County and its corporation counsel ... would never knowingly misrepresent either the facts or the law to the court, and did not do so here," Van Essen wrote in a statement to Law360.

In all, Michigan is scheduled to receive about $776 million from the settlement with three opioid distributors and manufacturer Johnson & Johnson, paid out incrementally over 18 years. Half of the total payout — $631 million from pharmaceutical distributors Cardinal, McKesson and AmerisourceBergen and $145 million from Johnson & Johnson via its pharmaceutical company Janssen — will go to the state. The other half will be distributed among the local governments.

Nessel and more than 40 counties filed for sanctions against Ottawa County and Van Essen in February, alleging the county's intervening complaint was unsound and had been holding up the distribution of "urgently needed opioid remediation funding" for more than two months, according to Law360.

On Tuesday, attorneys for the state and counties said Ottawa's claim "reeks of bad faith," given the settlement agreement itself laid out several other ways to spend the funds. They also called it "ironic" that Ottawa County, which didn't participate in the initial lawsuit, made a contradictory argument that it can't spend the settlement funds while at the same time claiming the county deserves a greater share of the money.

Van Essen said it was the first time sanctions have been filed against him, adding he's "dedicated his life" to representing local governments.

He said every decision he made was intended to ensure the people who live in Ottawa County receive their fair share of the settlement agreement.

He said he was made aware in September the county received a third of what other counties were getting per capita. The settlement administrator for the national opioid settlement fund told him disputes had to be resolved by the court, so he filed the complaint in Wayne County, according to Law360.

"I don't see how I could've been accused of being irresponsible in any of these actions," he said.

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The new Ottawa County Board of Commissioners has been the subject of controversy since its first meeting Jan. 3, when a majority of members affiliated with a far right-wing group, Ottawa Impact, fired the county administrator, replacing him with a failed Republican congressional candidate. It also eliminated the county's Diversity, Equity and Inclusion Office, attempted to replace its health director and fired Van Essen in favor of Lansing-based Kallman Legal Group.

Michigan has been hit hard by the opioid epidemic, which began with the misuse of pain medication, morphed into a heroin crisis and is driven now by fentanyl, an ultra-potent synthetic opioid. In 2021, the last year for which numbers are available, Michigan recorded 3,040 overdose deaths, the most ever, according to the U.S. Centers for Disease Control and Prevention.

— Detroit Free Press reporter Georgea Kovanis contributed to this report. Sarah Leach is executive editor of The Holland Sentinel. Contact her at sarah.leach@hollandsentinel.com. Follow her on Twitter @SentinelLeach.

This article originally appeared on The Holland Sentinel: Judge sanctions Ottawa, ex-lawyer over 'frivolous' opioid lawsuit