Judge allows AZ opioid settlement money to go to state prisons

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A Maricopa County judge ruled on Monday that Arizona can spend opioid settlement money in state prisons, ending a high profile dispute between Gov. Katie Hobbs, Attorney General Kris Mayes and GOP legislative leaders.

At issue was $115 million that was transferred to the Department of Corrections, Rehabilitation and Reentry in the new state budget. Republican lawmakers and Hobbs signed off on the plan after months of behind-the-scenes negotiations on how to close a $1.4 billion deficit. The move was sharply criticized by Mayes, who accused them of illegally using settlement funds to backfill budget holes and repeatedly warned that she would take them to court over it.

Mayes argued that the money, which is part of a national settlement agreement with pharmaceutical companies and pharmacy operators, including Walgreens and CVS, is strictly meant for opioid remediation, such as education, prevention or treatment efforts. She warned that using it to remedy the budget shortfall would endanger future disbursements. Arizona is expected to receive more than $1.1 billion over 18 years.

Just two days after Hobbs signed the budget , Mayes requested and won a temporary restraining order freezing the transfer of funds.

But during a Monday hearing, Maricopa County Superior Court Judge John Hannah dissolved that restraining order, saying that no evidence yet exists that the money will be used in ways that conflict with the settlement agreement . The budget specifies that the Department of Corrections must use the funding to address the effects of opioid addiction and expenditures must comply with the terms of the settlement.

“The state department of corrections shall use the monies only for past and current department costs for care, treatment, programs and other expenditures for individuals with opioid use disorder and any co-occurring substance use disorder or mental health conditions or for any other approved purposes as prescribed in a court order,” reads the underlying budget bill .

Hannah did leave open one avenue for recourse, however: If the funding is ultimately spent on unauthorized purposes, Mayes will have grounds to sue to recoup the money.

In an emailed statement, Mayes said she still believes the move to “sweep” the funds is wrong and that she will focus on ensuring that the money is spent correctly.

“I will be closely monitoring each penny of spending by ADCRR. I also believe that this move in a very real way puts at risk future settlement payments,” she said. “But the people who really lost here are the countless Arizonans on the front lines of this crisis, particularly in rural Arizona, whose needs have been ignored by the Governor and GOP legislative leaders.”

Hobbs and GOP legislative leaders, meanwhile, were quick to slam Mayes’ unsuccessful bid to stop the transfer.

“The Attorney General is flatly wrong on the law and mischaracterized the opioid funding in the bipartisan budget. The ruling gets it right,” said Hobbs’ spokesman Christian Slater. “Governor Hobbs is a social worker who secured a bipartisan agreement to treat victims of the opioid crisis and will continue to defend that funding.”

“This was a frivolous case brought by the Attorney General,” echoed Senate President Warren Petersen. “Facts matter. Laws matter. And our taxpayers are best served when our elected officials uphold the rule of law. Once again, I’m grateful we have checks and balances in place to ensure this principle is followed.”

House Speaker Ben Toma said he was “pleased” with the judge’s decision and looked forward to the funds making an impact in Arizona’s prison system.

“Now the funds will be lawfully spent by the Department of Corrections, as intended in the budget and to help individuals impacted by opioids,” he said, in an emailed statement.

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