HB2806

SECTION 1. The legislature finds that, according to KFF Health News, the State has received over $19,000,000 as of April 2023 in litigation proceeds from legal claims made against manufacturers and distributors of prescription opioids; pharmacies that have dispensed opioids; and other related parties for their alleged roles in contributing to the high rates of drug overdoses and other drug-related harms. The Hawaii department of the attorney general estimates that the anticipated recovery of litigation proceeds will exceed over $156,000,000.

The legislature further finds that experience with the 1990s tobacco settlement funds suggests that without firm commitment and transparent planning, opioid litigation proceeds may not be directed toward preventing and addressing substance use disorders, overdoses, and other drug-related harms. This would be an unacceptable outcome, as substance use disorders, overdoses, and drug-related harms have had a significant impact throughout the State.

The purpose of this Act is to require transparency and ensure accountability through the creation of the Hawaii opioid litigation proceeds council to oversee the expenditure of all opioid litigation proceeds received by the State as part of the historic nationwide lawsuits holding entities responsible for the opioid crisis devastating communities.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

hawaii opioid litigation proceeds

§ -1 Definitions. As used in this chapter, unless the context otherwise requires:

"Conflict of interest" means a financial association involving a council member or the council member's immediate family that has the potential to influence a council member's actions, recommendations, or decisions related to the disbursement of opioid litigation proceeds or other council activity.

"Council" means the Hawaii opioid litigation proceeds council.

"Department" means the department of health.

"Director" means the director of health.

"Special fund" or "fund" means the Hawaii opioid litigation proceeds special fund.

"Substance use disorder" means a pattern of use of alcohol or other substances that meets the applicable diagnostic criteria delineated in the most recent publication of the Diagnostic and Statistical Manual of Mental Disorders of the American Psychiatric Association, or in any subsequent editions.

§ -2 Hawaii opioid litigation proceeds special fund. (a) There is established in the state treasury the Hawaii opioid litigation proceeds special fund to be administered by the council and into which shall be deposited the following moneys:

(1) All opioid litigation proceeds received by the State, regardless of whether the proceeds are received as a lump sum or series of payments to be made over a period of time;

(2) Appropriations made by the legislature;

(3) Gifts, donations, grants, bequests, and other moneys received by the State on the fund's behalf; and

(4) All interest earned or accrued from the investment of the moneys in the fund.

(b) The moneys in the special fund shall be expended for the following purposes:

(1) Disbursement of funds allocated to the counties as their share of opioid litigation proceeds;

(2) The administration and staffing of the council and special fund; provided that no more than eight per cent of the fund's annual balance, as determined on December 31 of each year, shall be expended for this purpose;

(3) The management, investment, and disbursement of moneys from the special fund; provided that no more than two per cent of the fund's annual balance, as determined on December 31 of each year, shall be expended for this purpose; and

(4) Subject to majority approval from the council, the following substance use disorder abatement purposes:

(A) Statewide or community substance use disorder needs assessments to identify structural gaps and needs to inform expenditures from the fund;

(B) Infrastructure required for evidence-based substance use disorder prevention, treatment, recovery, or harm reduction programs, services, and supports;

(C) Programs, services, supports, and resources for evidence-based substance use disorder prevention, treatment, recovery, or harm reduction;

(D) Evidence-informed substance use disorder prevention, treatment, recovery, or harm reduction pilot programs or demonstration studies that are not evidence-based but are approved by the council as an appropriate use of moneys for a limited period of time as specified by the council; provided that for all evidence-informed pilot programs and demonstration studies, the council shall assess:

(i) Whether the emerging evidence supports distribution of moneys for these uses; or

(ii) Whether there is a reasonable basis for finding such uses with the expectation of creating an evidence base for such uses;

(E) Evaluations of effectiveness and outcomes reporting for substance use disorder abatement infrastructure, programs, services, supports, and resources for which moneys from the fund were disbursed, such as the impact on access to harm reduction services or treatment for substance use disorders, or a reduction in drug-related mortality; or

(F) One or more data interfaces managed by the department to aggregate, track, and report, free of charge and available online to the public, data on substance use disorder, overdoses, and drug-related harms; spending recommendations, plans, and reports; and outcomes of programs, services, supports, and resources for which moneys from the fund were disbursed.

(c) Moneys in the special fund that are allocated to the counties as their share of proceeds shall be disbursed to the respective counties within thirty days of receipt of the litigation proceeds by the State. The counties' authority to direct and determine how their respective shares are spent shall be consistent with the litigation agreements and shall not be subject to severability.

(d) Unless otherwise required by controlling court order to refund to the federal government a portion of the proceeds, moneys in the fund shall be used for prospective purposes and shall not be used to reimburse expenditures incurred prior to the effective date of this Act.

(e) All opioid litigation proceeds shall be spent, whether by the state or counties, consistent with the settlement agreements entered into by the State and any court orders.

§ -3 Special fund disbursements; requirements; restrictions.

(a) Disbursements from the special fund shall be made promptly by the director upon the approval of the council and no later than thirty days after the approval of the council. The director shall not make or refuse to make any disbursement allowable under this subsection without the approval of the council. The director shall adhere to the council's decisions regarding disbursement of moneys from the fund so long as the disbursement is a permissible expenditure under subsection (b). The director's role in the distribution of moneys as approved by the council shall be ministerial and not discretionary.

(b) Except for moneys disbursed pursuant to section ‑2(b)(1), moneys expended from the fund for the purposes of section ‑2(b) shall be supplemental to, and shall not supplant or take the place of, any other funds, including insurance benefits or federal, state, or county funding, that would otherwise have been expended for these purposes.

(c) The director shall not disburse moneys from the fund unless the governor, president of the senate, and speaker of the house of representatives transmit to the council a letter verifying that moneys appropriated and allocated in that fiscal year's budget for substance use disorder abatement infrastructure, programs, services, supports, and resources for prevention, treatment, recovery, and harm reduction are no less than the sums of the moneys for these purposes appropriated and allocated in the state budget for the previous fiscal year.

(d) Subject to subsection (c), all moneys from the special fund appropriated for substance use disorder abate infrastructure, programs, services, supports, and resources for prevention, treatment, recovery, and harm reduction shall be made available for disbursement during the fiscal year for which they are appropriated by the council; provided that if the moneys are not fully expended, they shall be made available in each subsequent fiscal year until fully expended.

§ -4 Special fund; investments. The director shall have the responsibility for the investment and reinvestment of moneys in the fund. On or before December 31 of each year, the director shall issue a public report, which shall be made available online, specifying:

(1) An inventory of fund investments as of December 31;

(2) The net income the fund earned for the previous fiscal year;

(3) The dollar amount and the percentage of the fund balance incurred for expenses of administering and staffing the fund and the council during the previous fiscal year; and

(4) The dollar amount and the percentage of the fund balance incurred for expenses associated with managing, investing, and disbursing moneys in the fund during the previous fiscal year.

§ -5 Hawaii opioid litigation proceeds council. (a) There is established a Hawaii opioid litigation proceeds council to be placed in the department of health for administrative purposes only.

(b) The purpose of the Hawaii opioid litigation proceeds council shall be to ensure that the proceeds received by the State pursuant to section ‑2 are allocated and spent on substance use disorder abatement infrastructure, programs, services, supports and resources for prevention, treatment, recovery, and harm reduction; and to ensure robust public involvement, accountability, and transparency in allocating and accounting for moneys in the fund.

(1) The director of health, or the director's designee;

(2) The director of corrections and rehabilitation, or the director's designee;

(3) The superintendent of education, or the superintendent's designee;

(4) A member of the senate, designated by the president of the senate;

(5) A member of the house of representatives, designated by the speaker of the house of representatives;

(6) The dean of the John A. Burns school of medicine at the university of Hawaii at Manoa, or the dean's designee;

(7) The mayors of the counties of Hawaii, Kauai, and Maui, and the city and county of Honolulu, or the mayors' designees; and

(8) Five community members upon application to, and approval by the governor; provided that these community members shall include:

(A) A person who has experience in providing substance use disorder prevention, treatment, recovery, and harm reduction services;

(B) A person who has expertise, experience, or education in public health policy or research;

(D) A person who has experience in public budgeting; and

(E) A person who has lived experience with substance use disorder recovery.

(d) To the extent practicable, council members shall also invite family members of persons who have, or decedents who had, a substance use disorder, and representatives of communities that have been disproportionately impacted by substance use and disparities in access to care or health outcomes.

(e) The council shall elect a chair from among its members on January 15 of each year.

(f) Council members shall serve two-year terms.

(g) The council shall be responsible for:

(1) Recommending and approving policies and procedures for administration of the council and for the application, awarding, and disbursement of moneys from the fund, to be used for purposes set forth in section ‑2(b)(4);

(2) Recommending and approving goals and objectives and their rationales, sustainability plans, and performance indicators relating to:

(A) Substance use disorder prevention, treatment, recovery, and harm reduction efforts;

(B) Reducing disparities in access to prevention, treatment, recovery, and harm reduction programs, services, supports, and resources; and

(C) Improving health outcomes in traditionally underserved populations, including but not limited to those who live in rural communities, persons of color, and formerly incarcerated individuals;

(3) Approval of awards of moneys from the fund exclusively for permissible expenditures set forth in section ‑2(b)(4); and

(4) Approving suspensions of allocations of moneys from the fund to recipients found by the council or the department to be substantially out of compliance with council policies or procedures; the policies, procedures, rules, or regulations of the department; or to have used the awards for a purpose other than an approved purpose. The council may resume approval of allocations once the council or department has determined the recipient has adequately remedied the cause of the suspension.

(h) When approving an allocation of moneys from the fund, the council shall consider, at a minimum, the following criteria:

(1) The number of people per capita with a substance used disorder in a community;

(2) Disparities in access to care in a community that may preclude persons with a substance use disorder from obtaining a diagnosis or receiving evidence-based treatment;

(3) The number of overdose deaths per capita in a community;

(4) The infrastructure, programs, services, supports, or other resources currently available to individuals with substance use disorders in a community; and

(5) Disparities in access to care and health outcomes in a community.

(i) The council shall hold at least four meetings per year. Members may attend meetings in person, remotely by audiovisual means, or upon approval by the chair, by audio-only means.

(j) A majority of council members shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the members present shall be necessary for any action by the council. Each council member shall have one vote.

(k) Members shall disclose to the council, refrain from participating in discussions, and recuse themselves from voting on any matter before the council where the member has a conflict of interest.

§ -6 Recipients; reports. Any recipient who receives an award of funds from the special fund shall prepare a report to the council one year after the award of any funds, and for each year thereafter that the recipient receives funds from the special fund, detailing the effectiveness of infrastructure, programs, services, supports, and resources funding. The report shall include, at a minimum:

(1) How the recipient used the moneys for the intended purpose;

(2) The number of individuals serviced by race, age, gender, and other demographic factors reported in a de-identified manner;

(3) A specific analysis of whether the infrastructure, program, service, support, or resources reduced mortality or improved prevention, treatment, harm, reduction, or recovery outcomes, or both; and

(4) If a plan to ensure the sustainability of the infrastructure, program, service, support, or resources funded exists, a summary of the plan.

§ -7 Department of health; program director; duties; responsibilities. The department shall:

(1) Employ a full-time program director of the council to plan and support the meetings and functions of the council and direct the day-to-day activities required to ensure that all opioid litigation proceeds received by the State and deposited in the special fund are allocated and spent on substance use disorder abatement infrastructure, programs, services, supports, and resources for prevention, treatment, recovery, and harm reduction; and to ensure robust public involvement, accountability, and transparency in allocating and accounting for moneys in the fund;

(2) Provide public health research and policy expertise, support staff, facilities, technical assistance, and other resources to assist the program director of the council with the program director's duties;

(3) Utilize, where feasible, appropriations from the general fund and existing infrastructure, programs, services, supports, or other resources to address substance use disorders, overdoses, and drug-related harms in the State;

(4) Prepare for review and approval by the council goals and objectives and their rationales, sustainability plans, and performance indicators relating to substance use disorder prevention, treatment, recovery, and harm reduction efforts and reducing disparities in access to prevention, treatment, recovery, and harm reduction programs, services, supports, and resources;

(5) Evaluate applications and recommend to the council awards and disbursements of moneys from the fund that meet the requirements of section ‑2(b)(4);

(6) Maintain oversight over the expenditure of moneys from the fund to ensure fund moneys are expended in accordance with the requirements of section ‑2(b);

(7) Recommend to the council any suspensions of allocations of moneys from the fund to recipients found by the department to be out of compliance with council procedures; the department's policies, procedures, rules, or regulations; or to have the awards for a purpose other than an approved purpose;

(8) Implement and publish on the council's or department's website the policies and procedures for administration of the council and for the application, awarding, and disbursement of moneys from the fund, to be used for purposes pursuant to section ‑2(b)(4); and

(9) Create and maintain a website that shall include, at a minimum,

(A) An annual report of the council's activities and effectiveness pursuant to section ‑8;

(B) Council meeting attendance rolls and minutes, including but not limited to records of all votes on expenditures of moneys from the fund, recipient agreements, and any reports made by a recipient pursuant to section ‑6; and

(C) All policies and procedures approved by the council and any council-related policies, procedures, rule, or regulations adopted by the department.

§ -8 Court orders; exceptions. (a) The council shall disburse moneys from the fund in a manner consistent with the limitations on uses of litigation proceeds set forth in any controlling court order.

(b) In the event a controlling court order permits expenditures other than or in excess of expenditures authorized under section ‑2(b), the council shall adhere to the limitations on use of moneys set forth in section ‑2(b).

(c) In the event section ‑2(b) permits expenditures other than or in excess of those authorized in a controlling court order, the council shall adhere to the limitations on use of moneys set forth in the court order.

(d) In the event a controlling court order allocates litigation proceeds among counties, section ‑2(b)(1) shall not apply, and the council shall disburse moneys from the fund according to the allocations set forth in the court order.

§ -9 Reporting. (a) Beginning on December 31 one year after the initial deposit of proceeds into the fund, and every year thereafter, the department shall provide a written report to the governor, legislature, and attorney general detailing the council's activities during the previous calendar year.

(b) The report shall be published on the council's or department's website and shall include, at a minimum:

(1) The opening and closing balance of the fund for the calendar year;

(2) An accounting of all credits to and expenditures from the fund;

(3) The name and a description of each recipient of moneys from the fund, and the amount awarded to each recipient;

(4) A description of each award's intended use, including the specific program, service, or resource funded; population served; and measures that the recipient will use to assess the impact of the award;

(5) The primary criteria used to determine each recipient and its respective award amount;

(6) A summary of the information included in the annual report prepared by the recipient required under section ‑6;

(7) All applications for an award of moneys from the fund received during the calendar year;

(8) A description of any finding or concern as to whether all moneys disbursed from the fund pursuant to section ‑2(b)(4) supplemented, and did not supplant or replace, any existing or future federal, state, or county funding; and

(9) The performance indicators and progress toward achieving the goals and objectives developed under this Act, including metrics on improving outcomes and reducing mortality and other harms related to substance use disorders."

SECTION 3. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2024-2025 for the purposes of drug policy and coordination the establishment of the following positions within the alcohol and drug abuse division of health:

(1) One full-time equivalent (1.0 FTE) program director position exempt from chapter 76, Hawaii Revised Statutes;

(2) One full-time equivalent (1.0 FTE) outreach coordinator position exempt from chapter 76, Hawaii Revised Statutes; and

(3) One full-time equivalent (1.0 FTE) administrative assistant position exempt from chapter 76, Hawaii Revised Statutes.

The sum appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 4. In accordance with section 9 of article VII of the Hawaii State Constitution and sections 37‑91 and 37‑93, Hawaii Revised Statutes, the legislature has determined that the appropriations contained in H.B. No. , will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. In addition, the appropriation contained in this Act will cause the general fund expenditure ceiling for fiscal year 2024‑2025 to be further exceeded by $ or per cent. The combined total amount of general fund appropriations contained in only these two Acts will cause the state general fund expenditure ceiling for fiscal year 2024‑2025 to be exceeded by $ or per cent. The reasons for exceeding the general fund expenditure ceiling are that:

(1) The appropriation made in this Act is necessary to serve the public interest; and

(2) The appropriation made in this Act meets the needs addressed by this Act.

SECTION 5. This Act shall take effect on July 1, 2024.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2806
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII