WASHINGTON (Legal Newsline) - A $574 million settlement between the McKinsey & Co. consulting firm and state attorneys general includes a $15 million payment to their professional group, the National Association of Attorneys General.
Under the consent agreement released Feb. 4, McKinsey will pay more than half a billion dollars to resolve claims it gave improper advice to Purdue Pharma on how to increase opioid sales by identifying physicians who were heavy prescribers of painkillers and marketing more aggressively toward them. McKinsey denies wrongdoing in the settlement, which includes agreements to refrain from advising opioid manufacturers and distributors in the future.
The side payment to NAAG includes $7 million to reimburse the Washington, D.C., group for “the costs and expenses of the States’ opioid investigations.” The rest of the $15 million will go toward individual state expenses and for setting up an online database of documents the AGs obtained in their investigation, the agreement says.
State AGs have negotiated direct payments to their professional association as part of a larger settlements before, most significantly in the 1998 tobacco settlement, which infused NAAG with $103 million, primarily from Philip Morris. At that time, the group also occupied a building owned by the American Legacy Foundation, an antismoking group funded with $1.4 billion in tobacco money.
The AGs also obtained a $15 million contribution to NAAG as part of the $25 billion settlement they negotiated with Bank of America and other mortgage lenders in 2012.
Critics including corporate defense lawyers have questioned the propriety of state prosecutors negotiating contributions to their own professional organizations as part of settling civil lawsuits. NAAG describes the payments as reimbursements for investigative and other expenses.
NAAG keeps most of its money in the National Association of Attorneys General Mission Foundation, a nonprofit registered to provide “education, research and training programs” for its members. The group reported $91.6 million in assets in the fiscal year ended June 30, 2019, when it took in $3.6 million in investment income. Its executive director, Chris Toth, earned $238,000 that year in salary and benefits.
The NAAG Mission Foundation’s largest expense is some $3.5 million it provides to NAAG, which is registered with the Internal Revenue Service as a governmental organization. The group also reported $1.6 million in travel and $1.4 million in conference, conventions and meeting expense in fiscal 2019.
A spokesperson for NAAG declined comment on what expenses NAAG incurred directly in the opioid investigation. The organization still administers programs associated with the tobacco settlement and maintains funds to pay for multistate investigations into antitrust and other violations.