Recommendations for Prioritizing Children in Opioid Settlement Funding


Last year, First Focus on Children and Families USA invited child advocacy, welfare, and health experts to determine how to prioritize substance use prevention, bolster resiliency, and ensure that the programs benefiting children and youth receive their fair share of settlement funds from a potential global opioid settlement between pharmaceutical manufacturers and distributors and state, tribal, and local governments. The 1998 Tobacco Master Settlement Agreement resulted in little settlement money being spent on smoking cessation and prevention for children over the last 22 years, while today a staggering 12 percent of middle school students and 30 percent of high school students use tobacco products. We continue to battle the serious health consequences of tobacco, and we cannot repeat the same mistakes with children and opioids. 

Children and youth are the opioid epidemic’s most vulnerable victims and many of their life trajectories are incalculably altered – through direct exposure and substance use including prenatal substance exposure, youth substance use, and morbidity and mortality, and/or through major family impact including losing a parent to opioid use disorder, loss of parental employment, and others. From 2009 to 2014, eight million children in the U.S. lived in households with at least one parent with a substance use disorder, and the majority of these children were under the age of five. In 2019, 34 percent of all kids entering foster care are there at least in part due to parental substance use disorder. Incredibly, children have been overlooked in these legal proceedings.

Following and detailed in the following pages are recommendations for how governors, attorneys general (AGs), state children’s cabinets, legislatures, state advocates, city and town councils, and other stakeholders should prioritize children and their families in a potential opioid settlement with states and localities. 

  1. Ensure Accountability in Settlement Money
  2. Create and Fund Children’s State Trust Funds
  3. Coordinate Response Between State Systems
  4. Fund Family-Centered Treatment and Care
  5. Implement State Medicaid Expansion
  6. Provide Significant State-Based Kinship Caregiver Support
  7. Decriminalize Prenatal Substance Exposure
  8. Reduce Stigma Attached to OUD and MAT
  9. Increase Funding and Access to Mental Health Treatment Services
  10. Support Family First Prevention Services Act-Eligible Services
  11. Extend Postpartum Medicaid Coverage to 12 Months
  12. Increase Funding for Existing, Prevention-Focused Federal Programs


In 2017, 2.2 million children (2.8 percent of U.S. children) were directly affected by opioid use. Two million of these were impacted by parental use, including living with a parent with opioid use disorder (OUD), losing a parent to an opioid-related death, having a parent in prison because of opioids, or having been removed from their homes due to opioids. And approximately 170,000 children had OUD themselves or had accidentally ingested opioids. The COVID-19 pandemic is only increasing rates of substance use that could cause more harm to children, as more than 40 states have reported increases in opioid-related mortality since the pandemic started. By 2030, 4.3 million children will be affected with a lifetime societal cost of $400 billion (not including lost future productivity) for these children, through childhood trauma, increased health costs, increased foster care placement, additional education needs, and more involvement in the judicial system, in addition to the individual effects on children’s lives.

To date, relatively little attention and research has been dedicated to the impacts of opioids on children’s lives. Significant research exists that details the impacts of opioid use during pregnancy on newborns, but only two percent of federally-funded substance use research focuses specifically on children or families and only four percent of information in substance use textbooks focuses on children or families. There is even less research on children and adolescents absent their families or parents.

Our focus on children in the context of the opioid epidemic is on the arc of their entire lives and the long-lasting impacts on them. Prenatal substance exposure has a significant impact on children’s health and lives, and some of our recommendations address this diagnosis. However, we are not focused solely on newborns with a formal diagnosis of prenatal substance exposure in our recommendations – this is a small proportion of children relative to the enormous effects of this epidemic that are not limited to health consequences but rather can impact every aspect of a child’s life.

Opioid Litigation Background

Since 2014, local, tribal, and state governments have pursued legal action against pharmaceutical manufacturers and distributors in hopes of recovering a range of costs associated with opioid-related morbidity and mortality. These cases fall under two main categories. (A third category involves criminal prosecutions.) The first is the multi-district litigation (MDL), where 2,600 lawsuits brought by local (cities, counties) and tribal governments have been consolidated to a federal district court in Ohio. By October 2019, most of the manufacturer and distributor defendants reached settlement agreements totaling around $325 million with Ohio’s Cuyahoga and Summit counties, which had been selected as the plaintiffs for the MDL’s “bellwether trial” track. This trial is scheduled to begin in October 2021. Several other local government plaintiffs have trials scheduled throughout 2021.

The second category of opioid litigation is the state attorney general-led lawsuits filed in each state’s respective state court. Initial settlements have been reached in a few states. Notably, in 2019, Oklahoma settled with Teva for $85 million and with Purdue for $270 million, allocating $200 million for the National Center for Addiction Studies and Treatment and $12.5 million for local governments. Oklahoma went on to win a trial judgment of $465 million against Johnson & Johnson. In August, states asked for $26.4 billion during settlement talks, as many plaintiffs attempt to settle cases without going to court. However, many states are still attempting to pursue these claims in court; West Virginia and Ohio both have trials set for 2021, and the New York trial began with pretrial hearings in August, and jury selection took place in January 2021.

Purdue filed for bankruptcy in 2019 and is restructuring as a public benefit trust company as part of a broad settlement, which was accepted by 24 state attorneys general (AGs) (mostly Republican), five U.S. territories, and some MDL plaintiffs but rejected by the other 26 state AGs (mostly Democrat) and the District of Columbia. The bankruptcy proceeding included a claims process for people who lost family members to opioid overdose ( which had a deadline of July 30, 2020. It was the only direct line of compensation that any opioid-related pharmaceutical defendant is making available for individuals. Purdue also faced a lawsuit from the administration. At the end of July of this year, the Department of Justice filed civil and criminal claims against the pharmaceutical company, worth more than $13 billion. In October 2020, Purdue pleaded guilty to the charges brought by the Department and agreed to pay penalties of $8.3 billion. The Department announced that it would only require the company to pay $225 million of the settlement, and allocate the rest of the money to municipalities, states, and tribes to be used to lessen the impacts of local opioid crises. However, the fine that the Trump Administration collected from Purdue would come from the limited pool of money available from the bankruptcy proceeding. This means that the bigger the federal penalty imposed on Purdue, the less money there will be for the cities, states and tribes that have filed claims against the pharmaceutical company. 

Judge Dan Polster, the federal judge who oversees the MDL, has encouraged state AGs to participate in negotiations for a potential global settlement, which would allow defendants to settle both the MDL and the state AG-led lawsuits. Such a global settlement is a massive undertaking, requiring cooperation between the 48 states, Puerto Rico, the District of 

Columbia, and all of the local and tribal governments in the MDL. Ongoing tensions between the state AGs and the MDL plaintiffs have complicated the prospect of a global settlement. Local governments are concerned that they may have less agency on how to use the funds and may not receive as much in a global settlement, whereas states are concerned that local governments involved in the MDL would take a disproportionate amount of funds that they think should be distributed throughout and by the state.

These tensions are further complicated by concerns over states’ misuse of past settlement funds earmarked for public health purposes as well as ideological differences on how to best use the funds. While Judge Polster encourages a global settlement, he is aware of these tensions and has acknowledged why cities and counties were compelled to file their own cases in the first place, citing the Tobacco Master Settlement Agreement and how most of the settlement funds did not go toward reducing tobacco use and tobacco-related harms.

In November 2020, it was announced that four major drug distributors and manufacturers – McKesson, Cardinal Health, AmerisourceBergen, and Johnson & Johnson – and state and local governments are closing in on a $26 billion settlement, which would end thousands of lawsuits against the companies for their roles in the opioid epidemic. Around $21 billion of the settlement money would be paid out between 3 to 18 years, and it would help to reimburse state and local governments for expenses related to the opioid epidemic, as well as fund prevention and treatment programs. According to the New York Times, it would be up to each state to determine how to distribute the settlement money, and would be dependent upon four factors: state population, overdose deaths, diagnoses of substance use disorders and volume of pills sold.


We hope these recommendations will be used by governors, AGs, state children’s cabinets, legislatures, state advocates, city and town councils, and other stakeholders to demonstrate the imperative states and communities have to dedicate opioid settlement dollars to the millions of child victims that need and deserve a portion of this money dedicated to their wellbeing. We believe that this money must be directed at programs that serve children over the spans of their lifetimes, from birth through early adulthood, and must be directed at both prevention and treatment throughout state systems. These systems include mental and behavioral health, public health, housing, education, child welfare systems, and human and social services. Children must not be overlooked in this epidemic. We do so at their peril and that of the success of our next generation. We must mitigate the long-lasting effects on them of an epidemic they bear no responsibility for creating, but for which they bear the greatest burden. 

Attorneys General and States

Following are recommendations for actions that should be taken by AGs, governors, and state legislatures with opioid settlement money at the state level to benefit children who have been impacted by the opioid epidemic. Some of these actions will require funding, legislative action, or both, and these efforts will look different in different states.

1. Ensure Accountability in Settlement Money

Vitally, AGs and states must secure accountability in how settlement money is spent, and the mistakes of the Tobacco Master Settlement Agreement (MSA) must not be made again. Under the historic MSA that settled lawsuits between states and tobacco manufacturers and awarded states large and ongoing payments for damages incurred through tobacco products, very little funding has been dedicated to state tobacco prevention programs and instead has gone to fill state budget shortfalls, infrastructure projects, and other unrelated expenses. In 2017, 17 states did not spend any of their MSA payments on tobacco prevention and cessation programs. And in FY2020, states spent only 2.7 percent of MSA funds for such programs. In addition, a number of states have securitized their MSA payments, which has created a market and made states targets for financial instruments that in many cases are limiting the MSA funding they are able to access.

A system of accountability with clear direction for how settlement money is to be spent, that prioritizes children impacted by the opioid crisis, must be implemented in each state in order to safeguard this funding and ensure it is used to benefit current victims and prevent future victims of the opioid epidemic. This accountability should include costs for noncompliance and tracking how funds are spent through data dashboards operated for this purpose in each state. There are numerous examples of data dashboards that are used to track a variety of public health efforts, and these can be tailored to each state.

2. Create and Fund Children’s State Trust Funds

States should establish trust funds with a portion of the settlement money to be used only for children impacted by substance use. Some states have already established children’s trust funds for prevention and other purposes, and these existing structures can be used in the context of substance use as well – as long as states provide specific settlement money to these funds that target children impacted by substance use. These trust funds would support programs and community-based services that serve children impacted in a variety of ways including babies born with substance exposure as well as children impacted later in their lives. These trust funds should also allow impacted children and families to apply for direct assistance. The establishment of state trust funds could help further ensure that settlement money intended for children is actually spent on children.

Each state should establish a Children’s Trust Fund with a portion of its opioid settlement money and guarantee that these funds will be directed for spending on children impacted by the opioid epidemic and substance use. Current and former youth impacted by the opioid epidemic should be included in the creation and governance of these trust funds.

3. Coordinate Response Between State Systems

Children and families impacted by opioids have needs that fall under the jurisdiction of a range of state departments, offices, and programs, and some of the most successful efforts to provide prevention and services to families involve coordination among these different entities. Some of these stakeholders include mental and behavioral health providers; physical health providers; the child welfare system; economic supports including housing, TANF, and WIC; and family courts. Rarely is federal or state funding directed for purposes of this coordination. Without coordination and buy-in from families, communities, and local practitioners, success is much less likely for families and programs. One example of a state program utilizing this coordinated approach is the Children and Recovering Mothers (CHARM) Team in Vermont, which is an interdisciplinary and cross-agency team that coordinates care for pregnant and postpartum mothers with a history of opioid use disorder and their babies. This is a program supported by the federal government through the Substance Abuse and Mental Health Services Administration, and some of the indicators of success include starting prenatal care early in pregnancy, engaging in SUD treatment and counseling, the provision of family and social supports, and creating plans of safe care.

States should create and fund programs and systems of coordinated care and treatment to best address the needs of children resulting from the opioid epidemic. This coordination is so often missing at both the state and federal level, and it is vital to meeting the actual needs of children and families and to helping ensure success.

4. Fund Family-Centered Treatment and Care

Families with children impacted by SUD must be afforded the opportunity to recover in environments that work best for their families and meet their needs. Family-centered treatment programs include children and other family members in the treatment process, provide family-based clinical care, and provide supportive and community-based services including child care, transportation, home visiting, mental health services, employment training, housing, and linkages to other financial aid and human services programs. Numerous states have implemented family-centered treatment programs and have seen positive outcomes including that participating mothers were more likely to receive prenatal and postpartum behavioral health care, findings of child maltreatment were less common in participating families, and the length of NICU stays for babies born with prenatal substance exposure were shorter for families in these programs. However, access to these programs is limited because they are not widespread and sustained throughout the country. 

One example of such a program is the Boston Medical Center’s Supporting Our Families Through Addiction and Recovery (SOFAR) program, which establishes a medical home in its pediatric primary care clinic for parents in recovery and their children and provides these families with ongoing support to enhance child development and parent recovery.

Another example is Yale New Haven Hospital’s treatment of Neonatal Abstinence Syndrome (NAS), which is a non-pharmacological approach and instead focuses on soothing the infant’s symptoms while encouraging the mother-infant bond. This approach typically includes rooming together post-delivery and modification of the environment to support attachment and provide a soothing environment for the infant. Such non-pharmacological approaches are associated with better outcomes for both infants’ short term and long-term health, as well as mothers’ recovery outcomes in the near and long-term and attachment between mother and child, which is fundamental to building a healthy parent-child relationship. 

Additionally, funds from the opioid settlement should be used to promote family-based residential treatment opportunities. This type of treatment allows parents to receive substance use treatment in a location where their children and family live alongside them, thus preventing the children from being removed to foster care. One example of family-based residential treatment services is provided by LUND in Vermont, which provides residential treatment for substance use and mental health issues for pregnant and parenting women in addition to other family support and wrap-around services.

The federal Family First Prevention Services Act allows states (even those without a Title IV-E prevention plan) to use federal funds to cover the cost of family-based residential treatment. Unfortunately, there are a limited number of these programs available. Using settlement funds to facilitate the establishment, licensing, and certification of these programs will allow more children who are impacted by the opioid crisis to safely remain with their parents and out of foster care.

States should prioritize and fund family-centered, comprehensive care programs in order to dramatically expand access to these programs for children and families impacted by the opioid crisis.

5. Implement State Medicaid Expansion

Expansion of Medicaid in states that have yet to do so will help increase access to treatment for opioid dependency. Not only that, research has shown that in states that have already expanded Medicaid for low income adults, children have seen similar increases in coverage. Medicaid has been historically helpful in filling coverage gaps during public health crises, such as the AIDS epidemic and the Flint water crisis, and the opioid epidemic is no exception. Medicaid covered the treatment for nearly 54 percent of adults with a substance use disorder in 2017. In states that have expanded Medicaid, insurance plans will cover necessary health coverage for those suffering with an opioid use disorder, and all expansion benefit packages must include behavioral health services such as mental health and substance use disorder services. Medicaid expansion also means that kids gain coverage. Expansion states are more likely to have rates of uninsured children at or below the national level of 4.3 percent compared to non-expansion states.

States that have not yet expanded Medicaid under the Affordable Care Act should do so in order to increase coverage for children and families and increase treatment available for SUD.

6. Provide Significant Kinship Caregiver Support

Across the United States, approximately 2.7 million children live in grandfamilies or kinship families – families in which grandparents, other adult family members, or close family friends are raising children – with no parents in the home. Counties across the country that have seen higher overdose and drug hospitalization rates have higher child welfare caseloads, and many of these family members are caring for children outside of the child welfare system as well. Children raised by grandparents and other relatives outside of the foster care system often have little to no access to supports and services. While some states are beginning to create kinship navigator programs to link caregivers and the children they raise with public benefits, direct goods, legal services, and behavioral and mental health supports, many programs are still limited to certain geographic areas, certain degrees of relationship or only serve kinship families inside the foster care system. These kinship caregivers need support in the form of comprehensive kinship navigator programs in every state, trauma-informed SUD prevention awareness and training, financial assistance, referral and system navigation, and legal services. States can also strengthen their support to children who are being cared for by kin due to parental OUD by leveraging settlement funds to increase the child portion of  Temporary Assistance for Needy Families grants. Additionally, settlement funds could supplement the efforts of states to establish Kinship Navigator Programs that qualify for federal reimbursement under the Family First Prevention Services Act (FFPSA).

States should recognize the role of kinship caregivers, including in families affected by opioids and those outside of the foster care system, and should fund programs and services that will strengthen those families and their caregiving abilities.

7. Decriminalize Prenatal Substance Exposure

Cases of babies born with prenatal substance exposure have increased in recent years – four times as many babies were born with prenatal substance exposure in 2014 than in 1999. In 2016, a baby with prenatal substance exposure was born every 19 minutes in the United States, or nearly 80 newborns everyday. In response, some states have implemented punitive approaches toward mothers suffering from SUD, have criminalized substance use during pregnancy, have included substance use in their definitions of child abuse and neglect, and/or have required that these cases be reported to state child welfare systems. However, these policies often have their opposite intended effect and states that have instituted punitive policies instead have seen increased rates of prenatal substance exposure and more pregnant women have been deterred from seeking medical care. Twenty-three states and the District of Columbia consider substance use during pregnancy to be child abuse under civil child-welfare statutes, and three consider it grounds for civil commitment. Only ten states prohibit publicly-funded drug treatment programs from discriminating against pregnant women. The American Medical Association, the Association of Obstetricians and Gynecologists, and other prominent health groups oppose the criminalization of substance use during pregnancy. Primary prevention and treatment efforts are much more likely to achieve the intended outcome of providing pregnant women with prenatal care and treating their SUD so they are able to provide the best care for their babies.

Plans of Safe Care, as required by the Child Abuse Prevention and Treatment Act (CAPTA), require hospital personnel to work collaboratively with families, SUD treatment providers, and child welfare personnel (not as reporters) to arrange services and supports for mothers and their children upon discharge from the hospital. Successfully-implemented Plans of Safe Care provide a true prevention approach that works with parents in a non-punitive, non-stigmatizing way and prevents later placement into foster care. States including Delaware, Connecticut, and New Mexico have implemented various plans. Some features of these plans include identifying degrees of at-risk newborns and providing commensurate approaches to address their needs, enabling mothers to create and own their Plans of Safe Care, providing technical assistance to hospitals if tracking systems detect overrepresentations of families of color or other disparities in patients served, and coordinating with Managed Care Organizations to assign care coordinators to help oversee the Plan of Safe Care.

States should pursue legislative and regulatory efforts to decriminalize substance use during pregnancy in order to achieve optimal outcomes for women and their babies. States should also pursue changes to any state laws that include prenatal substance exposure in their definitions of child abuse and neglect. Programs including Plans of Safe Care are being implemented in some states that use a non-punitive approach to prenatal substance exposure and should be pursued in additional states. 

8. Reduce Stigma Attached to OUD and MAT

Stigma associated with opioid use disorder and medication assisted treatment impacts children in numerous ways. Stigma can prevent parents from accessing or being afforded treatment and can increase the possibility and lengthen the time of children’s involvement in the child welfare system. This matters to children for many reasons including that parents with custodial care of their children have greater rates of successful recovery than those without custody. Stigma can be created by laws, including state laws that criminalize mothers for having children born with prenatal substance exposure, and by providers that can impact care, among other causes. Investments in programs like Reducing Stigma Education Tools (ReSET) from the University of Texas at Austin that target providers and teach them to recognize stigma and learn skills to provide compassionate, recovery-oriented care for patients with substance use disorder are helpful in combating stigma and improving outcomes. And programs like ACOG’s Opioid Use Disorder in Pregnancy Bundles can educate providers on how to provide better care for pregnant women with OUD, benefitting both them and their families.

Reducing stigma associated with OUD and MAT is a vital part of combatting the impacts of the opioid crisis on children. States should prioritize and fund programs that aim to address and reverse damaging stigma.

9. Increase Funding and Access to Mental Health Treatment Services

Mental illness is very common in those with a substance use disorder. In 2018, nearly 48 percent of those with a substance use disorder also had a comorbid mental health disorder. A lack of mental health treatment for mothers suffering co-occurring mental illness and substance use disorder can lead to poor outcomes for their children. One study found that a shortage of mental health clinicians and high unemployment rates were associated with higher rates of neonatal abstinence syndrome in their babies. Mental illness can also occur in children that lose a parent to an overdose. Children who have lost a parent or caregiver are at an increased risk of depression, anxiety, social withdrawal, reduced self-esteem, and suicide later on in life.

It is vital that opioid settlement money be used to fund public, trauma-informed mental health services and help caregivers connect grieving children to the proper services.

10.     Support Family First Prevention Services Act (FFPRA)-Eligible Services

The Family First Prevention Services Act allows states to claim federal reimbursement for eligible costs of services which include evidence-supported mental health, substance use, in-home parenting skills, and kinship navigator services that are found on the Title IV-E Prevention Services Clearinghouse. Services that have not been placed on the Clearinghouse can still earn federal funding if the State submits an independent systematic review to the federal agency by October 1, 2021. 

States should use a portion of opioid settlement funds to supplement transitional funding to complete the independent review process for programs and services that prevent children from coming into foster care due to their parents OUD or to cover any administrative costs for clearinghouse-approved services that are not eligible for FFPSA reimbursement.

Federal Government

Following are recommendations for ways the federal government should prioritize children and the effects on them from the opioid epidemic. These recommendations would require increased federal appropriations, legislation, and administrative work.

11.  Extend Postpartum Medicaid Coverage to 12 Months 

Currently, Medicaid coverage for postpartum mothers only lasts for 60 days in many states. For postpartum mothers struggling with a substance use disorder, and especially mothers that have given birth to a newborn with prenatal substance exposure, 60 days of coverage is simply not enough to address their specific needs. One study found that opioid overdose deaths among postpartum mothers decline during pregnancy, but peak in the 7 to 12 months postpartum, which does not overlap with the 60-day coverage period. Another study found that expanded Medicaid does in fact increase coverage for postpartum women. Postpartum visits in Colorado, a state that expanded Medicaid, were 50 percent higher than in Utah, a state that has yet to expand the program. Federal lawmakers have introduced legislation to extend this period for all postpartum women and their infants from 60 days to 12 months, and a state option to extend this coverage to 12 months was included in the American Recovery Act. This important effort should be built upon and become a required Medicaid benefit.  

Some states have expanded postpartum Medicaid coverage to longer than 60 days, but this benefit must be afforded to all mothers, and Congress should enact legislation to implement this policy change. 

12.  Increase Funding for Existing, Prevention-Focused Federal Programs

At the federal level, funding for programs including the Community-Based Child Abuse Prevention program within CAPTA; the Maternal, Infant, and Early Childhood Home Visiting Program; Safe Baby Courts; Early Head Start and Head Start; family-centered treatment programs; and behavioral health supports for schools and educators, including Project AWARE, should be increased. These prevention programs need sustained and significant funding in order to help keep families together and support treatment and recovery for parents. They provide important prevention and family-oriented approaches for children and families.

Congress should provide sustained and significant funding for existing programs that promote prevention.