Audit: Arizona Department of Corrections may have unlawfully spent part of opioid settlement

A new audit finds the state Department of Corrections may have unlawfully spent more than $50 million from an opioid settlement.

Arizona won a settlement of $1 billion against opioid makers and distributors in 2021.

The state entered a settlement agreement, which requires that money to go toward addressing the effects of the opioid crisis. The agreement also requires reporting of how the monies are spent.

However, the Arizona Department of Corrections, Rehabilitation and Reentry may be out of compliance.

ADCRR used $50.9 million of opioid settlement money to treat inmates for hepatitis C and didn’t provide documentation to show whether the inmates contracted the virus from intravenous opioid use as the agreement requires.

Arizona Attorney General Kris Mayes raised concerns in 2024 that the agency was misusing opioid settlement monies for this purpose.

Her spokesperson, Richie Taylor, said Wednesday that the audit proves those concerns were legitimate.

“This money should have been spent in communities that needed help all along, not used to backfill a budget deficit and other expenses at ADCRR. Arizona is one of just a handful of states that are seeing opioid overdose deaths rise while they fall across the rest of the country. AG Mayes strongly opposes any future sweeps of these funds that can and should be spent saving lives in cities and towns across our state,” Taylor said in a text.

As a consequence of noncompliance, the state could require ADCRR to return misspent monies and the department could lose out on future funds.

“When Agreement monies are not spent as intended, less monies are available for uses that benefit the State and its residents, such as for approved opioid abatement strategies outlined in the Agreement,” the state auditor general’s report stated.

The state auditor general recommends ADCRR maintain detailed records and implement new policies to keep track of spending.

ADCRR agreed to implement a corrective action plan by Sept. 30 of this year, but also maintained that it used the funds appropriately.

The department estimates at least 95% of the inmates who were treated for hepatitis C contracted the virus from intravenous opioid use. In May, 2024 the agency’s medical director told staff that 3,850 out of 3,900 patients with hepatitis C also had a history of substance abuse disorder.

The agency therefore argued expenses to treat Hepatitis C are an appropriate funding use.