Arizona prisons spent $50.9 million in opioid funds without proof

Arizona's Department of Corrections, Rehabilitation and Reentry (ADCRR) spent $50.9 million⧉ in opioid settlement money on inmate medical care -- without the documentation the settlement agreement requires to prove the spending qualified.▸ A state audit found the money went to hepatitis C treatment for inmates, but ADCRR couldn't show the disease came from intravenous opioid use, the specific condition its own accounting relied on.

Between April and June 2024, ADCRR spent $50.9 million⧉ of opioid settlement funds providing medication to treat inmates for hepatitis C. Under the One Arizona Agreement -- the state's binding framework for spending its share of the national opioid settlements -- treating hepatitis C only qualifies as approved opioid-abatement spending when the disease resulted from intravenous opioid use.▸ In August 2024, ADCRR retroactively moved the $50.9 million from its General Fund into its dedicated Opioid Remediation Fund, treating 95% of the quarter's hepatitis C spending as settlement-eligible.

At the time auditors reviewed the spending, ADCRR's Financial Services Division couldn't produce⧉ the criteria behind its 95% estimate, citing turnover in the chief medical officer's position and difficulty retrieving old data.▸ More than a year later, in an August 12, 2025 filing responding to the audit, ADCRR did produce an explanation: a May 2, 2024 email from its then-chief medical officer reporting 3,900 known hepatitis C cases across the state's nine prison complexes, 3,850 of them -- about 99% -- with a documented history of substance use disorder. The Auditor General's office says it hasn't independently verified that account. Either way, the settlement agreement's own terms put the money at risk: it requires expenditure records be kept for at least five years, and noncompliant spending can mean the state has to return the money or lose future distributions.

ADCRR's official response, filed under Assistant Director Richard Evitch and due for completion by September 30, 2026, formally concurs with the audit finding⧉ -- but the department separately maintains it used the money appropriately.▸ Its counterargument is textual: ADCRR says the settlement agreement's language doesn't actually require proof that hepatitis C came from intravenous opioid use before treatment qualifies for funding -- that condition, it argues, is offered as just one of two illustrative examples of qualifying infectious-disease treatment, not a strict eligibility test. ADCRR has committed to documenting specific inmate medical histories going forward.

The finding has become evidence in a larger political fight.▸ Governor Katie Hobbs and the Republican-controlled Legislature both included an additional $40 million transfer to ADCRR in their new fiscal-year budget proposals -- a transfer Attorney General Kris Mayes is weighing whether to sue over⧉, calling it an "illegal diversion" of settlement money: "They stole the state's share of the opioid funding and they dumped it in the prison system." If it proceeds, the total settlement money routed to the prison system would reach roughly $150 million -- a small fraction of Arizona's $1.14 billion total settlement award, but the piece Mayes says crystallizes the broader dispute. A spokesperson for Hobbs pushed back, saying the money funds hepatitis C treatment for inmates⧉ and that the state is now running "regular internal audits" to close the documentation gap. As of the most recent available reporting, Mayes had not filed suit.