Nevada Paid Its Opioid Law Firm $11M Before the Deal Allowed It

Nevada's Legislative Auditor⧉ has found that the outside law firm representing the state in its opioid litigation was reimbursed more than $11 million in costs before the very contract amendment that was supposed to authorize them had taken effect -- one piece of a $20 million cost increase that the public could not see on the Attorney General's Office's website for three years.▸ The April 2026 performance audit also found the state's own reviewers missed more than $2.4 million in interest the firm overbilled on litigation costs, and that 88% of a sample of its photocopy invoices were priced at more than double Nevada's own best-practice rate.

Nevada's opioid litigation runs on a contingent-fee contract: the law firm fronts all litigation costs using its own lines of credit, and only gets reimbursed -- plus a fee of 9.0% to 21.5% of what's recovered -- if the state actually wins money.▸ The Attorney General's Office (AGO) agreed to reimburse the interest⧉ the firm paid on those lines of credit, at rates that moved between 3.95% and 9.25% from 2019 to 2024. For interest accrued from June 2019 through December 2023, the firm's own ledgers documented $3.7 million owed -- but instead of reporting what was charged in each quarter, the ledgers reported an accumulating total that kept adding every prior quarter back in.

AGO never caught it.▸ The Legislative Auditor did, finding the State had been charged more than $2.4 million in excess interest⧉ -- roughly two-thirds of everything billed. By the time auditors flagged it in May 2024, AGO had already paid out at least $1.6 million toward the inflated total; the office worked with the firm to correct the ledger down to $1.3 million. A follow-up review in June 2025, after the firm adopted a new calculation system, turned up a further $60,000 error still owed back to the state.

In August 2021, AGO executed a third amendment to the contingent-fee contract, permitting reimbursement for costs -- a document repository, review services, a predictive-coding database -- that had previously been off-limits.▸ The change added more than $20 million⧉ in allowable cost reimbursements. It also wasn't posted publicly: from August 2021 to August 2024, two of the contract's four amendments -- including this one -- were missing from the version on AGO's website, so for three years nobody outside the office could read the full, current terms of the state's own litigation contract.

The amendment's text never said its cost provision could reach backward in time.▸ AGO applied it retroactively anyway, and reimbursed the firm over $11 million⧉ of the $20 million -- more than half -- for costs the firm had already incurred before the amendment's effective date, without a documented cost analysis or any public explanation of why retroactive payment served the state's interest. Nevada law exempts contingent-fee contracts from the state's normal Board of Examiners review, which is exactly why the auditors flagged the gap: there was no other backstop checking whether the amendment was worth it.

The smaller line items tell the same story at a different scale.▸ Auditors pulled 186 invoices, totaling over $335,000, that one vendor billed the law firm for black-and-white document copies between 2019 and 2023 -- 165 of them, 88%, priced at more than double⧉ the copy-cost ceiling in state best-practice policy; over one four-month stretch the per-copy rate climbed from $0.25 to $0.89, a 256% jump. Two vendor invoices carried first-class airfare, one with roughly $3,300 in avoidable cost the auditors could document and another with almost $11,000 in travel expense nobody could verify at all. None of it was caught by AGO's own review -- auditors found it, and only after they raised it did the firm voluntarily refund more than $79,000 in travel costs. Separately, of 40 invoices auditors checked for basic completeness, eight -- worth more than $780,000 combined -- didn't even include enough information, like hours or rates, to judge whether the charges were reasonable in the first place.

Nevada's opioid settlements are scheduled to keep paying out through July 2043, and the state's share alone lands in the Department of Human Services' Fund for a Resilient Nevada (FRN), which has already taken in over $121 million since fiscal year 2022.▸ Two other agencies share responsibility for watching where that money -- and a separate stream of federal grant money -- actually goes, and the audit found both fell short. The Division of Public and Behavioral Health (DPBH) oversaw more than $115 million in federal substance-use grants⧉ from 2018 to 2023, but state law requires it to be notified of and review every substance-use grant application in Nevada -- and auditors found 74% of the applications they identified⧉ from public sources were never reported to DPBH at all.

Of the subrecipients DPBH did track for site visits, 23% never got one and another 38% got one late, averaging 123 days overdue.▸ For all 20 infant care plans auditors sampled -- plans meant to coordinate treatment referrals for infants exposed to opioids before birth -- there was no evidence DPBH ever reviewed or monitored a single one, and in 45% of the sample, the plan didn't even document a substance-use treatment referral for the mother.

DHS, which runs the FRN itself, comes off little better on its own oversight duty.▸ The department did not conduct required annual site visits for 4 of 6 (66%) grant recipients⧉ sampled whose grant periods had already closed; the two visits that did happen ran more than 100 days late. Auditors also found that DHS's own annual public report on FRN activity -- required to go out to various government entities and behavioral health boards every year -- misreported its own spending: the 2023 report overstated expenditures by more than $94,000 against actual spending of over $844,000, and the 2024 report understated them by more than $2.9 million against actual spending of over $3.8 million. It isn't all gaps: auditors separately reviewed 51 FRN-funded awards and found each one complied with the state's own spending plan, and on-site visits to 10 funded providers in Carson City, Las Vegas, Pahrump, and Reno confirmed the facilities existed and were doing the work the money was meant to pay for.