W.Va. House committee questions AG's practices

Chris Dickerson Feb. 5, 2007, 2:00pm


CHARLESTON - An annual legislative hearing to outline Attorney General Darrell McGraw's budget proposal turned into an impromptu questioning of the office's use of outside counsel and handling of money received from settlements and verdicts.

During the House Finance Committee meeting Thursday, Chief Deputy Attorney General Fran Hughes also was accused of not properly understanding the state Constitution.

After Hughes went over the office's budget request for the next fiscal year, some committee members questioned the practices of McGraw's office.

Hughes blamed the focus on an "activist" campaign by the U.S. Chamber of Commerce.

"It is a red herring that is being stirred up by the national chamber," Hughes said, according to an Associated Press story.

Legal NewsLine is owned by the U.S. Chamber, as is The West Virginia Record legal journal.

Delegate John Doyle, D-Jefferson, said Hughes' assertion wasn't true.

"I think you've misread the state Constitution," he told Hughes, according to the AP article. "It isn't within the purview of the attorney general to appropriate money. It is within the purview of the Legislature."

When McGraw's office has settled some cases, the money has been deposited into funds controlled by the AG's office.

According to the AP, Hughes said some of the money goes to the consumers behind the lawsuits, while other money goes toward specified in the settlement.

Citing the Legislature's power over the state's purse strings, Doyle and other lawmakers questioned the ability of the attorney general or even the courts to direct spending.

"Every penny in state funding that goes to the state is the Legislature's purview to appropriate," Doyle said in the AP story.

Delegate Mitch Carmichael, R-Jackson, also questioned Hughes after she said settlements have become an important source of revenue for operation of the AG's office. He asked if the office filed suits for the money.

"It depends on how many people violate the law," Hughes said, according to the AP. "We don't file a frivolous lawsuit. ... But they are being used to actually keep the doors of the office open."

When asked for documents showing pay promised to private lawyers, Hughes said the office only has letters appointing them as special assistants. The AP article said Hughes called the concerns over the office's use of special assistants is a "red herring."

In September, Hughes said the AG's office has no documentation about the use of special assistant attorneys general other than the appointment letters.

"It is my belief that no other documents, e-mails or letters exist," Hughes said in a response to a Freedom of Information Act Request from The West Virginia Record. "Any discussion with potential Special Assistant Attorney Generals would be done in person. However, if such documents existed, we would view those as privileged under the attorney-client relationship."

Then, Hughes also said she simply prefers meeting with potential special assistants in person.

"That's how I generally operate," she said in Septmember. "People are too much into this e-mailing. We have a lot of face-to-face meetings."

McGraw's office has appointed outside counsel as special assistant attorneys general more than 25 times in the last three years, according to information provided by the AG's office to The Record through another Freedom of Information Act request in August. In the cases involving special assistants, there have been three settlements for a total of nearly $4 million, the documents showed.

Hughes has defended the practice to The Record, saying the office does so "because otherwise the office would be unable to hold huge corporations accountable for violations of the law."

"Litigation is always a last resort, and when the defendant is a multinational company, it is expensive to try a case against them," Hughes told The Record in August, adding that the Legislature is unwilling to provide the office with money necessary to try significant cases.

"Our operating budget is $350,000," she said in August. "One case against a huge company costs more than our entire early operating budget. A typical case can run $400,000 to $500,000. Attorneys are willing to risk their capital. They receive a return on their capital just like any other businessperson."

In August, Hughes also said the use of outside counsel has helped McGraw's office balance the state budget.

"What we do (in those cases) doesn't cost the taxpayers one red cent," she said. "And we've paid down the workers' comp debt. We've established the physicians' mutual fund. We've helped balance the state budget. And we're still being criticized."

Last month, three bills introduced in the Legislature would change West Virginia Code to change how McGraw's office conducts it business.

House Bill 2268, introduced by Kanawha County Republican Patrick Lane, would require that the Joint Committee on Government and Finance approve any proposed settlement involving the AG's office while, additionally, providing that any proceeds received in any AG civil action be deposited in the General Revenue Fund to be appropriated by the Legislature. The bill also would require that the Attorney General seek bids from private attorneys when seeking outside legal assistance. Carmichael, along with Lane, was among the sponsors of a similar bill that also was introduced.

Hughes has called Lane's idea of submitting all settlements to the Joint Committee is unconstitutional.

"We're talking about less than 1 percent of the money we bring in that comes completely under our control," Hughes told The Record last month. "We're the most cost effective constitutional office, and we're one of the few agencies that pays for itself and put generates money back in the general revenue."

Hughes also criticized the U.S. Chamber of Commerce last month, saying the Chamber is focused on McGraw because of his successful track record of going after businesses.

"Purdue Pharma and Big Tobacco, they're not helping West Virginia. They're not here in West Virginia, and we are holding these people responsible," Hughes told Legal NewsLine. "The national Chamber sees they're being held accountable for the consumer protections laws. We're so effective. That is why the Chamber is coming after us.

"I don't think the people of West Virginia are as stupid as the national Chamber thinks they are."

As for AG office's budget proposal for the upcoming fiscal year beginning July 1, among the new items proposed in the $9.9 request is money to open a regional office in the Eastern Panhandle.

McGraw was not at Thursday's budget hearing. He was in Martinsburg, promoting national Consumer Protection Week, which begins Monday.

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