W. Va. lawmakers: Put settlement funds in our hands

John O'Brien Feb. 20, 2008, 1:50pm




CHARLESTON, W. Va. - Legislators who have grilled West Virginia Attorney General Darrell McGraw over his appropriation of lawsuit settlement funds are sponsoring a bill that would eliminate his ability to do so in the future.

Senate Bill 685 was introduced on Monday by 18 state senators, 12 of whom are members of the Senate Finance Committee. A month ago, that committee discussed with McGraw his controversial 2004 settlement with Purdue Pharma, manufacturer of the prescription painkiller OxyContin.

"The purpose of this bill is to reaffirm the Constitutional authority of the Legislature to appropriate public moneys; to establish procedures for appropriation of moneys received in certain actions; and to require reporting expenses in these actions in order to provide the Legislature with information necessary for it to properly exert its authority to appropriate," the bill says.

Three state agencies were originally named as plaintiffs in the suit against Purdue Pharma, but McGraw's office has admitted the settlement was structured to give power over the funds only to McGraw. He used much of the $10 million on substance abuse causes like day report centers, and gave $500,000 to the University of Charleston for a pharmacy school.

Two times in recent months, the federal Centers for Medicare and Medicaid Services, which supplies about 75 cents of every dollar the State spends on Medicaid, has notified the state's Department of Health and Human Resources that it will be withholding Medicaid funds because it does not believe it was given what it was owed from two of McGraw's lawsuit settlements.

A $4.1 million withhold, currently being appealed, results from the agreement with Purdue Pharma. Another $634,525 potential withhold relates to a settlement with Dey Inc., which McGraw's office claimed inflated the prices of the prescription drugs it manufactured, thereby defrauding the state's Medicaid program.

Among the senators sponsoring the bill are Walt Helmick, D-Pocahontas, and Jesse Guills, R-Greenbrier. Helmick is the chairman of the Senate Finance Committee, and Guills took the lead in the January meeting with McGraw.

Guills asked McGraw who would be responsible for paying the federal government back.

"If we lose this contest, who will pay the $4.1 million?" Guills asked.

"The burden is back on the Legislature," McGraw replied.

Guills also asked where that money would come from.

"Perhaps sharper pencils than mine can find 0.005 percent of that money," McGraw said, referring to $2 billion figure he's secured in settlements since becoming AG.

McGraw said his office had three options when reaching the OxyContin settlement.

"We could take the money agreeable to the judge and the drug company," he said. "We could've turned it over to the DHHR, and the money would have gone back to the federal government. Bye-bye.

"Or we could've given it to the Legislature, which would have been obliged to give it to the DHHR. Bye-bye."

Last week, McGraw had another dicey encounter with lawmakers when he met with the House Budget Committee. Del. John Doyle, D-Jefferson, criticized McGraw's actions.

"The minute your office or any office gets money for the State of West Virginia, that money is instantly the property of the taxpayers of West Virginia," Doyle said, according to a report in the Charleston Daily Mail. "Therefore, the Legislature must decide how it is spent."

Trial lawyers hired by McGraw to represent the State in the settlement received more than $3 million in attorneys fees.

The Senate bill says all settlement monies recovered in actions brought by a state agency will be placed in the General Revenue Fund unless:

-The recovery or a portion thereof was on behalf of a special fund, in which case the amount will be placed in a special fund established in the State Treasury;

-The recovery or a portion thereof was on behalf of or required to be held in a trust fund; or

-The recovery was on behalf of a political subdivision of the State, in which case it will be transmitted to the treasurer of the political subdivision.

The bill also says that accountings with regard to persons who provided extraordinary services in any action must be provided to several state agencies, including the Governor's office.

Sen. Brooks McCabe, D-Kanawha, is the bill's lead sponsor.

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