Everyone on board with McGraw settlement

John O'Brien Mar. 13, 2008, 10:40am


CHARLESTON, W. Va. - West Virginia lawmakers have stopped bickering with Attorney General Darrell McGraw long enough to agree with a settlement designed by McGraw and Gov. Joe Manchin that would use settlement dollars to create sales tax breaks.

Because of their efforts, $11.6 million from a settlement with VISA USA Inc. and MasterCard International Inc. apparently will create three sales tax holidays on appliances that carry the "Energy Star" label and cost $2,500 or less, according to a report in the Charleston Daily Mail.

The proposed settlement, reached in January, originally called for $12.1 million set aside in a trust account. The lawsuit, filed in Oct. 2003 in Ohio County, alleged the companies violated the state's antitrust and consumer protection laws.

McGraw said the two forced an increase cost of business for merchants accepting their credit and debit cards, and the costs were passed on to shoppers by increasing the costs of almost every retail product.

West Virginia is the only state to collected anything concerning those allegations from the companies. Target, Sears and Wal-Mart all settled with the companies in 2003.

"This has been a long time coming and involved the devotion of a lot of time and resources," McGraw said. "I hope that the settlement clips the wings of anyone embarking on a course of illegal conduct in West Virginia."

Only a judge's disapproval could now stop the plan. The Legislature, which has butted heads recently with McGraw over his design of a 2004 settlement, added two more holidays onto the bill. The first will be Sept. 1-7 of this year, and the final two will take place in 2009 and 2010 and push the maximum cost of the appliance to $5,000.

According to the bill, products that can be purchased with the Energy Star logo are: battery charger, room air cleaner, water cooler, heat pump, boiler, furnace, geothermal heat pump, ventilating fan, dishwasher, clothes washer, air conditioner, ceiling fan, compact fluorescent light bulb, light fixture, dehumidifier, programmable thermostat, freezer and refrigerator.

Chief Deputy Attorney General Fran Hughes would not speculate whether or not Ohio Circuit Judge Ron Wilson would approve the settlement, the Daily Mail reported. It also said $39,000 will be spent to notify people of the holidays.

Members of both houses of the Legislature have criticized McGraw's 2004 settlement with OxyContin-manufacturer Purdue Pharma. The $10 million agreement stipulated that McGraw's office would appropriate the money to substance-abuse programs.

By not giving the money to the state's Department of Health and Human Resources (the suit alleged the costs of OxyContin harmed the state's Medicaid program, run by the DHHR), the federal government could not claim a share of the money.

The federal Centers for Medicaid and Medicare Services has told the State it will withhold $4.1 million from its next payment of Medicaid funds. The CMS provides nearly 75 cents of every dollar the State spends on Medicaid. The State is appealing.

During a Senate Finance Committee meeting, Sen. Jesse Guills, R-Greenbrier, 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.

Members of the Finance Committee are attempting to pass a measure that "reaffirm(s) 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."

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