CHARLESTON, W. Va. (Legal Newsline) - West Virginia Attorney General Darrell McGraw's office has maintained that pharmaceutical company Purdue Pharma has had its say in how $10 million of a 2004 settlement between the two have been spent.
So far, however, McGraw has not taken any of Purdue Pharma's advice, recently obtained records show.
"We have a jaundiced opinion of Purdue Pharma," Chief Deputy Attorney General Fran Hughes said. "They are true criminals."
Every year, Purdue Pharma submits a list of state organizations it feels should share in the settlement funds, and every year McGraw does not heed its suggestions.
Annual payments of $2.5 million have mostly gone to day report centers, check-in spots for individuals convicted of non-violent crimes. Another $500,000 went for a pharmacy school at the University of Charleston, while the 30 organizations recommended by Purdue Pharma have not received anything.
"We considered it, but we thought the community programs we selected were more geared toward helping provide those services," Hughes said.
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 $4.1 million in Medicaid funds because it does not believe it was given what it was owed from the settlement. That withhold is being appealed.
Hughes has admitted that not giving the money to the DHHR was an intentional way around keeping the federal government from claiming any of the settlement.
Purdue Pharma has also been ordered to pay more than $600 million in fines after pleading guilty in a federal criminal suit against it, and gave $20 million to 27 other state attorneys general. The company was charged with intentionally misrepresenting the addiction capabilities of its prescription painkiller OxyContin.
McGraw's suit alleged that OxyContin harmed the state's Medicaid program. Hughes said Purdue Pharma wanted the money to be used to repair the company's image.
"That was their demand as part of the settlement," Hughes said, according to a report in the Charleston Gazette. "They insisted that the money should go to finance community programs to help drug abusers, law enforcement aimed at reducing substance abuse and medical education to further reduce substance abuse."
The money was to be spent on continuing medical education programs, law enforcement and community-based programs.
So far, it has been -- just not on the programs Purdue Pharma wanted. In 2004, the company submitted its first list to McGraw.
Purdue Pharma wanted $750,000 to go to West Virginia University's Health Sciences Center and $500,000 to Marshall University. Instead, $500,000 was given to the University of Charleston for the pharmacy school.
After McGraw made that decision, Purdue Pharma began putting the University of Charleston on its list of recommended programs. It never received another cent of the settlement money.
Also on the 2004 list were:
* $250,000 to five McDowell County communities;
* $50,000 to the state police for equipment for drug diversion investigations;
* $15,000 each for the sheriffs in Logan, Mingo, McDowell and Wyoming counties;
* $190,000 for the state's Board of Pharmacy; and
* $300,000 for public service announcements.
The lists that followed did not differ greatly from the first.
"We thought these community projects could provide a service better than some of those projects (recommended by Purdue Pharma)," Hughes said. "The day report centers are obviously the bulk of it.
"Everyone agrees with that, because for every dollar spent on the day report centers, it saves the counties $7 each on regional jail costs. We were looking at it in terms of maximizing money for the state."
Trial lawyers hired by the State received more than 80 percent of the first $2.5 million payment. Four firms received a total of $2,052,503.10. They were: DiTrapano, Barrett and DiPiero; Cohen, Milstein, Hausfield and Toll; Law offices of William Druckman; and David G. Brumfield.
In each of the next two fiscal years, the firms were paid $833,333.24. In fiscal year 2008, no money will go to attorneys.
Instead, it will mostly go to county commissions for use at day report centers. The West Virginia Council of Churches will also receive $150,000.
McGraw is seeking election to his fifth term this year. He has recently battled with members of both the House of Delegates and state Senate.
Sen. John Doyle, D-Jefferson, criticized McGraw's handling of the OxyContin settlement at a Senate Finance Committee meeting.
"That is constitutionally the job of the Legislature to appropriate money," he said, according to the Charleston Daily Mail. "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. Therefore, the Legislature must decide how it is spent."
McGraw says he is simply following a court order and will continue to do so when the final $2.5 million payment is delivered. Purdue Pharma did not respond to a message seeking comment.
Top recipients of Purdue Pharma settlement
1. Cohen, Milstein, Hausfield and Toll - $1,119,842.95
2. DiTrapano, Barrett and DiPiero - $846,157.15
3. David G. Brumfield - $840,836.24
4. Law Offices of William S. Druckman - $$833,333.24
5. University of Charleston - $500,000