RICHMOND, Va. (Legal Newsline) -- In a letter to Virginia Attorney General Ken Cuccinelli late Wednesday afternoon, the U.S. Treasury Department said it would release $115 million due to the state for his office's role as the lead investigator in a 2012 Medicaid fraud settlement.

Cuccinelli said his office received a letter from the Treasury's Executive Office for Asset Forfeiture, or TEOAF, saying that a decision had been made on the disbursement.

Subsequent phone calls with TEOAF confirmed the $115 million figure, the attorney general said in a news release.

"I am grateful to the Treasury's Executive Office for Asset Forfeiture for agreeing to work with us to get this money to Virginia law enforcement," Cuccinelli said.

"We have been planning for more than a year to use this money for equipment and training to benefit law enforcement and communities throughout Virginia."

During a press conference held earlier in the day, the attorney general detailed how he wanted the money to be spent on law enforcement.

He also shared his office's continued struggles in obtaining the money.

At one point, the attorney general said, Treasury officials told his office that they wouldn't turn over the money because of the sequestration -- a set of automatic federal spending cuts that were triggered March 1.

"This is despite the fact that it's not federal money, but money that a private defendant paid to settle a case -- money which was to be turned over shortly thereafter to our office and the other agencies involved in the investigation," Cuccinelli said during the earlier press conference. "Now the hold-up is the IRS, which, according to the Treasury Department, refuses to complete its paperwork so the money can be properly distributed.

"The exact amount of the forfeiture was known since September 2011 and finalized in a May 2012 plea agreement. It doesn't take a year to complete the paperwork."

Cuccinelli's office said it has no indication of when, exactly, the money will be disbursed.

The $1.5 billion settlement reached with Abbott Laboratories in May 2012 was divided into $800 million in civil settlements with the federal government and 45 states and the District of Columbia, and $700 million in criminal fines and forfeitures.

Under the civil settlement, Abbott paid $800 million to the federal government and the states to settle claims for defrauding Medicaid and other government health care programs.

Abbott allegedly promoted the prescription drug Depakote to control agitation and aggression in elderly dementia patients and to treat schizophrenia, even though the federal Food and Drug Administration never approved the drug for those uses.

The drug was approved by the FDA to treat epileptic seizures, bipolar mania and migraines.

That part of the settlement has already happened and the money went to reimburse Medicaid and other programs to help beneficiaries, Cuccinelli's office explained.

Under the criminal portion, Abbott paid the federal government a criminal fine of $500 million, it paid $1.5 million to the Virginia Medicaid Fraud Control Unit for investigative costs, and it forfeited assets of $198.5 million to go to the investigative agencies for law enforcement purposes.

Virginia's $115 million comes from that asset forfeiture money, which is required by federal regulations to be used for law enforcement purposes.

From Legal Newsline: Reach Jessica Karmasek by email at

More News