Lawmakers speak on W. Va. settlement controversy

By John O'Brien | Aug 23, 2007




CHARLESTON, W. Va. - So how can the State of West Virginia recover from having $4.1 million in Medicaid funds withheld by the federal government?

Republican legislators said Thursday that Attorney General Darrell McGraw's office needs investigated, the Legislature needs a backbone and the budget will need more taxpayer money -- even though state law may say otherwise.

"To me, I absolutely think that the Legislature has let the Attorney General run all over them because he is of the same party," said state Sen. Vic Sprouse, a former Senate minority leader. "I can't imagine a Republican Attorney General getting away with the things this Democrat gets away with.

"The Legislature needs to step up and grow a backbone. They might like this Attorney General, but they might not like the next one."

Disputed is McGraw's 2004 settlement with Purdue Pharma, manufacturer of the prescription painkiller OxyContin. The state's Department of Health and Human Resources sued Purdue Pharma, alleging the treatment of addicts caused by the drug's misrepresented addiction capabilities put a strain on the state's Medicaid budget.

The federal government supplies nearly 75 cents of every dollar West Virginia spends on Medicaid, but McGraw structured the settlement with Purdue Pharma in a way that allowed his office to keep the $10 million. By not handing the money to the DHHR or the Legislature, it prevented the federal Centers for Medicaid and Medicare Services from reclaiming its 75 cents of every dollar.

The CMS recently decided to withhold $4.1 million from its next Medicaid appropriation to the State. The State is planning an appeal.

"It's amazing what McGraw has gotten away with," Sprouse said. "I don't really blame the AG's office, I blame the Legislature for letting the AG run roughshod over it."

Sen. Andy McKenzie, R-Ohio, stopped short of blaming the Legislature, but said his colleagues need to conduct an investigation into McGraw's practices.

"Who's to blame? I don't know. That is definitely a question that needs to be investigated," McKenzie said. "Clearly, the buck now stops at the Attorney General's office.

"I believe the Legislature needs to do a full investigation of the Attorney General's office, not just this case but others. This should not be a witch hunt. I'm not trying to put blame on the Attorney General, but we're dealing with a lot of money. And who becomes the losers? Taxpayers and the people of the State of West Virginia and especially Medicaid users."

State law, though may provide taxpayers some remedy. West Virginia Code 9-5-11 might put the responsibility of filling the $4.1 million hole on McGraw. Part of the law reads:

"If, after being notified in writing of a subrogation claim and possible liability of the recipient, guardian, attorney or personal representative for failure to subrogate the department, a recipient, his or her guardian, attorney or personal representative disposes of the funds representing the judgment, settlement or award, without the written approval of the department, that person shall be liable to the department for any amount that, as a result of the disposition of the funds, is not recoverable by the department. In the event that a controversy arises concerning the subrogation claims by the department, an attorney shall interplead, pursuant to rule twenty-two of the rules of civil procedure, the portion of the recipient's settlement that will satisfy the department exclusive of attorneys fees and costs regardless of any contractual arrangement between the client and the attorney."

Despite that, Sprouse feels taxpayers will still take the brunt of the damage, if the State loses its appeal.

"In the end, who pays for it is the taxpayer," he added. "I think we'd like to see it come out of the amount of money the AG brings in in other resources.

"We're appealing, but it seems pretty evident we're going to end up paying that money back. Hopefully it's a lesson learned that there is no free ride.

"You can't purposely screw over the federal government and get away with it."

McGraw's office, the DHHR and the CMS did not return messages. McKenzie added that Chief Deputy Attorney General Fran Hughes, who told the Legislature in February that her office would stop appropriating settlement funds itself instead of turning them over to the Legislature, recently called him.

"I think her words were twisted a little bit. If she could take those words back, she would," McKenzie said. "Personally, she told me she told the committee that from any new settlement they would no longer disperse those funds in any ways other than how the court ordered."

Existing settlements, though, are a different story. The office still plans to keep spending those how it sees fit.

"Ultimately, what could be done to bring back credibility to the Attorney General's office is they probably need to turn those over to the Legislature as well," McKenzie said. "Frankly, if they want to recommend to (Senate President Earl Ray Tomblin and Gov. Joe Manchin) where they would like to see those dollars go...

"This has gone on too long. Whatever dollars are left, they should give over to the State of West Virginia and its taxpayers."

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