Cash-strapped W.Va. agency urged to look into McGraw settlement

By John O'Brien | Jul 13, 2009


CHARLESTON, W.Va. (Legal Newsline) - Before a state agency starts making budget cuts, one West Virginia lawmaker wants it to inquire about money that he feels it may be owed from state Attorney General Darrell McGraw's controversial 2004 OxyContin settlement.

Del. Jonathan Miller recently submitted a Freedom of Information Act request to the Public Employees Insurance Agency, wondering what steps the PEIA took to claim any amount from McGraw's $10 million settlement with Purdue Pharma.

PEIA is one of three state agencies McGraw represented in the lawsuit, which claimed Purdue Pharma misrepresented the addiction capabilities of OxyContin. More than $3 million went to outside counsel that represented the State, and the rest went into McGraw's Consumer Protection Fund.

Miller said court records show PEIA may be owed more than $400,000. The federal government is currently planning a withhold of millions of dollars in its next Medicaid payment to the State because the settlement was structured in a way that the feds could not recover portion.

"The operation of the Attorney General's Office of how it relates to state agencies and the state is budget is very important," Miller said. "We've been going through this for years, and we've gotta get a handle on it."

PEIA is holding public hearings on diminishing benefits to new employees. Miller said maybe it should look into claiming some money from McGraw's settlement.

The state Department of Administration has said ending the 72 percent retiree premium subsidy for new hires would cut down the PEIA's debt, now at $7 billion, according to a recent report in the Charleston Daily Mail.

The West Virginia Department of Administration has stated that ending the 72 percent retiree premium subsidy for new hires after Jan. 1, 2010, would cut down on a huge, growing debt. PEIA officials now are saddled with a $7 billion deficit.

"There are budgetary issues," Miller said, noting the future looks bleak for the state budget. "The attorney general is affecting our bottom line as we're approaching a budget cliff.

"(McGraw) is well known for his antics. That's an issue we've gotta address. If he goes off base and takes these settlements in the wrong direction, it causes problems we'll have to address in the legislature.

"We haven't really wanted to get too involved with the issue. It's the big elephant in the room."

McGraw spent the bulk of the money on day report centers that nonviolent criminals can check in with when they are released. He also gave $500,000 to the University of Charleston for a pharmacy school.

Sen. John Doyle criticized McGraw's handling of the OxyContin settlement at a Senate Finance Committee meeting last year.

"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 said he was simply following a court order when he distributed each of the four yearly $2.5 million payments.

Recently, a federal appeals board approved a withhold of more than $400,000 from a similar settlement with Dey Pharmaceuticals. That settlement was worth $850,000.

"The big thing for me is the attorney general files these suits on behalf of state agencies," Miller said. "This wouldn't happen in the private sector. I'm wondering why it happens with state agencies.

"We can't have our chief attorney file a suit on behalf of a state agency and then have no correspondence as to who gets the money and how much. It's an issue that needs to be addressed.

"If all this money is not given to us to fix budget shortfalls, then it falls back on the taxpayers. If we keep losing money we shoud've had to pad those holes, then we'll have to raise taxes."

From Legal Newsline: Reach John O'Brien by e-mail at

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