CHARLESTON – West Virginia Attorney General Darrell McGraw will stop giving away money from settlements of the state's lawsuits, his chief deputy told the Senate Finance Committee.
"This is not going to repeat itself in the future," Fran Hughes assured committee chair Sen. Walt Helmick during the Feb. 12 meeting. "We are not interested in being the center of controversy."
Helmick told her the process would go to court if it was not curtailed.
McGraw, who in 2004 settled a suit against OxyContin manufacturer Purdue Pharma for $10 million, has distributed the proceeds to organizations of his choice instead of letting the Legislature appropriate the money.
Controversy kicked in when he gave the University of Charleston $500,000 for a pharmacy school.
Last year, Republicans in the Legislature introduced a bill that would have deposited settlement proceeds in the state's general fund for appropriation by the Legislature.
Democrats, who control the Legislature, did not support the restriction on McGraw, a Democrat. The bill failed.
This year, Democrats backed away from McGraw's position.
At the Finance Committee meeting, Helmick, a Democrat, asked Hughes, "Why do it when the papers berate your office? I can't understand what you are doing because it's not a popular thing to do."
Another Democrat on the committee, Sen. Roman Prezioso of Fairmont, said the practice raised a constitutional question.
Prezioso said it was not appropriate to dole out state money without involving the Legislature.
He said, "If you had talked to me, I probably could have found places to use that money."
His statement carried extra weight because he is chair of the Senate Health and Human Services Committee.
He said, "The more I read, the more confusing it gets."
He said media reports said McGraw's office consulted people from the Public Employees Insurance Agency, the Workers Compensation Commission, the Department of Health and Human Resources, the House and the Senate.
He said, "I would like to know who these people are."
He said he did not understand why the Purdue Pharma settlement money did not go to the agencies for which McGraw filed the suit. The suit sought reimbursement of expenses that resulted from OxyContin addiction.
"I think as John Q. Citizen, you would fill the gap of the money that was lost," Prezioso said. "How does a pharmacy school make the agency whole?"
Hughes said, "Providing community services benefits some who were harmed."
She said that if the money had gone to the Department of Health and Human Resources, the federal government would have retained the portion it contributed through Medicaid.
"We have arranged a methodology that has prevented the federal government from coming back and seizing money," Hughes said.
She said the department was represented in settlement negotiations. She said the department received $300,000 from the settlement.
Presiozo said he had not found anybody who McGraw's office consulted about his plan for the proceeds.
Hughes said the office consulted Helmick, the Senate President, the House Speaker, the House finance chair, the governor's office, the secretary of health and human resources and former Workers Compensation Commission director Greg Burton.
When she named Burton, grunts and groans of doubt rose from the public seating area at the back of the room.
Sen. Vic Sprouse of Charleston, a Republican, asked Hughes how McGraw decided where money should go.
"You are dispensing it as your own without consulting the Legislature," he said.
Hughes said, "We act often like a private attorney that is holding money in trust for the benefit of a client."
She said the Attorney General must have discretion.
"We have exercised that with restraint and respect," Hughes said. "We are the only successful party to hold Purdue Pharma accountable for its illegal marketing practices."
Sprouse asked why the money did not go to general revenue or the Department of Health and Human Resources.
Hughes said the state needs pharmacists to fight drug abuse. She said there was no pharmacy school in the southern part of the state.
She said pharmacists make $90,000 a year.
"It shouldn't be the Attorney General's office making that decision, to open a pharmacy school," Sprouse said. "Did DHHR say we don't want it? Give it to U. C.?"
Hughes said, "I assume their attorney acted in their behalf at settlement negotiations. They were there and they signed off."
Presiozo asked if she had an accounting of the ten million. Hughes said she did. Presiozo asked her to give it to the committee.
"I have no problem sharing every penny of information," Hughes said.
After the meeting, Burton released a statement. Burton is president of BrickStreet, a private workers' compensation insurer that the lLegislature set up in place of the Workers Compensation Commission.
"While we had representation there, based on what our representative told me, at no point did the Attorney General get our approval for the settlement. I never approved the settlement. We fully anticipated getting part of the money that was recouped as we had in other cases that were handled by the Attorney General's office."
John Law, assistant secretary of communications and legislative affairs for the DHHR, responded to The Record when asked about Hughes' comments. Paul Nussbaum was DHHR secretary at the time.
"I don't think there was any deep negotiation," Law said. "But by the same token, I think Fran talked to us about how it was going to be used."