Burden's on lawmakers to repay feds, McGraw says

By Chris Dickerson | Jan 16, 2008



CHARLESTON -- Attorney General Darrell McGraw said it is up to state lawmakers to deal with the problem if the federal government seeks reimbursement of more than $4 million in Medicaid money.

"The burden is back on the Legislature," McGraw said Wednesday during a Senate Finance Committee hearing on his office's budget request. He later said "sharper pencils than mine" could figure out a way to repay the federal government.

Two times in recent months, the federal Centers for Medicare and Medicaid Services has notified the state's Department of Health and Human Resources that it will be withholding Medicaid funds because it does not believe it was given what it was owed from two lawsuit settlements.

A $4.1 million withhold, currently being appealed, results from the 2004 $10 million agreement with Purdue Pharma, manufacturer of the prescription painkiller OxyContin. Another $634,525 potential withhold relates to a settlement with Dey Inc., which McGraw's office claimed inflated the prices of the prescription drugs it manufactured, thereby defrauding the state's Medicaid program.

Though he hasn't done so in recent years, McGraw attended Wednesday's hearing personally and made the presentation on behalf of his office. He touted his office's achievements since he became AG in 1992, noting that his work product since then has brought in more than $2 billion to the state.

But his Fiscal Year 2009 request barely was addressed. After his presentation, McGraw was peppered with questions, mostly from state Sen. Jesse Guills, R-Greenbrier. The back-and-forth sometimes became heated.

Along the way, McGraw accused the federal government of "double-dipping," criticized the U.S. Chamber of Commerce, forced an awkward break to get a drink of water and told a story about his cousin's return from the Korean War.

Guills asked questions primarily about the OxyContin settlement.

"My questions are directed toward where the money ended up," Giulls said.

"The settlement order gave the parameters," McGraw replied. "The judge indicated he wanted the money used at the local levels."

Guills, an attorney, asked if McGraw's office could provide a detailing accounting of where all of the OxyContin settlement money had gone. McGraw said that information is available.

When the discussion changed to the details of how the OxyContin settlement came about, McGraw said it took place the morning the trial was supposed to begin. And most of the negotiations, he said, took place on the steps of the McDowell County Courthouse.

McGraw said he recalled one of the attorneys representing the state agencies in the case being at the courthouse that day.

"We had several named plaintiffs in the lawsuit," McGraw said, mentioning the DHHR, the Public Employees' Insurance Agency and Workers' Compensation. No state agencies were named as plaintiffs in the original OxyContin lawsuit, but later were added.

Still, none of the agencies received any of the money.

"Our focus changed," Chief Deputy Attorney General Fran Hughes said of the case. "When it was first filed, we had a different approach."

Guills then asked McGraw if any of the attorneys representing the state agencies were involved in the settlement.

"We had had many Attorneys General offices before us," McGraw replied. "None succeeded. We were going to trial that morning. Literally, it was settled that day."

Guills asked McGraw who would be responsible for paying the federal government back.

"If we lose this contest, who will pay the $4.1 million?" Guills asked.

"The burden is back on the Legislature," McGraw replied.

Guills also asked where that money would come from.

"Perhaps sharper pencils than mine can find 0.005 percent of that money," McGraw said, referring to $2 billion figure he's secured in settlements since becoming AG.

McGraw said his office had three options when reaching the OxyContin settlement.

"We could take the money agreeable to the judge and the drug company," he said. "We could've turned it over to the DHHR, and the money would have gone back to the federal government. Bye-bye.

"Or we could've given it to the Legislature, which would have been obliged to give it to the DHHR. Bye-bye."

Guills later asked if the state agencies involved in the case were consulted about the settlement.

"We're lawyers, and we do litigation and settlements," McGraw replied.

McGraw later attacked the U.S. Chamber of Commerce, which owns The West Virginia Record.

"The national Chamber of Commerce made this complaint," he said of the actions that led to the federal government seeking reimbursement for Medicaid money. "They spend a lot of time running West Virginia down. A judicial hellhole? That's the national Chamber."

He said members of the U.S. Chamber of Commerce are the same companies his office has sued over the years.

"We're not talking about a free lunch," he said. "Somebody has to pay. These people are the people we sued for $2 billion. The national Chamber makes this claim, and the federal government responds to their allegations.

"When you sue people, would you believe, they don't like it. And when you take money from them, they like it even less. They make it a political issue and they seek revenge."

Sen. Walt Helmick, chairman of the Finance Committee, then chimed in.

"If we owe this $4.1 million, then the debt belongs to the state?" Helmick asked.

"Of course it does," McGraw replied.

McGraw then switched gears, discussing a $634.5 million criminal fine last year in Buchanan County, Va., against Purdue Pharma and three of its executives for misleading the public about OxyContin's risk of addiction. He said that criminal case, filed by the U.S. District Court Western District of Virginia, came about because of his office's settlement.

"This occurred after our settlement," he said. "This is an effort by the federal government to double-dip. … The federal government strives to double-dip.

"We in West Virginia received, what, $20 million of this money?"

"No, $44 million," Hughes said.

"Oh, $40 million. I was half right."

Getting back to the 2004 McDowell County settlement, Guills tried to verify that McGraw's office received the fourth $2.5 million payment in December.

McGraw stopped him in mid-sentence.

"Can I have some water?" he asked.

As a committee staffer went to get McGraw a drink, Guills tried to resume the questioning.

"I want to wait for the water," he said.

After a long pause, a cup of water was handed to McGraw, who took a long drink.

"It is good water," he said. "It reminds me of a story."

McGraw then recounted a story about a celebration his family had when his cousin returned from the Korean War. McGraw was away from his podium and microphone, so all of the details of that story couldn't be heard by the audience.

Guills then got back to the settlement discussion, asking if that last $2.5 million payment had been dispersed yet.

McGraw said it hadn't been. Guills then asked if McGraw's office will disperse the money.

"We have to do that per the court order," the AG said. Hughes added that it is supposed to be done within the fiscal year.

"Do you believe it would be a responsible act not to spend that money while the claim by the federal government is pending?" Guills asked.

"My choice is to do what we're supposed to do in the court order," McGraw replied. "My responsibility is to the court order."

Guills then asked if McGraw felt a responsibility to protect West Virginia citizens.

"I do protect the interests of the people of this state," McGraw said.

Helmick then wrapped up the hearing, noting another meeting was scheduled to begin in the same room.

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