Legislators see little AG change on horizon

By Staff reports | Aug 29, 2008







CHARLESTON -- When House Bill 104 passed during the first Special Session of this year's state Legislature, it did so with little fanfare.

Yet it represents to date the single act of oversight the Legislature has enacted over the state attorney general's office.

Democrats and Republicans agree little more can be expected anytime soon.

A 2001 Joint House and Senate Committee on Government Oversight took on five issues related to the attorney general's office. The panel submitted a report documenting recommendations on appropriate staffing levels, structuring settlements, relationships to outside counsel and other areas that should be clarified.

Among the recommendations is one that suggests any settlement fees over $300,000 be "immediately transferred to the State General Fund by the attorney general's office."

To date, none of these recommendations have been enacted. Only HB 104, which requires the attorney general to notify the governor and legislators when filing a lawsuit and when entering into settlement agreements.

Republican Sen. Vic Sprouse called the bill "toothless."

"I don't think it's progress because it is strictly a 'reporting' requirement after the fact," Sprouse, who was a member of the 2001 joint committee, said. "I mean, I guess it's better than nothing, but it does show how scared the legislative leadership is of Attorney General Darrell McGraw that they only require him to tell them after he settles."

A May 2007 story in the National Law Journal listed West Virginia as one of several state legislatures introducing bills that would create oversight over the attorney general's outside interests.

"These measures address the growing concern that many AGs are not transparent in their hiring of outside counsel and would deter favoritism with political cronies or so-called sweetheart deals," the story reports.

But lawmakers from both parties said once the bills are introduced they flounder.

"There may be some bills out there that have been sponsored," Del. Jonathan Miller, R-Jefferson, said. "But they haven't seen the light of day. They get introduced and go right into the trash can."

Del. John Doyle, D-Jefferson, said he isn't aware of any bills offering serious reform or oversight gaining any traction.

"Nothing's happening," Doyle said.

Robert Altman, the bill status clerk, said he doubts any significant legislation pertaining to the attorney general's office is forthcoming.

"I've been here for about seven years now, and I am unaware of anything that is progressing," he said.

But few lawmakers are suggesting the lack of activity represents legislative concern over the methods of Attorney General Darrell McGraw.

McGraw's legal settlements have increasingly made their way into his consumer protection account instead of the state treasury, exactly the opposite of what the 2001 joint committee recommended.

Nothing irks lawmakers, no matter the party, like keeping money from them.

"Attorney General Darrell McGraw is the hot topic because he is the poster child of renegade attorney generals," Miller said.

Wayne County Democrat Don Perdue, chairman of the House Health and Human Resources Committee, said while he still supports McGraw, concern has risen, particularly following a $10 million settlement with Purdue Pharma in a high-profile 2004 OxyContin case.

The private lawyers contracted by McGraw to work on the case received $3.3 million. The rest went to McGraw, who used the money to fund substance abuse programs throughout the state and make a $500,000 donation to the University of Charleston's new pharmacy school and a $50,000 loan for a Sesame Street exhibit at the Clay Center in Charleston.

"That created some controversy because the Legislature felt that we should have had our hands on that money first," Perdue said.

That controversy boiled over anew when the federal government attempted to withhold $4.2 million in Medicaid payments to the state, claiming it did not receive its fair share of the settlement.

Indeed, all three plaintiffs in the case -- government agencies that operate Medicaid, workers' compensation and public employees' insurance funds -- never were paid a portion of the settlement.

Now the Legislature is faced with the potential of having to come up with the money the federal government wants back.

"At least a dozen Democratic lawmakers," Sprouse wrote on a blog on the topic, "have had it up to their ears with Darrell McGraw."

But a recent legal victory supported McGraw when the courts ruled that the $4.2 million figure was too high, directing the federal government to amend its request.

Deputy Attorney General Fran Hughes told the Legislature that the attorney general's office has set aside money in case they do have to pay something back.

Still, Sprouse said, "Trust me. Democrats, as well as Republicans, are fuming."

Perdue said Sprouse's characterization is far too strong. He said the Legislature mostly views its relationship with the attorney general as "a mixed bag."

"There are a number who believe the attorney general could do things differently," Perdue said. "By the same token, most I have talked to are grateful that he is active in helping bring funds to the state.

"It's awfully hard to look a gift horse in the mouth and tell him his breath is bad."

Perdue said the issues deserve careful consideration. But he said once good policy is crippled by political infighting, everyone loses. And with an election coming up just ahead in November, Perdue knows now is the time when politics are at their worst.

"Unless we divorce ourselves from the politics and look only at the policy, whatever we do will be flawed," he said.

Election season

Wait and see.

That's one thing –- perhaps the only thing until November -– that those on both sides of the aisle can agree on in regards to the state's attorney general.

"I think (lawmakers) are waiting to see who wins the election," Doyle said.

For Republicans, clearly in the minority where Democrats control both the House and state Senate, the governor's mansion and the attorney general's office, the biggest target this election is McGraw.

He won re-election in 2004 by just over 5,000 votes to a poorly financed competitor. Now he faces a serious challenge from former Republican state legislator Dan Greear, whose candidacy has attracted national attention.

So whether the Legislature's opinion of McGraw is indeed a "mixed bag" or more of the uproar Sprouse claims, Democrats must first protect their exposed flank. In the coming November battle, their flank is clearly McGraw.

"The Legislature is very hesitant to deal with the attorney general," Miller said. "It's party politics. The Democrats are in control. They are all Democrats, so it's party politics. They aren't going to go after one of their own."

Doyle agreed that party politics underlie any genuine attempt to seek oversight over the attorney general. But he said the blame is as much the Republicans as his own party.

"A number of Republicans have chosen to attempt to get some partisan advantage out of it," Doyle said. "This has driven a number of intellectually alert Democrats to back off in joining the effort to try to bring some sense to this."

Perdue is sympathetic to the broad concern that the Legislature retain control over the state's power of the purse. But he said the policy issues are often mired by political bickering.

"I would assure you that there are people who are looking for legislation in that regard," Perdue said. "But, there is an awful lot of politics in this. I am sure there are folks looking at the relationship between the various branches from a policy, and not a political, standpoint. We need to let that proceed on a policy level."

Perdue cites the Purdue Pharma settlement as an example of political backlash. He said his Health and Human Resources Committee remains very concerned about the potential threat of the loss of federal funding. But the small amount involved in the settlement -– which some are calling McGraw's "Budget Hole" -- compares to the real threat, he said.

"That particular so-called 'hole,'" Perdue said, "pales to what the federal budget proposed that could cost us hundreds of millions of dollars. There are far more dangerous things going on out there that the federal government has proposed."

Blunt instruments

Another problem facing the Legislature, even if a majority does eventually agree that policies of the attorney general need to be revised, is specifically what can and should be done. Again, the Purdue Pharma settlement lies at the center of the debate.

Following the disgruntlement among legislators with the 2004 payout from the settlement, West Virginia Citizens Against Lawsuit Abuse backed a bill that would have forced the attorney general to report his hiring practices to the governor and the Legislature. After much publicity, it failed. Now HB 104 is a watered-down version that requires after-the-fact reporting.

Doyle said the problem is not unique to West Virginia. Among the solutions would be federal legislation that would require that force settlement monies be paid directly to the state.

Short of that, he said, the state Legislature retains one other avenue of forcing McGraw to be more cooperative.

"You can cut the budget of the attorney general's office," he said. "That is a blunt instrument, but it is an instrument of last resort. I'd say we are almost there."

The problem with that, according to Amber Taylor, a tort reform lawyer, is McGraw has proven the ability to fund his own office through settlement dollars.

"To the extent that the proceeds from these cases are doled out by the attorney general instead of being deposited directly and in to the state treasury, their control over funding is similarly undermined," she said.

When party politics and the lack of a coordinate policy plan and the sense of frustration among lawmakers quickly turns into defeat.

"It's very difficult right now to get any legislation," Miller said. "The only way it can happen is if Darrell McGraw loses or if many Democratic party members lose their seat.

"I don't see the second happening, but it is possible that McGraw could lose."

Greear's campaign platform is a direct assault on McGraw's practices. He promises increased accountability, greater openness, competitive bidding for legal contracts and an end to the practice of distributing funds apart from the Legislature.

But Perdue is quick to point out that change can be costly.

"The truth of the matter is," he said, "the state of West Virginia received these monies because of the actions of the attorney general. Without him, we wouldn't have gotten it."

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