CHARLESTON -– A recent report criticized West Virginia Attorney General Darrell McGraw's practice of deputizing campaign contributors as special assistant AGs.

The executive director of a state civil justice group says the report highlights a serious problem in the state, while the president of a trial attorney organization says McGraw is being targeted because he stands up to big business.

Calling the relationships "a litigious cash cow," the study released earlier this month by the American Tort Reform Association -- titled "Beyond Reproach? Fostering Integrity and Public Trust in the Offices of State Attorneys General" -- says it is no coincidence that some of the biggest contributors to attorney general campaigns end up being awarded state contracts.

The report focuses on six states -- Alabama, Louisiana, Mississippi, New Mexico, New York and West Virginia.

"In certain states, attorneys general relationships with private attorneys appear to be highly questionable or unethical, but may be nearly impossible to trace due to state campaign finance laws," ATRA president Sherman Joyce said.

"In other states, the record of past attorney general practices contrasts with recent promises of ethics reform by state leaders - creating a cautionary tale of 'practice versus promise' that voters and good-government advocates should closely watch."

McGraw has been a constant target of ATRA.

"West Virginia has long been known as fertile ground for the plaintiffs' bar, in part because of Attorney General Darrell McGraw," the report says. "McGraw's campaign contributors – and at least one relative – have been rewarded with work filing lawsuits against the state. Moreover, McGraw's record over the years and some of his actions as a public official and as an attorney might best be described as 'ethically challenged.'"

Richie Heath, executive director of West Virginia Citizens Against Lawsuit Abuse, said the issue still needs to be addressed by lawmakers.

"McGraw's questionable lawsuit practices have damaged our state's reputation for legal fairness for far long too long," he said. "West Virginians deserve transparency and accountability from their elected representatives. Requiring the Attorney General's office to post state legal contracts online, disclose detailed information on the amount of hours worked by outside counsel, and ensure that lawsuit settlement funds go to the state treasury are simply good government measures that are long overdue."

Michael J. Romano, president of the West Virginia Association for Justice, said ATRA is the problem, not McGraw.

"The American Tort Reform Association was created for one purpose -- lobbying legislatures for immunity when big business breaks the law," he said. "It is a front group for big money special interests. ATRA annually targets West Virginia Attorney General Darrell McGraw and other state attorneys general because they hold those corporations accountable for wrongdoing.

"Attorney General McGraw is targeted because he puts the health, safety and well-being of all West Virginians he serves over bigger profits for the big multinational corporations ATRA represents."

Romano said McGraw recovered more than $133 million on behalf of the state and consumers last year and that his office represented consumers in cases involving predatory lending practices, off-label use of prescription drugs and abuses by credit card companies.

"A major effort in 2010 focused on unlawful debt collection practices," Romano said. "His office has also helped consumers with major product recalls -- including recent automobile recalls due to defects that could have resulted in accidents with major injuries or death.

"Attorney General McGraw is doing exactly what he is supposed to do—fighting for the State of West Virginia and the people who live here."

Lee Murray Hall, president of the Defense Trial Counsel of West Virginia, said her organization believes that a system that appears to reward political contributors with legal contracts and lacks accountability for settlement proceeds undermines the public's confidence in the judicial system.

"There are instances where it is appropriate for state government to retain outside counsel in order to protect the state's interest, whether in advancing or defending claims or other specialized areas such as public financing issues," she said. "However, we need to ensure that there is a genuine need for outside counsel in a particular matter, that the choice of counsel is transparent, that the lawyers chosen are appropriately skilled, that the fees are reasonable and consistent with West Virginia law, and to eliminate the suggestion of "payback" to political supporters.

"With regard to settlements of claims, when the Attorney General prosecutes claims on behalf of the state, the state is his client and we believe -- as in all other cases -– that the determination of the use of those funds belongs to his client, the State and ultimately its citizens. We discourage any process which permits the Attorney General to disburse settlement proceeds at his discretion."

Campaign finance totals indicated that McGraw has received more than $185,000 in campaign contributions over the years from individuals with ties to the law firms he has appointed special assistant attorneys general. That includes either the attorneys appointed, their spouses and relatives, employees, etc.

The ATRA report notes that McGraw hired Cook Hall & Lampros, which had given him $20,000, for a bid-rigging lawsuit against Bank of America and 24 co-defendants. The managing partner of the firm is Edward Shuff Cook, the nephew by marriage of McGraw's brother Warren. Warren is a former state supreme court justice.

McGraw has also frequently used the firm DiTrapano, Barrett & DiPiero for state work. That firm and its employees and their relatives gave $37,800 to McGraw between 2004-2008.

The DiTrapano firm was part of McGraw's most controversial case. He has been frequently criticized for how his office handled a $10 million settlement with Purdue Pharma, maker of OxyContin, in 2004.

Rather than giving the settlement funds to the state agencies named as plaintiffs, the settlement allowed McGraw to disperse the funds as he saw fit. He gave much of the settlement to day report centers and gave the University of Charleston $500,000 for a pharmacy school.

In retaliation, the federal government is withholding nearly $3 million from its Medicaid appropriation to the state because that's what it feels it was owed in the settlement.

The lawsuit alleged harm to the state's Medicaid program, which is largely federally funded. Private attorneys made more than $3 million in the settlement.

"West Virginia is a state in need of better public and legislative oversight of lawsuits by the attorney general and private counsel," the report says.

"The law firms selected by Attorney General McGraw to file state suits have often been generous campaign contributors, suggesting a 'pay-to-play' process; his actions as an attorney call into question his adherence to the Rules of Professional Conduct; settlement funds are withheld from the attorney general's plaintiffs and used as an apparent 'slush fund' where his own office determines who receives the grants from the settlement, and the state's Medicaid funding is reduced as a result of his actions."

Calls to McGraw's office were not returned.

ATRA has championed its own proposed code of conduct for state attorneys general that involves disclosing the methods used in choosing who receives state contracts.

More about the code can be found at the end of the report, which is located online here.

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