By JACKSON KELLY LAW FIRM
On June 5, 2013, the West Virginia Supreme Court of Appeals issued a new opinion which expands the power of the West Virginia Attorney General and in so doing overruled more than 30 years of precedent. This case is very significant to any health care entity facing potential actions by the West Virginia Attorney General because it signals that he has more power to institute actions than under prior law.
State ex rel Discover Financial v. Nibert held the West Virginia Attorney General has common law powers, which include the power to retain and pay private outside counsel. In a nutshell, the court overruled a 30-year old case, Manchin v. Browning, 170 W. Va. 779, 296 S.E.2d 909 (1982), where it held the Attorney General had only those powers specifically prescribed by statute.
Thus, even though the court in State ex rel Discover Financial found there was no statutory authority for the Attorney General to retain private counsel, it held the retention was proper because of the Attorney General’s common law powers. The court also found no statutory prohibition against the Attorney General retaining and paying counsel, and refused to limit payments.
In the opinion, Justice Robin Davis re-examined the Virginia law relied upon in Manchin and concluded the court in Manchin had it wrong. Finding the Attorney General had common law powers in Virginia at the time West Virginia was formed, Justice Davis concluded, contrary to Manchin, that those powers survived the formation of the West Virginia Constitution.
“Insofar as we have shown that Manchin incorrectly interpreted the common law powers of Virginia’s Attorney General, and Burton has rejected Manchin’s holding that the Attorney General has no inherent authority, we make clear and once again expressly hold that the Office of Attorney General retains inherent common law powers, when not expressly restricted or limited by statute," Davis wrote.
"The extent of those powers is to be determined on a case-by-case basis. Insofar as the decision in Manchin v. Browning, 170 W. Va. 779, 296 S.E.2d 909 (1982), is inconsistent with this holding, it is expressly overruled.”
The court concluded “[i]n the final analysis, the authority of the Office of Attorney General ‘comes from three sources–the constitution of this state; the legislature; and the common law, from which emanates some of its so-called inherent power.’ State ex rel. McGraw v. Telecheck Servs., Inc., 213 W. Va. 438, 443, 582 S.E.2d 885, 890 (2003).” Thus, the Attorney General, according to the Court, has common law power to retain counsel.
The court had to find common law authority (contrary to established precedent) because there is no statutory authorization for retaining outside counsel. The court agreed with the petitioners that “the lower courts were wrong in holding that W. Va. Code § 5-3-3 (1961) (Repl. Vol. 2011) authorized the Attorney General to appoint special assistant attorneys general and provided a basis for the method of payment chosen.”
Tracing the history of the statute, the court found the Legislature did not provide for special assistants even though in the past it had. Nonetheless, the court found “[e]ven though the Attorney General cannot rely upon W. Va. Code § 5-3-3 as authority to appoint special assistant attorneys general, we do not find any language in the statute which expressly prohibits the Attorney General from making such appointments under that Office’s inherent common law authority."
The court applied similar logic to conclude the Attorney General was permitted to enter into alternative fee agreements, stating, "Insofar as W. Va. Code § 5-3-3 does not expressly prohibit the Attorney General from making alternative fee arrangements with special assistant attorneys general, we now hold that the Attorney General has common law authority to provide for compensation to be paid to special assistant attorneys general through a court-approved award of attorney’s fees taken directly from the losing opponent in the litigation."
Finally, the court refused to restrict the amount of fees to “within the limits of the amounts appropriated by the Legislature for personal services…” as set forth in W. Va. Code § 5-3-3, finding the amount of the fee was discretionary with the trial judge and stating, "However, we wish to make clear that we are not addressing the appropriateness of awarding attorney’s fees to special assistant attorneys general directly from any actual monetary judgment award to the State because such a contingent fee agreement is not at issue in this case.
"We also note that the Legislature attempted to address the issue of contingency fee payment to special assistant attorneys general during the 2013 Regular Session of the West Virginia Legislature, but such proposals failed to be approved."
The recognition of common law powers in the Attorney General’s office is significant, and will hamper arguments that attack whether the Attorney General has statutory authority to bring actions, etc. Common law powers will undoubtedly be used to shore up arguments that the Attorney General can act when allowed by statute, but perhaps more significantly, when not prohibited by statute.
Like Pandora, this opinion sets the Attorney General free from the Manchin v. Browning box and may have implications far beyond whether the Attorney General can retain counsel. It opens the door for litigation by the Attorney General even absent statutory authority. West Virginia is not alone, as there was a similar recent ruling in the United States District Court for the Eastern District of Kentucky in Merck Sharp and Dome v. Conway.
This editorial appeared on Jackson Kelly's Health Law Monitor blog.