CHARLESTON, W.Va. - West Virginia may be approaching the end of a years-long legal and political saga over Attorney General Darrell McGraw's use of money from a multi-million dollar settlement with the makers of painkiller OxyContin.
The settlement, reached in late 2004, netted the state $10 million after McGraw sued Perdue Pharma. He alleged the pharmaceutical giant's marketing efforts caused doctors to prescribe OxyContin inappropriately and led to addiction.
But the end of that suit was really just the beginning of further litigation and controversy.
After private lawyers received $3.3 million of the settlement, critics of McGraw cried foul.
McGraw sued on behalf of three agencies, the state Department of Health and Human Resources, the old workers compensation program and the Public Employees Insurance Agency. McGraw claimed they had to pay for the drug when it was inappropriately prescribed. The agencies wanted their money back.
But they received little or nothing as a result of the settlement. DHHR received $250,000 and the others received none.
Instead, McGraw put the money to help build a pharmacy school and to fund community corrections programs, among other things. That arrangement was to the great displeasure of some lawmakers who said McGraw was overstepping his authority to hand out what the lawmakers argued is taxpayers' money. The Attorney General's Office always maintained the money belonged to communities affected by addiction and the office was giving it back to them.
Then, to further complicate matters, the federal Medicaid program said it deserved a share of the settlement money.
The U.S. Centers for Medicare and Medicaid Services, or CMS, said some of the money the state spent on OxyContin was originally federal dollars.
That litigation has dragged on since 2007. At first, the federal government wanted to recoup $4.1 million by withholding Medicaid payments to the state. Eventually, that figure was reduced to $2.7 million.
In 2007, Chief Deputy Attorney General Fran Hughes said the office had shielded the state from Medicaid's reach.
"One of the beauties of the way the attorney general's office has fashioned the (settlement) is that it makes it so CMS is not entitled to any of the money," she told the Daily Mail at the time.
But now it looks as if the federal government is likely to get its money.
That's become relatively clear in similar case involving a smaller amount of money. In that case, the federal appeals court ruled last summer that another plan fashioned by the attorney general's office did not, in fact, prevent the federal government from recouping its cost from the state.
"The same result follows in this case," the federal government said in a court filing late last year in the Perdue Pharma case.
There's been no official action in the case since mid-November.
Asked if there were settlement talks, Hughes said, "Not that I know of."
Now, it's not clear where McGraw's office will get the $2.7 million if it does, in fact, lose the Perdue Pharma fight with Medicaid. Medicaid's plan to withhold the money is known formally as a "disallowance."
Hughes said the office does have some money. But, "it wouldn't be enough to cover the disallowance," she said in a telephone interview.