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FACING SCRUTINY — West Virginia attorney General Patrick Morrisey gives an update in June on the status of settlement funds from opioid cases. West Virginia Citizens Against Lawsuit Abuse is challenging Morrisey over his office’s use of outside attorneys.

CHARLESTON — A feud between West Virginia’s top attorney and an anti-lawsuit abuse group continues to play out following the awarding of millions of dollars in outside attorney fees for major cases.

In a report set to be released in the coming days, West Virginia Citizens Against Lawsuit Abuse alleges that state attorney General Patrick Morrisey and his office’s use of outside legal counsel on civil cases resulted in those attorneys receiving approximately $55 million from contingency fees from settlements since 2013.

But Morrisey points to reductions in the percentages of recoveries paid to outside attorneys since taking office a decade ago, from a peak of 40% for one case filed by former Democratic attorney General Darrell McGraw to as low as 7% for Morrisey’s lawsuit against Johnson & Johnson, ensuring more settlement dollars are kept by taxpayers.

The feud between WV CALA and Morrisey began after the awarding of approximately $141 million outside counsel could receive following a class action settlement between the attorney General’s Office, cities and counties with eight opioid manufacturers, distributors and pharmacies following approval in October by the state’s Mass Litigation Panel. Of that $141 million, outside attorneys for the attorney General’s Office are set to receive $41 million alone.

Greg Thomas, executive director of WV CALA, said in a statement that these outside counsel contingency fees far exceed the fees outside attorneys received for cases brought by McGraw, who served from 1993 to the end of 2012 after being defeated by Morrisey.

“West Virginia Citizens Against Lawsuit Abuse highlighted the abuses of Darrell McGraw and his outside counsel hiring practices for years,” Thomas said. “There is no way that we could have imagined that the situation would have become worse under Patrick Morrisey, but that is exactly what happened.”

In response, the attorney General’s Office points to record-breaking settlement dollars secured by the state under Morrisey and the work he has done to ensure that more settlement dollars are kept by the state.

“attorney General Patrick Morrisey has negotiated some of the lowest outside counsel fee rates in America and literally went to court to fight against higher rates he inherited from his predecessor,” said John Mangalonzo, press secretary for the attorney General’s Office. “No one has negotiated lower rates and obtained better substantive results.”

SUE AND SETTLE

A review of court cases by WV CALA since 2013 found 31 cases where outside counsel was used by the attorney General’s Office, though eight of those cases were first brought by McGraw and finished under Morrisey.

In cases first brought by Morrisey between 2013 and 2023, the group found that more than $55.7 million had been awarded in attorney fees to outside counsel representing the attorney General’s Office in 12 cases. In another four cases, WV CALA could not identify any attorney fees. Seven other cases had no awards to date.

However, a chart provided by the attorney General’s Office tells a different story. In 11 cases brought by Morrisey using outside counsel, the state received more than $674 million in settlement amounts, with $54.5 million going toward attorney fees. The percentage of recoveries paid to outside attorneys ranged from 14% in the Rite Aid settlement to a low of 7% in the Johnson & Johnson case.

Based on the percentage of recoveries paid to outside attorneys under McGraw – ranging from 21% to as high as 40% – the attorney General’s Office estimated that the same 11 cases filed under Morrisey would have resulted in between $223 million and $269 million in attorney fees based on percentages during the McGraw years.

House Bill 4007, passed in 2016, sets a decreasing percentage scale based on the increasing settlement amount. The scale allows a minimum of 25% in attorney fees for the first $10 million recovered through a settlement and a maximum of 5% in attorney fees for any settlement exceeding $25 million. State Code 5-3-3a also sets a $50 million cap on fees for any matter arising out of a single court case.

“All contingency agreements entered by Morrisey are below the cap of W.Va. Code §5-3-3a, including cases involving (West Virginia) Paving, McKesson, Johnson & Johnson (hips and mesh) and the recently settled opioid litigation, all published on the attorney general’s website,” Mangalonzo said. “In every single case we have ever managed, we have pushed the court to have West Virginia pay the lowest or one of the lowest outside counsel rates in the nation.”

In 12 cases inherited from McGraw after his defeat in 2012, Morrisey was able to secure lower percentages for outside attorney fees, paying $4.4 million in attorney fees out of $17.9 million in settlement awards. Morrisey was able to bring down the average percentage of recoveries paid per case from 33.6% under McGraw to 24.7% for McGraw cases finished by Morrisey. For cases brought by Morrisey, the average percentage was 8.4%.

ON THE RECORD

Thomas and WV CALA also accused Morrisey and the attorney General’s Office of not properly reporting all outside counsel expenditures with the West Virginia Legislature.

State Code 5-3-4(a) – also amended by HB 4007 in 2016 – requires an annual report to be submitted to the governor, the Senate and the House of Delegates by Nov. 1 providing details on pending legal cases brought by the office, including specifics on use of private attorneys. HB 4007 requires competitive bidding for use of outside law firms, which are often required when the attorney General’s Office needs assistance with complex civil lawsuits.

The law requires the attorney General’s Office to list the names of outside counsel, their law firms and the amount of any legal fees paid. WV CALA identified missing legal fee information on past annual reports, as well as missing cases that WV CALA alleges involved the use of outside counsel.

“Despite the fact that the Legislature passed legislation to bring transparency to the practice of hiring outside counsel, Patrick Morrisey’s office has refused to comply with the new law and has remarkably helped pay personal injury law firms hundreds of millions of dollars more than Darrell McGraw ever did,” Thomas said.

HB 4007 first went into effect on May 9, 2016, but according to the WV CALA report, attorney General’s Office’s annual reports for 2016 through 2020 do not identify civil cases where outside counsel was appointed, with the annual reports for 2016 and 2017 only identifying outside counsel used for Division of Corrections and Rehabilitation cases.

However, the attorney General’s Office believes it is in compliance with the law. The office only reports the use of outside counsel in cases in which the attorney general is directly involved. The reporting of use of outside attorneys on behalf of other state departments and agencies is not required, the office maintains. Despite acknowledging one issue, Mangalonzo said the office is in compliance with reporting requirements.

“While the office may have made a clerical oversight, it has disclosed – in compliance with the law – all of its settlements, the firms involved, and all of the fees earned,” Mangalonzo said.

LAW REVIEW

The feud between WV CALA and Morrisey stems from the recent record-breaking nearly $1 billion settlement with major manufacturers and distributors of prescription opioids in West Virginia.

Former Berkeley County Circuit Court Judge Christopher Wilkes – acting as the common benefit fund commissioner – recommended in September that outside counsel receive 15% of the more than $940 million in settlement awards against Johnson & Johnson, Teva, Walgreens, CVS, Kroger, Walmart, Allergan, Rite Aid.

Motley Rice, a national firm specializing in class action lawsuits, and the Webb Law Centre based in Charleston, were the outside counsel used by the attorney General’s Office. The attorney General’s Office negotiated a capped fee rate for outside counsel at 7.8%, but that cap does not apply to the 20 other law firms for the cities and counties, which are set to receive more than $51 million in attorney fees.

“The opioid litigations resulted in the largest per capita settlements against opioid supply chain defendants in the nation,” Mangalonzo said. “And the State’s claims were advanced under a negotiated contract with outside counsel at a rate that saved the taxpayers $10.7 million compared to the contingency fee that was available under W.Va. Code §5-3-3a.”

Outside counsel for the attorney General’s Office stand to earn more than $41 million from the $92 million-plus awarded to the office for attorney fees recommended by Wilkes. This represents “more than 50 times the recovery of other recipients and more than double of all other fund recipients” according to the WV CALA report.

The organization was critical of these attorney fees at the time, accusing Morrisey and his office of not acting more quickly to oppose the contingency recommendations from Wilkes. Morrisey released statements in October opposing the recommendations and filed objections the same day the recommendations were approved by the Mass Litigation Panel.

During the McGraw administration, WV CALA was frequently critical of McGraw’s use of outside law firms, whose attorneys were often campaign donors to McGraw. A 2007 report by WV CALA accused McGraw of cronyism and favoritism, enriching attorneys in exchange for campaign contributions.

While nothing prevents private attorneys representing the attorney General’s Office from donating toward Morrisey, competitive bidding of outside attorney services and the capping of contingency fees were meant to provide a firewall to take much of the politics out of attorney selection. But with Morrisey seeking the Republican nomination for governor and new candidates seeking the office in 2024, WV CALA would like to see lawmakers take another look at contingency fees.

“We urge the members of the West Virginia Legislature to review our report and make another attempt to address this broken system of personal injury law firms using our state attorney General’s Office to make hundreds of millions of dollars,” Thomas said. “While Darrell McGraw and Patrick Morrisey may have gotten away with this abuse, we need to ensure that future attorney generals do not.”

(Adams can be contacted at sadams@newsandsentinel.com)

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