A controversy continues to simmer between Attorney General Darrell McGraw's office and the state Chamber of Commerce and Business and Industry Council.

The two business organizations have been airing radio and television advertisements criticizing McGraw for spending a $10 million legal settlement with Purdue Pharma L.P. without consulting the Legislature first.

That lawsuit, settled just prior to going to trial before McDowell County Circuit Judge Booker Stephens, focused on the addictive nature of OxyContin, a potent narcotic medication.

The advertisements criticizing McGraw have cost the two business groups several hundred thousand dollars.

The Business and Industry Council referred all questions about the advertisements to Steve Roberts, Chamber president.

Roberts said the Chamber and BIC bought radio advertising in mid-January that cost between $14,000 and $15,000. The "second buy" of TV ads that have been aired recently, Roberts said, "cost in the range of several hundred thousand dollars."

Roberts added, "We think we have been successful in causing the Legislature to take a harder look at all of this. We think public scrutiny is a good thing."

Managing Deputy Attorney General Fran Hughes said business groups often deduct the costs of such advertising campaigns when reporting their federal income taxes if those costs can be classified as "business expenses" under the federal Tariff Act passed in 1913.

Section 501(c)(6) of the Internal Revenue Code, created by that law, states chambers of commerce and business leagues may "work for the enactment of laws to advance the common business interests of the organization's members."

But such expenses are not tax-deductible if they are specifically designed to help or hinder the election of any candidate for public office. "Businesses donating to these campaigns do not have to identify themselves," Hughes added.

Roberts said members who fund the Chamber of Commerce cannot deduct any money they give that "is directly associated with lobbying."

"We already have one legal opinion that this [Purdue settlement advertising campaign] does not fall into the category of direct lobbying because it does not address a specific piece of legislation. It urged the Legislature to exercise some additional oversight on the spending of the attorney general."

Roberts said the Chamber will take another look to make sure expenses on those radio and television advertisements comply with Internal Revenue Service guidelines about what expenses can be deducted from contributions made by its members.

The two business organizations have been airing radio and television advertisements criticizing McGraw for spending a $10 million legal settlement with Purdue Pharma L.P. without consulting the Legislature first.

That lawsuit, settled just prior to going to trial before McDowell County Circuit Judge Booker Stephens, focused on the addictive nature of OxyContin, a potent narcotic medication.

The advertisements criticizing McGraw have cost the two business groups several hundred thousand dollars.

The Business and Industry Council referred all questions about the advertisements to Steve Roberts, Chamber president.

Roberts said the Chamber and BIC bought radio advertising in mid-January that cost between $14,000 and $15,000. The "second buy" of TV ads that have been aired recently, Roberts said, "cost in the range of several hundred thousand dollars."

Roberts added, "We think we have been successful in causing the Legislature to take a harder look at all of this. We think public scrutiny is a good thing."

Managing Deputy Attorney General Fran Hughes said business groups often deduct the costs of such advertising campaigns when reporting their federal income taxes if those costs can be classified as "business expenses" under the federal Tariff Act passed in 1913.

Section 501(c)(6) of the Internal Revenue Code, created by that law, states chambers of commerce and business leagues may "work for the enactment of laws to advance the common business interests of the organization's members."

But such expenses are not tax-deductible if they are specifically designed to help or hinder the election of any candidate for public office. "Businesses donating to these campaigns do not have to identify themselves," Hughes added.

Roberts said members who fund the Chamber of Commerce cannot deduct any money they give that "is directly associated with lobbying."

"We already have one legal opinion that this [Purdue settlement advertising campaign] does not fall into the category of direct lobbying because it does not address a specific piece of legislation. It urged the Legislature to exercise some additional oversight on the spending of the attorney general."

Roberts said the Chamber will take another look to make sure expenses on those radio and television advertisements comply with Internal Revenue Service guidelines about what expenses can be deducted from contributions made by its members.

Citizens Against Law Abuse of Southern West Virginia Inc. and its affiliates around the country can also deduct donations they receive for ads and publications criticizing the current legal system, Hughes said.

In its articles of incorporation filed with the secretary of state's office in July 1994, CALA states it was organized "to promote greater efficiency, fairness and predictability in the civil justice system."

Those articles also state CALA "shall be operated exclusively for purposes" defined in Section 501(c)(6) of the IRS Code.

Today, CALA regularly publishes a newsletter that criticizes lawsuits that injured plaintiffs file against companies, physicians or other business entities.

A telephone call to CALA on Friday was not returned.

In recent years, McGraw said, his office has recovered $2 billion in past and future payments from various lawsuits representing consumers.

Settlements include the tobacco settlement, part of a national settlement agreement, that brought hundreds of millions of dollars into the state.

The Purdue Pharma settlement was handled differently, Hughes said, under the agreement reached between Purdue and McGraw's office about the $10 million deal.

Between fiscal 2005 and fiscal 2007, $3.8 million of the Perdue settlement went primarily to fund drug rehabilitation centers across the state, as well as day-reporting centers to counsel people convicted of drug-related crimes and released on probation, saving the state prison system millions of dollars.

Private lawyers representing the state have received $3.7 million of the settlement, most of it during fiscal 2005.

The last $2.5 million in the $10 million settlement will be spent in fiscal 2008, according to statistics provided by McGraw.

McGraw's office also donated $500,000 to the new pharmacy school at the University of Charleston.

To contact staff writer Paul J. Nyden, use e-mail or call 348-5164.