Countering criticism that his office has misspent lawsuit settlement money, Attorney General Darrell McGraw says he has put $2 billion of nontaxpayer money into state coffers during the past 15 years.

The overwhelming majority of that money - 97 percent of the total - went directly to the state Legislature to help balance the state annual budgets, said McGraw.

The $2 billion came from dozens of settlements and verdicts McGraw won from suits filed against companies marketing harmful products and against businesses committing consumer fraud.

Another 2.7 percent of the $2 billion went directly to consumers who were defrauded, while 0.3 percent was spent as designated by court orders, McGraw said.

That final category includes the $10 million settlement McGraw negotiated with Purdue Pharma L.P. for marketing and advertising OxyContin, a highly addictive painkiller sometimes called "hillbilly heroin."

Last month, the West Virginia Chamber of Commerce and the Business and Industrial Council began airing television and radio ads attacking McGraw, accusing him of misspending the $10 million OxyContin settlement.

The television ads "cost in the range of several hundred thousand dollars," according to Chamber President Steve Roberts.

The West Virginia Record, a weekly paper financed by the U.S. Chamber of Commerce, has repeatedly attacked expenditures from the OxyContin settlement.

The lawsuit specifically criticized Purdue's "direct marketing efforts to physicians indicating OxyContin was a first-line treatment for osteo-arthritis for women, even after the Federal Drug Administration warned Purdue it could not promote it as a first-line defense drug," said Managing Deputy Attorney General Fran Hughes.

The settlement was reached on Nov. 4, 2004, during discussions on the McDowell County Courthouse steps, just before a trial was scheduled to begin before Circuit Judge Booker Stephens.

A week before, McGraw's lawyers rejected a Pharma offer to settle the suit for $2 million, said Managing Deputy Attorney General Barbara H. Allen.

During settlement negotiations, Pharma's own lawyers insisted that the settlement money be used in three ways.

"That was their demand as part of the settlement," Hughes said. "They insisted that the money should go to finance community programs to help drug abusers, law enforcement aimed at reducing substance abuse and medical education to further reduce substance abuse."

Pharma hoped to gain some positive public relations coverage for playing an ongoing role funding programs to help addicted individuals, Hughes added.

The overwhelming majority of that money - 97 percent of the total - went directly to the state Legislature to help balance the state annual budgets, said McGraw.

The $2 billion came from dozens of settlements and verdicts McGraw won from suits filed against companies marketing harmful products and against businesses committing consumer fraud.

Another 2.7 percent of the $2 billion went directly to consumers who were defrauded, while 0.3 percent was spent as designated by court orders, McGraw said.

That final category includes the $10 million settlement McGraw negotiated with Purdue Pharma L.P. for marketing and advertising OxyContin, a highly addictive painkiller sometimes called "hillbilly heroin."

Last month, the West Virginia Chamber of Commerce and the Business and Industrial Council began airing television and radio ads attacking McGraw, accusing him of misspending the $10 million OxyContin settlement.

The television ads "cost in the range of several hundred thousand dollars," according to Chamber President Steve Roberts.

The West Virginia Record, a weekly paper financed by the U.S. Chamber of Commerce, has repeatedly attacked expenditures from the OxyContin settlement.

The lawsuit specifically criticized Purdue's "direct marketing efforts to physicians indicating OxyContin was a first-line treatment for osteo-arthritis for women, even after the Federal Drug Administration warned Purdue it could not promote it as a first-line defense drug," said Managing Deputy Attorney General Fran Hughes.

The settlement was reached on Nov. 4, 2004, during discussions on the McDowell County Courthouse steps, just before a trial was scheduled to begin before Circuit Judge Booker Stephens.

A week before, McGraw's lawyers rejected a Pharma offer to settle the suit for $2 million, said Managing Deputy Attorney General Barbara H. Allen.

During settlement negotiations, Pharma's own lawyers insisted that the settlement money be used in three ways.

"That was their demand as part of the settlement," Hughes said. "They insisted that the money should go to finance community programs to help drug abusers, law enforcement aimed at reducing substance abuse and medical education to further reduce substance abuse."

Pharma hoped to gain some positive public relations coverage for playing an ongoing role funding programs to help addicted individuals, Hughes added.

So far, $7.5 million of the $10 million settlement has been spent. One-third of the total went to lawyers hired by McGraw to pursue the lawsuit.

In accordance with the settlement, McGraw's office distributed most of its funds to local and county programs to help substance abusers. Another $500,000 went to the University of Charleston's new pharmacy school.

Steve Cohen, executive director of Citizens Against Lawsuit Abuse, recently told the Record that the $10 million settlement is a "slush fund," specifically citing the donation to the University of Charleston.

Cohen and CALA want McGraw to turn over all the settlement money to the Legislature, including the $7.5 million already spent. The remaining $2.5 million will be spent this year.

But Purdue's settlement specifically stipulates the "funds shall be placed in trust and used by the attorney general in support of the general welfare of the people of West Virginia" for the three purposes cited by Hughes.

According to a list maintained by McGraw, settlement funds have already gone to county commissions and local health-care centers throughout the state, including $46,669 to Health Right Inc. in Charleston.

McGraw and others estimate day-report centers, which are set up to monitor individuals convicted on drug abuse charges, cost county and local officials about $7 a day, less than the $50 a day cost of keeping those same individuals behind bars.

When Barry McCaffrey, a retired U.S. Army general who led the Office of National Drug Control Policy under President Clinton, spoke in Charleston earlier this month to the West Virginia Association of Alcoholism and Drug Abuse Counselors, he praised such local efforts in West Virginia to counter drug addiction.

Calling OxyContin "the new heroin," McCaffrey said, "We want to get people back to their workplaces, back to their families and out of jail."

McGraw's $2 billion in settlements range from a huge settlement with tobacco companies for failing to reveal the harmful impacts of smoking to scores of smaller settlements, often for less than $30,000, to individual consumers defrauded by air-conditioning contractors, used-car dealers, dentists, roofing businesses, driveway pavers, cable television providers among other companies.

Discussing the $2 billion in settlements, McGraw said his office has provided more than $250 million to the governor's Rainy Day Fund, $250,000 to the Department of Health and Human Services, $30 million to the Workers' Compensation Division's "Old Fund" and a $24 million loan to the Physicians Mutual Insurance Co.

The largest amount of all was $807 million that went to help reduce the long-term debt of the West Virginia Teachers Retirement Fund, he said.

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