Bevin administration can reject Andy Beshear’s legal contracts, KY Supreme Court says
Republican Gov. Matt Bevin and the GOP-majority General Assembly had the authority to cancel an employment contract that Democratic Attorney General Andy Beshear awarded to private lawyers to help his office sue the pharmaceutical industry over the opioid epidemic, the Kentucky Supreme Court ruled Thursday.
The decision comes even as some states, like Oklahoma, are racking up record-sized wins against the pharmaceutical industry in court. Other states, including Ohio, are poised to move forward with their addiction-related claims against the industry.
In 2017, Beshear’s office sought to hire outside counsel on a contingency fee basis to help investigate and pursue litigation against drug manufacturers and distributors. A contract ultimately was awarded to the team of Morgan & Morgan; Motley Rice; The Lanier Law Firm; and Ransdell Roach & Royse PLLC. The attorney general currently has nine opioid-related lawsuits pending across the state with the help of those firms.
The Kentucky Finance and Administration Cabinet requested several contract language changes, which Beshear’s office provided, after which the deal was rejected by the legislature’s Government Contract Review Committee. Lawmakers said they wanted “a more favorable contingency fee schedule” and a “cap on the total amount of fees to be paid to the contractor.”
Finance Secretary William Landrum then canceled the contract. Beshear sued to challenge that decision.
Beshear, a frequent critic of Bevin, is the Democratic gubernatorial nominee opposing Bevin’s re-election this November.
“Matt Bevin just gave the opioid companies one of their biggest wins nationwide,” Beshear said Thursday in response to the court decision. “This decision has devastating impacts on our cases against companies that have ravaged our state and will cost taxpayers millions. Bevin took these actions to prevent the attorney general from holding these companies responsible for the death and addiction they have fueled.”
Beshear said he would seek a rehearing before the Supreme Court “because the stakes are too high.”
In his own response, Bevin blasted Beshear for taking campaign contributions from lawyers at Morgan & Morgan, and he said the attorney general’s office did not award the contract properly.
“The Supreme Court of Kentucky today unanimously held that Andy Beshear broke the law in awarding outrageous, uncapped state legal contracts to his friends and campaign donors,” Bevin wrote on Twitter.
“If allowed to continue, that practice could take millions of dollars away from Kentuckians who need it most and put it in the pockets of Andy’s largest campaign contributors,” Bevin wrote. “If Andy Beshear feels that he and his office are not competent to fight against the opioid manufacturers, he can still hire outside counsel, but he must do it legally.”
Under the terms of their contract with the attorney general, the private law firms would receive 20 percent of the sum recovered from defendants up to the first $10 million; 15 percent between $10 and $15 million; 10 percent between $15 and $20 million; and 5 percent for awards above $20 million, plus all relevant costs and expenses.
Last year, Franklin Circuit Judge Phillip Shepherd ruled that Beshear could hire outside attorneys without approval from the Bevin administration. Shepherd wrote that Bevin’s power to implement executive authority “does not authorize him to micro-manage or dictate legal strategy and tactics to the state’s independently-elected chief lawyer who represents all citizens.”
The Supreme Court on Thursday reversed Shepherd.
In a majority decision written by Chief Justice John Minton Jr. of Bowling Green, the high court said Beshear “is subject to the contracting-oversight requirements of the model procurement code, and that the committee and (Finance Cabinet) Secretary Landrum did not act inappropriately by disapproving and ultimately canceling the contract.”
“Simply put, the committee and Secretary Landrum considered relevant factors and decided to cancel the contract based on those factors, making it impossible for a reviewing court to say that the decision to cancel was a ‘clear error of judgment,’” Minton wrote. “We find that the committee and Secretary Landrum did not act arbitrarily in deciding to cancel the contract between the (attorney general’s office) and the Morgan & Morgan team.”
In a separate concurring opinion, Justice Michelle Keller of Covington said she agreed the attorney general’s legal contracts must be approved alongside other state contracts under the model procurement code rules. But Keller said she was troubled by the prospect of an attorney general having to deal with complicated litigation with his limited office staff because future contracts would not be approved.
“This is especially true in highly complex matters of public importance, like the litigation against the opioid manufacturers,” Keller wrote.
“My concern is that the secretary or a similarly-situated official, emboldened by the narrow standard of review recited above and practically unfettered discretion afforded to his position, could reject or cancel a similar carefully drafted contingency-fee contract for outside counsel having considered nothing more than this court’s own statement that ‘time and again, the (attorney general) has proven itself capable of handling complex legal matters using the resources the commonwealth provides it,’” she wrote.
This story was originally published August 29, 2019 at 11:15 AM.