FISCAL NOTE
Date Requested: February 12, 2020
Time Requested: 10:25 AM |
| Agency: |
Attorney General, WV |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3252 |
Originating |
HB4418 |
|
|---|
| CBD Subject: |
|
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FUND(S):
Special Revenue
Sources of Revenue:
Special Fund
Legislation creates:
Decreases Existing Revenue, Creates New Expense
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
HB 4418, if passed, would continually redirect all settlement funds paid by multiple categories of businesses away from state agencies that use those funds for current and ongoing responsibilities. Settlements affected by this bill could involve multiple state agencies, including the Department of Health and Human Resources, Department of Military Affairs and Public Safety, and Attorney General’s Office. Regarding the Attorney General’s Office, this would result in reduced available operational funds for Consumer Protection Division and the Medicaid Fraud Control Unit. (Also, this would be inconsistent with certain federal law requirements relative to the Medicaid Fraud Control Unit.)
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2020
Increase/Decrease
(use"-") |
2021
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
4,700,000 |
4,700,000 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-4,700,000 |
-4,700,000 |
Explanation of above estimates (including long-range effect):
The amount above is provided as an illustration of the potential future impact of HB 4418. It is certain that this bill will reduce the amounts from opioid settlements available to the Consumer Protection Division, as well as other state agencies. However, accurate numerical estimates of the bill's specific impact cannot be provided due to the unknown nature of future settlements. It is impossible to predict the size, scope, or frequency of future settlements (or their respective payment structures) or the balance of the Consumer Protection Division fund and the Medicaid Fraud Control fund at any point in the future. However, this bill would assuredly restrict the potential future amounts to be added to the Consumer Protection Division fund and the Medicaid Fraud Control fund, which are the special revenue funds used to pay for those divisions. The amounts are derived from the funding necessary to run the Consumer Protection Division and the Medicaid Fraud Control Unit.
Memorandum
HB 4418, if passed, would reduce available funding for the Consumer Protection Division and the Medicaid Fraud Control Unit. To the extent that settlements are divided among several state agencies, the bill would reduce the amounts to be received by all agencies party to these settlements.
The Consumer Protection Division is operated via spending authority regarding the Consumer Protection fund, which is where the portion of settlements involving drug manufacturers, drug distributors, and pharmacies and paid to the Attorney General’s Office are placed. A long-term reduction of settlement amounts attributed to the Consumer Protection fund, as required by HB 4418, could result in a lessening of that fund to the point that appropriations of new dollars from the Legislature could become a necessity. (Currently, the Consumer Protection Division is fully-funded from the amounts from settlements that are placed in the Consumer Protection fund.)
Also, the scope of settlements described in the bill would include settlement amounts received by the Medicaid Fraud Control Unit. This could create a similar funding gap for the Medicaid Fraud Control Unit as with the Consumer Protection Division. Specifically, this could result in long-term unavailability of the required state matching funds (per the federal grant). The Medicaid Fraud Control Unit receives spending authority regarding the Medicaid Fraud Control fund, which contains settlement funds obtained by the Unit. This spending authority represents the state matching share (25%) of the Medicaid Fraud Control Unit's budget as required by the federal grant that provides the vast majority of the Unit's funding (75%). The Medicaid Fraud Control Unit, if this bill passes, would see its state funding source reduced. (This would also result in one or more violations of requirements under federal law regarding reimbursements to the federal government.)
Providing specific numerical estimates of the bill's impact is impossible due to the language of the bill. It is impossible to predict the size, scope, or frequency of future settlements (or their respective payment structures) or the fund balance at any point in the future. The only certainty is that all settlement funds originating from a drug manufacturer, drug distributor, or pharmacy, including the portions of such settlements typically attributed to other state agencies such as DHHR and DMAPS, would be redirected away from these agencies and the Attorney General’s Office. This is equally true for settlement amounts received by the Medicaid Fraud Control Unit.
Finally, the restriction on settlements inconsistent with the bill’s requirements could cost the state millions of dollars in the long term. The dynamics of future litigation and settlement efforts for any agency are unknown, but it is not difficult to foresee occasions where a court could order or an opposing party could require particular uses of settlement proceeds as part of a settlement. More specifically, settlements may be directed by bankruptcy judges, judges overseeing mass litigation panels, and nationwide settlements. Restrictions mandating how settlement proceeds are used may prevent West Virginia from receiving money to which it would otherwise be entitled, thereby preventing a full and fair settlement.
Person submitting Fiscal Note: Curtis R. A. Capehart
Email Address: curtis.r.a.capehart@wvago.gov