FISCAL NOTE

Date Requested: January 31, 2020
Time Requested: 11:14 AM
Agency: Attorney General, WV
CBD Number: Version: Bill Number: Resolution Number:
2265 Introduced HB4640
CBD Subject: Actions, Suits and Liens


FUND(S):

Special Revenue

Sources of Revenue:

Special Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    HB 4640, if passed, would continually redirect a fixed percentage of settlement funds from the state agencies that use those funds for current and ongoing responsibilities. Settlements affected by this bill typically involve multiple state agencies, including the Department of Health and Human Resources, Department of Military and Protective Services, 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.



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 1,175,000 1,175,000
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 0 0


Explanation of above estimates (including long-range effect):


    The amount above is provided as an illustration of the future impact of HB 4640. 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 settlement (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.
    



Memorandum


    HB 4640, if passed, would reduce available funding for the Consumer Protection Division and the Medicaid Fraud Control Unit. Presently, many settlements of the type identified in the bill are divided among several state agencies, including DHHR and DMAPS. The bill would reduce the amounts to be received by all agencies party to these settlements.
    
    The Consumer Protection Division is operated via the spending authority regarding the Consumer Protection fund, which is where the portion of opioid settlements paid to the Attorney General’s Office are placed. A long-term reduction of settlement amounts attributed to the Consumer Protection fund 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 settlements 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 passed, 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.)
    
    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: Sam Curia
    Email Address: scuria@wvago.gov