A nonprofit publication of the Kentucky Center for Public Service Journalism

KY Supreme Court overturns lower court, rules that legislature can reject Attorney General’s contracts

By Tom Latek
Kentucky Today

The Kentucky Supreme Court handed down a unanimous decision Thursday, finding a contingency fee contract the Attorney General’s office signed with an outside law firm to represent the state in lawsuits against opioid manufacturers and distributors is subject to legislative approval. 

Attorney General Andy Beshear issued a Request for Proposals for law firms in September 2017.

After the Attorney General’s office selected Morgan and Morgan from 17 applications, the Finance and Administration Cabinet rejected it, so they and the Attorney General’s office sent contract language revisions back and forth before the Cabinet finally approved the third version in December of that year.

The following month, it was submitted for approval to the General Assembly’s Government Contract Review Committee, who rejected it. 

According to a letter sent by the Legislative Research Commission to Beshear’s office, “The committee is concerned, in consideration of the enormity of the potential financial settlement resulting from litigation, a more favorable contingency fee schedule has not been extended to the Commonwealth and there is no cap on the total amount of fees to be paid to the contractor.”

Kentucky Supreme Court

The letter then explained, “By disapproving this contract, the committee was merely exercising its statutory oversight duties in an attempt to protect taxpayer dollars.” 

The Attorney General’s office then filed suit Franklin Circuit Court, arguing they are exempt from review by the Finance Cabinet and the Contract Review Committee, under state law and the Kentucky Constitution.

Franklin Circuit Judge Phillip Shepherd upheld the attorney general’s right to hire the law firms. He ruled that neither state law nor the Model Procurement Code, “requires the Attorney General to submit and receive outside approval of contingency-fee-based legal services contracts.”

Finance Secretary William Landrum then filed a Notice of Appeal and Motion for Emergency Relief in the Court of Appeals. After the Court of Appeals denied Landrum’s motion, he sought to transfer the case to this Court, which was granted. 

In their 7-0 decision, the Justices found:

• The constitutional authority of the Attorney General to enter into a contingency-fee contract with outside counsel is subject to the overriding authority of the General Assembly.

• The oversight process of the state’s Model Procurement Code applies to the contract at issue.

–The LRC and Secretary Landrum did not arbitrarily reject the contract in violation of Section 2 of the Kentucky Constitution.

The Justices reversed the lower court ruling and sent it back to Franklin Circuit Court with directions to enter judgment in favor of the Finance Cabinet.

In reaction to the High Court ruling, Beshear said, “Matt Bevin just gave the opioid companies one of their biggest wins nationwide. 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. We will seek a rehearing because the stakes are too high.” 

Bevin released a statement following the unanimous ruling.

”The Supreme Court today unanimously held that Andy Beshear broke the law in awarding outrageous, uncapped state legal contracts to his friends and campaign donors,” he said. “As Attorney General, Andy Beshear claimed that he is above the law and attempted to put his campaign donors ahead of the interest of Kentuckians in ongoing cases with opioid manufacturers.” 

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