Five months lapsed between two contracts that the state attorney general’s office signed with a Houston law firm that’s suing a pharmaceutical company on behalf of New Mexico. During that time, no contract was in effect, but the law firm continued to work.
That raises questions about whether the legal work Bailey Perrin Bailey did during that time could be challenged and whether the firm can be paid for that work.
There’s also a question about why the gap exists. While the AG’s office says it was merely an oversight, the Wall Street Journal, which has already hit Attorney General Gary King and others it claims have engaged in a “pay-to-sue” scheme against Janssen Pharmaceuticals, suggests there might be an ulterior motive.
In the lawsuit, the state accuses Janssen of harming state Medicaid patients by failing to disclose side effects of an anti-anxiety drug, and of overcharging the state by failing to present cheaper alternatives. The first contract between the state and Bailey Perrin Bailey expired on June 30 of last year. But the second contract didn’t take effect until late November 2008, so there was a five-month period in which the law firm represented the state without a contract. (Click here to read both contracts.)
In an e-mail exchange with NMI conducted late last week, AG spokesman Phil Sisneros called that “an oversight for which we do take responsibility.” He said the office is taking steps “to prevent it from happening again.”
An ulterior motive?
But the Wall Street Journal, in an editorial published today, suggested other motives. It pointed out a provision in the state procurement code that requires companies signing sole-source contracts with the state to disclose any contributions over $250 made to the relevant public official in the two years prior to signing the contract.
Had the second contract taken effect immediately upon expiration of the first, less than two years would have passed since what was then called the Williams Bailey law firm gave $25,000 to King on Sept. 27, 2006, and another $25,000 to King on Oct. 18, 2006.
But the signing of the contract in November 2008 came slightly more than two years after those contributions.
“It’s possible that the lapsed contract was an innocent mistake that happened to go unnoticed until late November of 2008. Then again, it’s also possible that Mr. King didn’t want to renew the contract earlier because Bailey Perrin might have been required to disclose Mr. Bailey’s generous campaign contributions to Mr. King back in 2006,” the Journal editorial states. “… We can see how Mr. King would prefer to have that law firm-contractor gift kept under wraps.”
Contrary to the Journal’s assertion, Sisneros said Bailey Perrin Bailey wouldn’t have been required to disclose the contributions under the provision in the procurement code regardless of when the new contract was signed because “it was a different law firm (Williams Bailey) that made the contributions.”
While Sisneros said such a technicality may be “hairsplitting,” he pointed out that King disclosed the contributions on his campaign finance forms, as required by law, in 2006.
“… (S)ince Mr. King made full disclosure, clearly there was no attempt on his part to conceal the contributions,” Sisneros wrote in the e-mail.
A copy of the disclosure form Bailey Perrin Bailey filed in November 2008 reveals that, as expected, it did not disclose any contributions to King.
What effect will the gap have?
Will the gap have any practical effect on the lawsuit? Don’t companies doing business with the state need a contract before they can legally work? According to the Journal, the lawsuit and summons were served on Janssen by the law firm during the gap, when it had no contract to work on behalf of the state.
Asked if there might be a legal problem with work that was done in the gap, Sisneros said the law firm was still the state’s council of record in the case and was thus obligated to represent the state even during that time. He pointed out that the law firm only gets paid if it wins the case for the state.
“There could conceivably be some question as to whether payment for that work is covered under the contract, but we won’t know for sure until completion of the case,” Sisneros wrote. “…that is assuming we win; if not, it is moot.”
The Journal, in today’s editorial, states that King told the newspaper he “isn’t concerned about the contract gap,” but if King elaborated, the Journal didn’t include it.
The newspaper did express its own skepticism:
“We’ll have to see what Janssen’s lawyers make of it,” the editorial states.
The history of the ‘pay-to-sue’ allegation
In its “pay-to-sue” allegation, the Journal accuses lawyer F. Kenneth Bailey of taking a “pre-packaged lawsuit” against Janssen to a number of states and convincing their AGs to get involved by giving them big campaign contributions.
King says the allegation is false. His predecessor Patricia Madrid, following a competitive bidding process, entered into the first contract with the law firm in 2006, and, he says, for continuity he issued a new, sole-source contract in 2008 without seeking bids. He says the contributions aren’t related.
King says the business-friendly newspaper is part of the latest assault by the U.S. Chamber of Commerce and drug companies that are trying to stop “activist attorneys general” from taking on big business. In 2006, King said, the groups funneled $650,000 to his opponent through the Republican Leadership Council.