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Wisconsin cases worth millions in limbo due to lame-duck law

August 28, 2019

MADISON, Wis. (AP) — More than 15 lawsuits that could net the state millions of dollars are in limbo thanks to a dispute between Democratic Attorney General Josh Kaul and Republicans who passed a lame-duck law giving them final say over settlements.

State Department of Justice officials on Wednesday released two multi-page memos they sent to the Legislature’s finance committee on July 19 and Aug. 19 warning that they’ve put off resolving at least 16 cases because of the impasse.

The July 19 memo mentions 11 cases. One involves the University of Wisconsin System Board of Regents’ lawsuit against former UW-Oshkosh officials Richard Wells and Tom Sonnleitner. They’re accused of illegally funneling $11 million to the UW-Oshkosh Foundation to help it execute building projects and illegally promising to back the foundation’s loans. The foundation ultimately defaulted on the loans and filed for bankruptcy.

“The parties have worked for some time to negotiate the resolution of this matter,” the Justice Department memo said. “They are now waiting on this Committee’s approval before finalizing an agreement.”

In another case, the state Department of Employee Trust Funds is suing Vitech Systems Group for failing to complete a new software system to track state workers’ retirement benefits. The ETF has sued Vitech and the company has filed a counter-claim for $14.3 million that it says the state still owes it. The Justice Department memo warns that another company has purchased Vitech, which may create a “limited time window for settlement.”

A third case involves the state’s efforts to recover as much as $8 million from a dental provider accused of overbilling Medicaid.

Another involves the state’s lawsuit against a Waupaca sewer service accused of dumping sewage on hay crops. The business could face tens of thousands of dollars in forfeitures. The memo warns that a trial has been scheduled for mid-September in that case.

The Aug. 19 memo lists five cases. Four involve people seeking reductions in what the state can take from their awards in injury lawsuits to repay Medicaid for their treatment.

The fifth case is a federal lawsuit in which the state and federal government are seeking to force Superior Refining Company LLC to mitigate the harm from emissions that resulted from an April 2018 explosion at the company’s Superior refinery. The memo noted that the state wouldn’t win any money if it prevails.

Also in play is a lawsuit that Kaul filed in May in state court against Oxycontin maker Purdue Pharma alleging that the company intentionally downplayed the opioid pain medication’s addiction risks.

Thousands of state and local governments have filed similar lawsuits against the drugmaker. The Justice Department’s July memo doesn’t mention the case, but NBC News reported Tuesday that Purdue Pharma was negotiating a $10 billion to $12 billion umbrella settlement with state and local governments.

Republicans passed a law during a December lame-duck session that requires Kaul to get permission from the Republican-controlled finance committee before the state can settle any lawsuits. Documents that the committee and Justice Department released this week show they’ve been trying to figure out how to approach such discussions.

Kaul wants committee members to sign non-disclosure agreements before he’ll talk to them about cases, citing the often-sensitive nature of settlements. Republicans have refused to sign any agreements, saying that they can meet in closed session and that Kaul shares information with Democratic Gov. Tony Evers without confidentiality agreements.

Republican lawmakers sued Kaul this month, alleging that he’s not complying with the law. In a surprise move, Kaul asked the committee to meet Tuesday to discuss settling an unknown case.

The committee met with him in a closed session. Republicans said during a subsequent open session that Kaul wouldn’t tell them anything about the case without a confidentiality agreement, so they adjourned.

The Justice Department hasn’t offered any information about the case, but Kaul’s urgent request for a committee meeting suggests he’s looking for approval on the Purdue Pharma settlement.

Aides for state Rep. John Nygren and Sen. Alberta Darling, the finance committee co-chairs, didn’t immediately respond to emails Wednesday.

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Follow Todd Richmond on Twitter: https://twitter.com/trichmond1

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