Idaho health department wants state’s attorney general to pay $119K in legal bills

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Earlier this year, top staffers for the Idaho Department of Health and Welfare hired outside lawyers to sue Idaho Attorney General Raúl Labrador.

They sought to stop his wide-reaching civil subpoenas for information about how a scrutinized child grant program was run. 

Now that those orders for information — formally called civil investigative demands — are off the table, the Idaho health department officials want the Idaho Attorney General’s Office to pay $119,000 in legal bills they racked up fighting the demands.

Labrador, by Idaho law, is required to represent the state health department and other state agencies. But since the former congressman took over as the state’s top attorney in January, he has engaged in high profile legal clashes with some of the state’s largest agencies — including the state health department in this case and the State Board of Education, which his office sued alleging open meeting law violations with the University of Idaho’s attempted acquisition of University of Phoenix.

State health department officials “were required to hire counsel as a direct result of Attorney General Labrador’s conflict of interest,” according to a Tuesday court filing outlining the request for attorney fees.

The lawsuit, and a similar one filed by an ex-department official who worked on the grant program, were recently dismissed. That’s after special prosecutor Christopher Boyd withdrew the demands. 

How we got here: Civil subpoenas are withdrawn. But the investigation is ongoing.

An audit that found flaws in how the Department of Health and Welfare administered the grants answered questions that the demands sought to answer, Boyd told lawyers in a letter for the ex-department official. He said the demands were no longer needed. But the investigation is still ongoing, he wrote in the letter. He said he’d look to appoint a special inquiry judge on the case.

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Boyd’s letter to the ex-official’s attorney was posted in publicly available court filings. But his letter to Department of Health and Welfare officials has not been published. Agency spokesperson Greg Stahl declined to share a copy with the Idaho Capital Sun, citing attorney-client privilege. The letter will not become public, Stahl said.

Boyd was appointed as special prosecutor in the case in August, after a judge barred Labrador from pursuing the civil investigative demands. The judge’s order said Labrador had a conflict of interest on the case, citing previous legal guidance from the Attorney General’s Office to the Department of Health and Welfare in late 2022 and early 2023 that said the agency’s distribution of grant funds was legally sound. 

But the Attorney General’s Office withdrew those opinions in March, saying that they were legally inaccurate.

The author of those opinions, a since-fired deputy attorney general, disagreed that they were inaccurate but withdrew the opinions. That attorney recently sued the Idaho Attorney General’s Office for retaliation.

The Idaho Attorney General’s Office, in a statement through spokesperson Dan Estes, pushed back on the request for attorney fees. The statement said the lawsuit was dismissed without a party named as winning the case and that Boyd waived the demands “to proceed with a civil and criminal investigation pursuant to the findings of the legislative audit.” 

“The Department of Health and Welfare spent millions of taxpayer dollars in ways not permitted by the law,” the AG’s office said in a statement. “It is unfortunate that they continue to waste taxpayer resources and refuse to take responsibility for their actions.”

Trudy Hanson Fouser, a Boise attorney representing the Idaho Department of Health and Welfare officials in their suit against Labrador, is also representing the Idaho State Board of Education in another inter-agency legal battle. Labrador sued the State Board of Education earlier this year, alleging that the board violated Open Meetings Law in approving University of Idaho’s planned acquisition of University of Phoenix. 

Hanson Fouser had tallied $81,000 in legal bills in that case, where both sides are arguing about who pays the bill, Idaho Education News reported.

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What are the grants under investigation?

Labrador is investigating tens of millions in child care grants distributed by the Idaho Department of Health and Welfare. The Idaho Legislature appropriated $36 million to Health and Welfare in both 2021 and 2022 through legislation that directed the funds be used for community partner grants that address the pandemic’s impacts on school-aged children, including learning loss.

The bills specified that the grants should be used for school-aged children 5-13 years old, “as allowable by federal guidance.” The bills, setting caps on how much organizations could receive, required funds be used for in-person activities only and “for providing behavioral health supports to address student needs.”

An audit released this year found that a lack of internal controls in how the Idaho Department of Health and Welfare administered the federal child care grant funds that the audit said led to money being spent on ineligible purposes and ineligible groups. The Department of Health and Welfare disagreed with all of the audit’s findings. 

The department earlier this month refused to submit a corrective action plan in response to the audit. Rep. Wendy Horman, co-chair of the Legislature’s powerful budget committee, told lawmakers recently that the department’s response “calls into question our ability to authorize funds for the agency.”

The civil investigative demands, served to top agency officials, asked for records on the program and information about former and current state health department employees that worked on the program, including about charitable organizations they work for, volunteer for or donate to.

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