Health: DuPont Fined for Teflon

Rhode Island Rhapsody

August 16, 2006

When a state sues an industry — think tobacco — any settlement money typically goes directly to that state. But when Rhode Island dropped the DuPont Corporation from a lead paint lawsuit last year, after the defendant agreed to donate $12 million to charity, most of the money ended up at organizations based in Washington, D.C., and Boston. Which is why Rhode Island Attorney General Patrick Lynch has some explaining to do.

Rhode Island’s “public nuisance” lawsuit against DuPont and several other former lead paint companies predates General Lynch, but the decisions to continue the litigation and settle were entirely his call. When Mr. Lynch announced the agreement just over a year ago, he said “this money will go straight to cleaning up this mess,” so that “the children of Rhode Island — particularly those in the inner-cities — are protected from the hazards of lead poisoning.” But it turns out Mr. Lynch also had other uses for the money.

The Associated Press reports that Mr. Lynch accepted campaign contributions from DuPont’s chief negotiator in the settlement “at the same time the deal was being discussed.” Moreover, most of the money — $9 million — is going to the Children’s Health Forum, a Washington, D.C., nonprofit that has agreed to dole it out to groups back in Rhode Island for lead paint clean-up.

Why not cut out this middleman? Well, perhaps because the Children’s Health Fund was incorporated as a lobbying group three years ago and received nearly all of its seed money from DuPont. “When the state’s deal with DuPont was struck,” reports AP, “four of the Children’s Health Forum’s five board members had current or previous business ties to the company.” If DuPont’s trangressions are as dastardly as Mr. Lynch claims, it’s strange he’s allowing a DuPont-backed nonprofit to oversee millions in spending to combat lead poisoning.

Some $2.5 million is going to the Brigham and Women’s Hospital, another curious choice because that Massachusetts medical center has no lead-poisoning prevention program to speak of. What the Boston hospital does have is a program devoted to mesothelioma, an asbestos-related cancer. The connection here is that Mr. Lynch had hired the private law firm of Motley Rice to try the Rhode Island lead paint case on a contingency-fee basis. Motley Rice happens to represent patients against asbestos manufacturers and had earlier pledged $3 million to the Brigham and Women’s meso clinic. In other words, Mr. Lynch agreed to allow money from DuPont that would otherwise go to lead-paint cleanup in Rhode Island to be used instead by a private law firm to fulfill its pledge to an out-of-state institution.

State AGs regularly hire outside counsel for help in prosecuting cases, but these outside attorneys are typically paid by the hour. By contrast, contingency-fee deals introduce a profit motive that has no place in state-sponsored litigation. Mr. Lynch didn’t originate this practice, which has become increasingly common. Writing in Legal Times last month, former Virginia AG Jerry Kilgore notes that the trend emerged in the mid-1990s with lawsuits against Big Tobacco.

“The settlements that resulted from state tobacco litigation generated hundreds of millions in fees for the private lawyers involved,” writes Mr. Kilgore. “It also pioneered a new model for state-sponsored litigation that combines the prosecutorial power of the government with private lawyers aggressively pursuing litigation that has the potential to generate hundreds of millions — or billions — of dollars in contingent fees.”

Contingency deals also raise the question of whether prosecutors are rewarding campaign donors with lucrative business. In 2001, West Virginia Attorney General Darrell McGraw used four outside law firms — three based outside of the state — to sue Purdue Pharmaceuticals, the maker of OxyContin. The lawsuit was brought on behalf of the state’s workers’ compensation fund and other state agencies. But when Purdue settled the case for $10 million, a third of the money went to the lawyers instead of the state. The one in-state law firm used by Mr. McGraw turned out to be a major contributor to his re-election campaign.

Later this month, the Rhode Island Ethics Commission will hold a hearing to determine whether to launch a full investigation into the deal, and a thorough vetting of Mr. Lynch’s motives seems appropriate. It would also help policy makers decide if they want to follow other states, such as Louisiana, that have banned or limited contingency-fee arrangements with the AG’s office. At the very least, Mr. Lynch might explain how sending millions of dollars to Boston helps children in Providence.
Read

December 14, 2005
By Elizabeth Weise, USA TODAY

DuPont (DD) has agreed to pay $10.25 million in fines and $6.25 million more for environmental research and education to resolve federal charges that it hid information about the dangers posed by a chemical used to make Teflon and other products.

The settlement is the largest civil administrative penalty the Environmental Protection Agency has ever levied under any federal environmental statue.

Perfluorooctanoic acid, or PFOA, is used to make fluoropolymers, a class of non-stick and stain-resistant materials. A science advisory board convened earlier this year by the EPA found it to be a likely carcinogen.

“This settlement sends a strong message that companies are responsible for promptly informing EPA about risk information associated with their chemicals,” said Granta Nakayama of the Office of Enforcement and Compliance Assurance.

It also allows the company to put the matter behind it and move forward, said DuPont general counsel Stacey Mobley. “We have already cut PFOA emissions from U.S. plant sites by 98%, and we are committed to reducing those emissions by 99% by 2007.”

The settlement amount under federal law could have gone as high as $300 million. While $300 million would have meant something to DuPont, “$16 million is really just a rounding error,” to the chemical giant, said Frank Mitsch, a senior chemical analyst with Fulcrum Global Partners in New York.

DuPont stock closed down 10 cents a share, at $43.18. “Obviously the stock’s not reacting to it one way or the other, so that gives you an idea of what the Street thinks about it,” Mitsch said.

DuPont’s violations were “multiple failures to report information to EPA about substantial risk of injury to human health or the environment that DuPont obtained about PFOA,” said the EPA release, including:

• Withholding 2001 test results that showed levels of PFOA in the blood of people living near DuPont’s Washington Works facility in West Virginia.

• Failing to report a 1997 test on the risk of inhaling PFOA that killed all the rats tested.

• Withholding information from 1991 about the contamination of public drinking-water supplies near the West Virginia plant.

• Withholding 1981 findings that at least one pregnant worker at that plant passed PFOA to her fetus.

The $6.25 million for Supplemental Environmental Projects will go toward investigating the potential of nine of its fluorotelomer-based products to break down into PFOA.

DuPont will also fund a science curriculum in West Virginia schools designed to reduce risks posed by chemicals in schools and further long-term goals of safe science through “green” chemistry.