http://online.wsj.com/article/SB10001424052748704471504574443331780127384.html

From the Wall Street Journal…

In case anyone thought pay-to-play legal rackets were solely Democratic scandals, look to South Carolina, where Attorney General Henry McMaster is proving that Republicans can also get cozy with the plaintiffs bar.

Mr. McMaster, first elected in 2002 and now (surprise!) running for governor, sued Eli Lilly in 2007 to recover state money used to treat medical problems that he claims were caused by the antipsychotic drug Zyprexa. The suit is one of a new wave of Medicaid-related lawsuits, in which states target pharmaceutical companies to fill their health-budget holes.

More interesting than the suit’s dubious merits are Lilly’s recent court filings about the AG’s ties to trial lawyers. Mr. McMaster in 2006 chose three private lawyers—John S. Simmons, John Belton White, Jr., and F. Kenneth Bailey, Jr.—to prosecute Lilly on behalf of the state. The no-bid contingency contract—which Mr. McMaster refused to produce to Lilly for nearly a year—gives the private lawyers a sliding-scale cut of any judgment or settlement, a jackpot potentially worth tens of millions of dollars.

About a month after filing the case in 2007, according to the Lilly documents, Mr. Simmons’s law firm had turned around to contribute the maximum amount allowable ($3,500) under state law to Mr. McMaster’s re-election. Mr. White’s law firm contributed the same amount on the same day, and Mr. White later added a personal maximum donation. All told, the law firms, their lawyers and spouses have contributed more than $60,000 to Mr. McMaster since 2006. The AG can transfer this money to his gubernatorial account.

This sweetheart deal is rife with conflict of interest, and Lilly’s filing also lays out the legal and constitutional problems. Consider due process. Both the U.S. and South Carolina constitutions make clear that the state and its lawyers must be guided by justice and the public interest, not monetary gain. South Carolinians would be outraged if Mr. McMaster won a personal financial cut of any case he won as Attorney General. How is it better that his lawyers get it instead?

AGs dodge this complaint by claiming ultimate “control” over their special litigators. But as of August, Lilly could find no evidence “that either the Attorney General or anyone from his office has signed any motion, agreement, or discovery response since the filing of the Complaint.” Lilly was also unaware of the AG or anyone from his office “making an appearance on behalf the State at any of the numerous hearings and depositions.” As for the chestnut that the state lacks the manpower to litigate these cases, Lilly notes that as of 2008 Mr. McMaster ran an office with 207 employees, including 71 lawyers. Only five law firms in the state employ more attorneys.

In 1991, South Carolina passed a law specifically prohibiting individuals with no-bid state contracts from donating to officials in a position to act on those contracts. Mr. McMaster claims the law doesn’t apply to lawyers, despite clear language (“any person”) to the contrary. The judge in the case this month denied Lilly’s request to disqualify the private lawyers, so Mr. McMaster is claiming victory and refusing to return the money.

He might want to rethink. Lilly is appealing, and the State Ethics Commission says it has jurisdiction. “McMaster should probably start tallying up that kind of money and see how he’s going to give it all back,” says Cathy Hazelwood, the commission’s deputy director and general counsel.

Whatever the outcome, Lilly has done a public service by challenging the shady financial arrangements at the root of these suits. As for Mr. McMaster, voters should consider what his pay-to-play schemes reveal about his political ethics.