WASHINGTON — The District of Columbia's attorney general wants a federal judge to decide whether federal prosecutors can examine documents relating to a $7.5 million settlement between the district and its former Medicaid contractor, but prosecutors continued to press the city to hand over the material without conditions.
Thursday's offer from Attorney General Irvin Nathan came a day after U.S. Attorney Ronald Machen took the rare step of publicly criticizing Nathan for refusing to turn over the documents. Nathan claims they are protected by attorney-client privilege and that they contain nothing incriminating.
Federal prosecutors are looking into the settlement as part of their wide-ranging investigation of corruption in city politics. The district's former Medicaid contractor, Jeffrey Thompson, is the subject of a grand jury investigation, according to court documents.
Thompson, who has not been charged with a crime, is suspected of funneling $653,000 in illicit funds into Mayor Vincent Gray's 2010 campaign. While he is not named in court documents as the suspected source of the funds, he has been identified in open court and by attorneys for his associates. Several of his associates have pleaded guilty to felonies — some for their involvement in what prosecutors called the "shadow campaign" for Gray; others for making straw contributions on Thompson's behalf to candidates for local and federal office.
In April 2011, less than four months after Gray took office, Thompson informed the city's Department of Health Care Finance that his firm had not been adequately reimbursed for the rates it was paying to children's dental providers. The department reviewed the claim and determined that the rates were too high, director Wayne Turnage said. Thompson agreed to settle for $7.5 million and drop a pending lawsuit.
Nathan, who was appointed by Gray, said in a letter to Machen that his office has already produced nearly 20,000 documents related to the federal investigation of Gray's 2010 campaign. He said there was no wrongdoing in the settlement with Thompson's now-defunct firm, D.C. Chartered Health Plan, and that the documents Machen is seeking are routine communications that are protected by attorney-client and other legal privileges.
Nathan said he would voluntarily release the documents if prosecutors can "show or describe ... a single scintilla of evidence that any person in the district government committed or facilitated an arguably illegal act in connection with the district's 2011 settlement with Chartered."
The U.S. Attorney's office said in a statement that if the documents contain nothing incriminating, there's no reason not to hand them over immediately.
"We continue to hope that district leaders will reconsider the decision to withhold documents relevant to an ongoing public corruption investigation," the statement said. "Given the strong public interest in uncovering illegality among government officials, the citizens of the district would be best served by a timely and unfettered investigation rather than protracted litigation that delays a comprehensive review of the facts."
Nathan offered to turn over the disputed documents to the chief judge of the city's U.S. District Court, who would review them to determine whether attorney-client privilege applies. He said it was his third offer to resolve the dispute over the documents.
A spokesman for U.S. Attorney Machen declined to comment on whether the office would subpoena the documents if the city doesn't cooperate.
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