CHARLESTON, W.Va. -- A special fund established to pay for Attorney General Patrick's Morrisey's inaugural party received a $2,500 contribution from Cardinal Health in late February, the same company Morrisey's office has a pending lawsuit against for allegedly fueling West Virginia's problem with prescription drug abuse.
Morrisey's wife, Denise Henry, is a lobbyist for Cardinal Health in Washington, D.C.
Cardinal Health, the nation's second largest drug distributor, paid her lobbying firm $100,000 last year, according to Henry's lobbying disclosure form.
The attorney general's Jan. 14 inaugural party was listed as a "political fundraiser" for "Patrick Morrisey ... Office of the Attorney General," according to filings with the Secretary of State.
On Wednesday, Morrisey said he stepped aside from the Cardinal Health case after taking office in January. He said his chief deputy, Dan Greear, has managed the case.
Morrisey alleged that former attorney general Darrell McGraw spoke to him about the Cardinal Health lawsuit at a parade during last year's campaign.
" ... My predecessor implied to me at a campaign stop that he had brought suit against Cardinal Health in retaliation for the fact I was running against him," Morrisey said in a prepared statement.
Morrisey said McGraw's comments disturbed him greatly and led him to believe "at least some part of that case [against Cardinal Health] was politically motivated."
"After I took office I decided that, not withstanding McGraw's comments, West Virginians deserved the case to be decided on the merits," Morrisey said. "While not required under the law, because of McGraw's ethically problematic comments, earlier this year I recused myself from the litigation as it pertains to Cardinal Health."
McGraw said Wednesday that he never spoke to Morrisey about the Cardinal Health lawsuit at a campaign stop or anywhere else.
"That did not happen," said McGraw, who served as attorney general for 20 years.
In April, Morrisey tapped the inauguration fund to pay his wife $2,741, according the attorney general's inauguration financial statement.
Morrisey said the inauguration committee reimbursed his wife for hotel rooms used by Jefferson County teenagers who volunteered for his campaign last year and attended the attorney general's inaugural.
"My wife has had no involvement in any West Virginia legal issues and is not engaged in any issues before our office," Morrisey said in his statement.
In late December, Charleston accountant Larry Pack established Morrisey's inaugural committee, calling it the "GOP Inauguration Committee," after Morrisey defeated McGraw in the November general election.
West Virginia law allows any statewide elected officer -- including the attorney general, agriculture commissioner, state auditor, treasurer and secretary of state -- to set up an inaugural committee.
West Virginia's governors typically establish such committees to pay for their inaugurals, but no other statewide elected officers -- other than Morrisey -- have formed inaugural funds in recent years, according to filings with the Secretary of State.
Morrisey held his inaugural ball on Jan. 14, raising more than $36,000. Major contributors included Cardinal Health's political action committee, which gave $2,500 on Feb. 19, and Capitol Counsel, the Washington, D.C., lobbying firm owned by Morrisey's wife, which donated $5,000 to the inaugural fund on Jan. 28.
Cardinal Health executives previously donated $4,000 to Morrisey's election campaign last year, $3,000 of which came after then-Attorney General McGraw's office filed suit against Cardinal Health, alleging the drug wholesaler was distributing powerful painkillers, such as OxyContin, to "pill mill" pharmacies and doctors in southern West Virginia. Physicians prescribed the drugs and the pharmacies dispensed them for illegal use, according to the lawsuit.
McGraw alleged that Cardinal Health profited from West Virginia's prescription drug "epidemic," shipping enormous quantities of the pain pills to the state, and knowing they would be used illegally.
The lawsuit was filed in June 2012 in Boone County Circuit Court. Judge William Thompson is hearing the case. Morrisey did not disclose Cardinal Health's contribution to his inaugural fund in court filings.
Morrisey said such contributions are irrelevant to court proceedings, and it's not possible to report the donations to the court.
A $34 million fine
Last year, Cardinal Health settled government allegations that the company shipped large amounts of painkillers in Florida for non-medical needs. Cardinal Health, the nation's second largest drug wholesaler, agreed to a two-year ban on its federal license to distribute controlled substances in the state.
In 2008, Cardinal Health paid a $34 million fine after the U.S. Drug Enforcement Agency cited the company's Lakeland, Fla., distribution center for failing to notice suspicious orders for the painkiller hydrocodone.