Retired West Virginia judges whom the state Supreme Court overpaid, in violation of state law, received letters vaguely alluding to that overpayment, according to a legislative audit released Friday afternoon. 

The judges received letters that said:

“Your ‘retirement’ allowed per diem may run out … depending on your work days,” according to the audit, which includes a copy of one of the letters. “Thereafter, please submit an invoice for your $435 per diem for your service after ... directly to Sue Troy,” who is the court’s director of finance.

In at least one instance, a judge knew the payments to be “not proper” and returned them, according to the legislative audit. Troy is also quoted in the audit as saying it was “common knowledge” that the Supreme Court paid retired judges as independent contractors to get around a salary cap required by state law.

Last month, the West Virginia House of Delegates impeached the four justices of the West Virginia Supreme Court of Appeals. The Republican-controlled House of Delegates said all four justices – Allen Loughry, Margaret Workman, Robin Davis, and Beth Walker – should have had policies to prevent excess spending, including millions on chamber renovations and other perks.

They also said the three who had served as chief justice – Loughry, Workman and Davis – signed contracts to purposely overpay some retired judges more than state law allowed. 

An audit, released by the legislative auditor’s office just prior to 5 p.m. Friday, provided more detailed information about the allegations, including the overpayments to senior status judges.

Former Supreme Court Justice Thomas McHugh, who has served as a senior status judge, returned the payments because he knew they were “not proper,” according to finance director Sue Troy, the audit says. 

The audit also releases a list of ten judges who were overpaid to serve as senior status judges from 2011 to 2017:

John L. Cummings, who received $942 extra in 2011 and $10,976 in 2014; Fred L. Fox, $13,773 in 2011; Andrew N. Frye, $1,995 in 2012; John L. Henning, $23,818 in 2013, $783 in 2015 and $10,551 in 2016; John S. Hrko, $3,953 in 2016; Thomas H. Keadle, $27,962 in 2013, $24,518 in 2014 and $21,570 in 2015; Arthur M. Recht, $278 in 2012; James J. Rowe, $7,033 in 2016 and $55,064 in 2017; Larry V. Starcher, $9,930 in 2012 and $9,930 in 2013; Thomas W. Steptoe, $35,925 in 2012 and $12,000 in 2014.

Starcher, a previous justice, did not return calls for a previous report. 

The legislative auditors also noted that 2011 figures may not be precise; the cap on judges’ salaries was increased that year.

In 1991, the West Virginia Legislature authorized the Supreme Court to put together a panel of retired “senior status judges” to fill in on cases when other judges were absent or overloaded. The initial daily rate was $200, but has since been increased to $435.

One requirement, according to an order, was that they had retired from the court system and were receiving retirement pay. Another requirement was that, with retirement pay included, they could not be paid more than sitting judges. Since 2011, that salary has been set at $126,000.

The court was getting around the restriction, beginning in 2012, by paying the judges as independent contractors, according to the audit. Some judges were also overpaid before the court began paying them that way.

Tory told auditors that the court’s payroll division and recusal assistant actively monitored payments to senior status judges in order to begin paying them as independent contractors when they hit the cap.

“The Court’s Director of Finance indicated that it was common knowledge that the Court engaged in this practice to get around the statutory cap and allow a Senior Status Circuit Court Judge to continue to receive their retirement while serving,” auditors wrote. “Quoting the Director of the Division of Finance, ‘I was told so they would not stop receiving their pension.’” 

Auditors wrote that the IRS was also auditing the court over 2015 tax returns. The IRS had found they overpaid ten judges by $271,000 total, according to the audit. Auditors wrote that the court had to pay the IRS $228,000 in a settlement. 

The audit notes that other judges were not in danger of overpayment and could have filled in instead. 

Auditors found that over nine years, from 2009 through 2017, 34 judges were appointed senior status judges, while 16 were appointed five or more times and six were appointed every year.

Auditors found that in each of the years reviewed, there were at least ten judges who did not exceed the cap.

They wrote that in 2011, 13 senior status judges did not meet the cap. The average judge during that time had 54 days available to work that he or she didn’t work, according to the audit.

That number ranged from an average of 23 available days in 2012 to 65 available days in 2017. During the time period, several senior status judges were only appointed to one or two cases, according to the audit.

Justin Robinson, director of the legislative post-audit division, wrote in a Friday evening email: “Our auditors did not look into the specific cases, caseload, or other circumstances regarding those Senior Status Judges who were paid over the statutory limits.”

“It was discussed with representatives of the Court who stated that some instances were due to those circumstances you mentioned, such as caseload and length of a case,” he said. “However, making such determination as to what circumstances necessitated those judges to work in excess of the statutory limits was not within the scope of this audit report.”

The audit also notes that the court is allowed to appoint other judges who were retired but had not been appointed to senior status, if needed. 

The auditors wrote that they recommended all overpaid judges “comply with W.Va. Code §51-9-18 and correct all issues of overpayment.”

They wrote that “the IRS audit made clear that the Court’s conversion of employees to independent contractor status ran afoul of federal tax law.

“Further, it is the opinion of the Legislative Auditor that circumvention of State law, even where legally permissible, should be a matter of last resort rather than a matter of convenience,” they wrote. “While the Administrative Order issued by then-Chief Justice Loughry argues that it was necessary to allow Senior Status Judges to exceed the statutory limits, the Legislative Auditor questions whether it was truly necessary ‘to assure statewide continuity of judicial services’ when the Court’s panel of Senior Status Judges retained hundreds of unused days of eligibility each year.”

The audit also looked into spending. In several instances, they wrote that it was difficult to determine where money had gone because invoices were not detailed or because the court had not provided them enough information.

The link to the audit is http://www.wvlegislature.gov/legisdocs/reports/agency/PA/PA_2018_645.pdf

Email: ebeck@register-herald.com and follow on Twitter @3littleredbones

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