Judge weighs if Idaho AG should pay child care grants investigation attorney fees

Special prosecutor Christopher Boyd argues in district court that the Idaho Office of the Attorney General should not pay legal fees associated with litigation that set to block the office’s civil subpoena. (Kyle Pfannenstiel/Idaho Capital Sun)

An Idaho judge is weighing whether the Idaho Attorney General’s Office should pay $187,000 in attorney fees connected to a scrutinized child care grant program.

Idaho Fourth District Judge Lynn Norton heard arguments Tuesday in two separate, but related, lawsuits by current and former Idaho Department of Health and Welfare officials. The lawsuits sought to block civil subpoenas issued in March 2023 by Attorney General Raúl Labrador. But the suits were closed late last year after those demands were withdrawn by a special prosecutor, who says there’s still an ongoing investigation of how $72 million of federal child care grants were spent in Idaho.

Attorneys for current and former Idaho Department of Health and Welfare officials argued Labrador didn’t have a reasonable basis to issue the civil subpoenas, called civil investigative demands. And since they’re now dropped, attorneys in both lawsuits say the current and ex-officials got what they sought. 

Special prosecutor Christopher Boyd said Labrador in March knew that at least that the law had been allegedly violated. Boyd, who announced he’d withdraw the civil investigative demands last fall to conserve resources, said the demands being dropped doesn’t signal a win. The Attorney General’s Office could refile them again tomorrow, he said.

“The Attorney General by all means, through me, could tomorrow issue that exact same (civil investigative demand) as was issued before legally anyway. And there would be no impediment to doing so,” Boyd said.

What the Idaho Attorney General is investigating

In March 2023, after being alerted by legislative budget writers about concerns that $14 million had gone toward children under age 5, Labrador issued the civil investigative demands. The grants were slated to go toward kids age 5-13.

Top Idaho Department of Health and Welfare officials and Ericka Rupp, a former employee who led the grants program, sued Labrador in March, seeking to block his demands. The demands asked for a wide range of information about the program and state employees that worked on it, including charitable organizations they work for, volunteer for or donate to.

In August, a separate state audit found flaws in how the child care grant funds were distributed. In October, Boyd told attorneys for health department officials and Rupp that he’d drop the investigative demands to “conserve state resources,” saying the audit answered questions that the demands sought to answer.

Labrador, by Idaho law, is required to represent the state health department and other state agencies. But since the former congressman took over as the state’s top attorney in January, he has engaged in high profile legal clashes with some of the state’s largest agencies — including the state health department in this case and the State Board of Education, which his office sued alleging open meeting law violations with the University of Idaho’s attempted acquisition of University of Phoenix.

Boyd was appointed as special prosecutor in August, after a judge barred Labrador from pursuing the civil investigative demands. The judge’s order said Labrador had a conflict of interest on the case, citing previous legal guidance from the Attorney General’s Office to the Department of Health and Welfare in late 2022 and early 2023 that said the agency’s distribution of grant funds was legally sound. 

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Attorneys for Rupp and state health department officials asked Labrador’s office to pay attorney fees that they accrued fighting those demands. Three Idaho Department of Health and Welfare officials asked for nearly $119,000 to pay their attorney. Rupp asked for about $68,000 for her attorney.

Boyd in December said in a court filing there is probable cause that Rupp committed a crime. But the allegation came with little other information, such as what crime Rupp is accused of, or what specific evidence backs up the claim. 

Boyd argued in court on Tuesday that Rupp is in a “worse position” now. 

Boyd told the Idaho Capital Sun on Tuesday he couldn’t say if a special inquiry judge has been selected in the case.

Health department’s interpretation was clear, attorney says

Eric Stokes, a private attorney representing senior Idaho Department of Health and Welfare officials who sued over the demands, said the health department administered the program openly, citing press releases that identify grant recipients.

“From the outset of this program, it was clear that IDHW had interpreted the language as requiring funds to be concentrated on (age) 5 to 13, but that it permitted children under the age of 5 to benefit from those programs,” Stokes said.

The court adopted a similar interpretation in a separate ruling in another related lawsuit, he pointed out. The Attorney’s General Office, in November 2022 and January 2023 memos, said the health department’s grant distribution was legally sound, but the office withdrew those opinions in March, saying they were flawed. 

While Boyd said health officials hadn’t prevailed in their lawsuit because the investigation hasn’t stopped, Stokes said their lawsuit asked for the civil investigative demands to not be enforced, not to halt the investigation.

“They will not enter into a stipulation because they wanted … the investigative case to be entirely disregarded. That I was to cease all investigations going forward,” Boyd said. 

Boyd said counsel for Rupp had asked him to stop the investigation in a private letter. He declined to share that letter with the Idaho Capital Sun, which he said was in response to reaching out about a stipulation.

“The counsel responded with a letter. His letter demanded in no uncertain terms that we cease investigating, that the state ceases to investigate this matter. That was the thing that I could not agree to,” said Boyd, who said he hadn’t been subjected to such “strenuous demands.”

He also argued in court that since the investigation wasn’t stopped, Rupp hadn’t won what she had sought. Rupp’s attorney Scott McKay in court said the only relief Rupp sought, through her lawsuit, was that the civil investigative demands be set aside. 

“She has effectively achieved that same result,” he said.

McKay declined to comment.

McKay also argued that the attorney general didn’t have the power to issue the demands. One new consumer protection law Labrador issued the demands under, the Idaho Charitable Assets Protection Act, was meant to deal with charitable donations, McKay said. But under the attorney general’s interpretation, it would give the Idaho attorney general the authority to investigate “wherever it believes that the agency has used funds in an inappropriate way, or a way that at least it disagrees with,” McKay said.

Boyd said the statute applies to some government grants if they support charitable services, like education in this case.

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