An already embattled funeral home director was subjected to additional scrutiny recently following the release of a Legislative audit which determined an inordinate number of body transportation contracts had been directed towards another of his companies.
Tri-State Mortuary, which is owned by Chad R. Harding of Poca, provided 94 percent of all transportation services for bodies in need of an autopsy by the state Medical Examiner's office in fiscal year 2014, according to an audit provided to state lawmakers on Nov. 15.
In addition, the audit determined Tri-State Mortuary received $1.8 million in taxpayer dollars for body transport services during a four-year period ending in fiscal year 2013. During the same time period, other companies received $967,000.
"[Office of the Chief Medical Examiner] appears to have given preferential treatment to Tri-State Mortuary Services by assigning the majority of all incoming body transports to Tri-State," the audit said.
In their research, auditors found Harding and Mike Scragg, the former chief of operations for the Medical Examiner's Office, entered into an "unauthorized hand-written contract" in May 2008 in which both men agreed to have Tri-State "provide transportation service to OCME, state of WV thru the year 2018."
The Bureau of Public Health, which oversees the Medical Examiner's Office, did not recognize the handwritten contract as a legal document.
But Jeff Woods, an attorney for Harding, said on Wednesday the contract was typed up and his client received a letter of confirmation.
When the contract was written, Woods said Harding was approached by the Medical Examiner's Office to provide the transportation services, after other companies had been failing to adequately do so due to concerns over gasoline prices.
Due to the fact that body transportation services are exempt from the state's purchasing policies - meaning no bidding process is required - the auditors recommended lawmakers consider altering the state's code in order to establish guidelines to "prevent preferential treatment."
Beyond examining the contract and the amount of taxpayer dollars awarded to Tri-State Mortuary, the auditors also found the company's invoices had been prepared by an employee in the Bureau for Public Health.
Although the bureau employee said such a system "promoted efficiency and increased productivity," the audit noted the practice was only done with Harding's mortuary company and not with other vendors.
"There is a strong appearance of preferential treatment toward Tri-State Mortuary Services when considering the 'hand-written contract' for a service exempted by the Purchasing Division, the extremely high percentage of transport business received by the vendor, and the preparation of invoices by a Bureau employee," the audit said.
Although the auditors made no specific recommendations to lawmakers pertaining to Harding's company, the audit is the latest form of scrutiny the local business owner has faced in recent months.
In August, Harding's Poca-based funeral home, Gatens-Harding, was named in a lawsuit filed in federal court by Iowa-based insurance company Homesteaders Life Co.
The company alleged Harding and his wife, Billie, were involved in cashing in on 111 pre-need funeral arrangement contracts valued at more than $900,000 before the individual in the contract was deceased.
Gatens-Harding has denied the allegations and is preparing for a jury trial, which is scheduled to begin in Huntington in October 2016, according to a scheduling order.
In September, agents from the West Virginia Offices of the Insurance Commissioner and the West Virginia State Police visited Gatens-Harding and walked away with numerous boxes. At the time, Harding told the Gazette-Mail, "We just wanted to cooperate. We just wanted to make sure everyone gets what they needed."
Two days after the incident, Gatens-Harding was named in a complaint filed by Attorney General Patrick Morrisey in Kanawha County Circuit Court. The complaint stemmed from an audit of the company, which determined that at least 108 West Virginians had been affected by a scheme similar to that outlined in the lawsuit filed in federal court. In his complaint, Morrisey alleged Gatens-Harding violated the state's Consumer Credit and Protection Act and the West Virginia Funeral Contracts Act.
Last month, Jeff Woods, who is representing Gatens-Harding, responded to Morrisey's complaint and denied the allegations against his client.
In a 10-page response, Woods said the Hardings and their company "assert that any alleged losses or damages" for which Morrisey's office is seeking relief "were caused by the acts, failures to act, omissions, official malfeasance, and inappropriate and negligent governmental oversight practices and procedures."
On Wednesday, Woods explained the statement, saying that the attorney general's office is the gatekeeper of pre-need contracts.
"They didn't conduct an audit until the Homesteaders lawsuit," Woods said. "If this stuff was going on, what took them so long to do an audit?"
In September, Anthony Martin, a spokesperson for Morrisey, wrote in an email to the Gazette-Mail, "Gatens-Harding was audited in 1995 when it was just Gatens Funeral Home and [not again since] Chad Harding took control in 2004. We just finished auditing Gatens-Harding."
On Wednesday, Morrisey's press secretary Curtis Johnson responded to Woods' criticism, saying, "Our office cannot comment on the actions or lack thereof by the prior administration but our filing of a lawsuit against the defendant should leave no question as to our respect to enforcing state law."
In his latest court filing, Woods argued that Morrisey's attempts to collect punitive damages violates the Fourth, Fifth, Sixth, Eighth and Fourteenth Amendments of the U.S. Constitution.
Woods requested a jury trial, as well as a dismissal of the case. The case has been assigned to Judge Joanna Tabit.
Woods told the Gazette-Mail he does not believe the attorney general has a case against his client due to the fact that the Consumer Protection Act requires a person to be named as the victim, not a business. Woods noted that the only "person" named in Morrisey's complaint was Homesteaders Life, the Iowa-based insurance company suing Gatens-Harding.
"Patrick Morrisey is doing nothing more with this lawsuit than political grandstanding," he said. "This is a Gestapo-istic tactic by the attorney general's office."
Reach Joel Ebert at joel.ebert@wvgazettemail.com, 304-348-4843 or follow @joelebert29 on Twitter.