Idaho agency asks court to stop Raúl Labrador’s investigation into child care grants

Idaho Department of Health and Welfare officials have petitioned a court to stop the Idaho attorney general’s investigation into child care grants, sparking a rare, if not unprecedented, conflict between executive branch officials and their own attorney.

Idaho Department of Health and Welfare Director Dave Jeppesen and two other department officials, through private attorneys, on Thursday asked Ada County’s 4th Judicial District to halt investigative demands from Attorney General Raúl Labrador’s office.

Labrador’s office, acting on a request from legislators, is investigating whether state law was followed in distributing the federal grants, which went to public and nonprofit child care providers over the last two years. The attorney general’s office issued civil investigative demands to dozens of grant recipients, many of whom have also asked a court to intervene.

The health officials’ petition argued that Labrador is “stretching the statute” granting him authority to investigate the charitable assets, and he’s “created an inescapable conflict of interest” by investigating his own clients in the Department of Health and Welfare, which “will generate entirely unnecessary costs.”

“This is not a simple matter of an overbroad request for documents,” the petition said. “It is a matter of government overreach.”

Court filings showed the attorney general’s office, on two occasions, wrote legal opinions that concluded Health and Welfare’s distribution of the grants were lawful. One was written on Nov. 30, under former Attorney General Lawrence Wasden, while the other was written Jan. 25, under Labrador, according to Jeppesen’s declaration.

“The Idaho attorney general’s office has already determined that IDHW’s implementation of the grant program was lawful and within both state and federal guidelines,” the health officials’ petition said. “This is a case in which the attorney general has himself instituted an adversarial proceeding against his own clients on a matter in which the attorney general’s office has provided counsel to those same clients.”

Beth Cahill, spokesperson for Labrador’s office, told the Idaho Statesman on Thursday that the attorney general is required by state law to represent both the Legislature, “which asked for this investigation,” and the Department of Health and Welfare.

Labrador was unaware of the Jan. 25 legal opinion, which was written by an attorney in his office to the health department, Cahill told the Statesman.

“The attorney general would never knowingly have put his name on a legal opinion like that,” she said.

Lobbyist raised concerns about programs

When the Idaho Legislature approved the ”Community Partner Grants,” funded by federal COVID-19 aid in 2021 and 2022, lawmakers wrote in state code that the funds “shall be used for serving school-aged participants” 5 to 13 years old, “as allowable by federal guidelines.”

Kestral West Lobbyist John Foster filed a public records request for applications and award letters regarding the community grants in October 2022 and subsequently shared his concerns with the health department about the allocation of the grants, according to the department’s petition.

Foster raised concerns about the grants funding programs for children under 5 and a potential conflict of interest with a department official, the legal declaration from Jeppesen said. In response to the concerns, department officials in November requested a legal opinion from Wasden’s office, which said that the grant distributions were above board and had no conflict.

On Jan. 17, Rep. Wendy Horman, R-Idaho Falls, who co-chairs the Joint Finance-Appropriations Committee, asked Jeppesen whether the grants went to programs for children under 5, “which is in direct opposition to the law.”

Jeppesen told the budget committee that the department’s grant application asked potential recipients to check a box verifying that the funds could only be used for 5- to 13-year-olds, and Jeppesen said he later reviewed applications ensuring those boxes were checked.

But some grant recipients have programs for children under 5, so the department was giving “extra special attention” to a quarterly review of the grants, Jeppesen said.

In guidelines published online, the Department of Health and Welfare, which administered the Community Partner program, advertised the grants as eligible for child care providers that serve Idaho children ages 5-13. The guidelines also noted that it’s “allowable to serve other ages of children within the program, but you must at least serve children in this age range and funding may not be used for children over 13.”

Idaho’s Charitable Assets Protection Act grants the attorney general’s office authority to investigate federal grants funneled through the state. If the attorney general “has reason to believe” a charity used assets “contrary to law,” he can issue investigative demands to anyone who might have relevant information, Cahill said.

Department requests second legal opinion

The week after Jeppesen testified in front of the budget committee, the Department of Health and Welfare requested a second opinion on the grants from Labrador’s Health and Human Services Division.

The second opinion was almost identical, except it didn’t include an analysis of a potential conflict involving the employee, who no longer worked for the department by January. The department’s implementation of the program “is consistent with federal and state guidelines,” the letter said.

Jeppesen “insisted” that the department “took every measure” to ensure that no grant funds went to serve children under 5, Cahill said, referring to his JFAC testimony. Then the director obtained a legal opinion which said there was no problem with the grants funding children under 5, she said.

“The director’s shifting accounts alone provide ample warrant for this investigation of the disbursement of charitable assets in violation of Idaho law,” Cahill said.

Last month, lawmakers ordered an audit of the grants. Associate Attorney General Mitch Toryanski told the Statesman that lawmakers on the budget committee showed attorney general officials a spreadsheet with data on the grants.

“The spreadsheet indicated that there was an amount spent in a manner that was inconsistent with state law,” Toryanski said.

This week the Joint Finance-Appropriations Committee cut $14.4 million from the health department’s budget “for the purpose of recouping ineligible payments” to “ineligible community partner providers.”

In a Thursday email to department staff, Jeppesen wrote that he’s “committed to transparency” about the grants. But the attorney general demanded “personal information” about employees who worked on the grant, including their charitable donations.

“Employers have a duty to protect their employees,” Jeppesen wrote in the email, which was provided to the Statesman. “In this case, I can and should intervene to protect you, your personnel records and your right to privacy.”

Jeppesen’s declaration said the attorney general’s office did not contact him before serving investigating demands. Most of the information requested was already accessible to the state attorneys, the health officials’ petition said.

“Under ordinary circumstances, when a legitimate request is made, the Idaho attorney general has a clear mechanism for obtaining documents from his clients,” the petition said. “He simply asks.”

Statesman reporter Alex Brizee contributed.