Massachusetts Secretary of State William F. Galvin criticized Attorney General Martha Coakley’s handling of a case involving a prominent lobbyist Wednesday and launched his own inquiry into the lobbyist’s activities.
The move added to a simmering controversy about Coakley’s settlement with lobbyist John Brennan, a former state representative and state senator, just weeks before Coakley faces Democratic primary voters in the gubernatorial election.
“The agreement raises more questions than it answers,” said Galvin, in an interview.
Coakley’s office alleges that Brennan’s firm, the Brennan Group, collected $370,000 in improper lobbying fees from the Franciscan Hospital for Children for work performed between 2004 and 2006.
Brennan, according to the attorney general, had a contingency fee contract with Franciscan that allowed the firm to collect a commission on the money it won for the hospital on Beacon Hill. State law bars contingency agreements.
In the settlement, signed last week, the Brennan Group made no admission of guilt but agreed to repay Franciscan $100,000 of the $370,000 in disputed lobbying fees it was paid by the hospital.
Coakley’s office maintains that pursuing a criminal prosecution would have been too risky, for a number of reasons: A six-year statute of limitations may have invalidated the case, prosecutors had questions about the credibility of one of their key witnesses, and there was no case law on some critical questions in the case.
“I believe, and I will stand by what we’ve said, that based on the facts in our investigation, we made the right call,” Coakley said as she left a gubernatorial candidates forum Wednesday night.
Brad Puffer, a Coakley spokesman, added that a failed prosecution could have left Franciscan with nothing.
Concern about an uncertain court result is enshrined in the settlement itself, with the attorney general’s office and the Brennan Group agreeing that “the absence of a clear legal precedent” made it “hard to predict the outcome.”
But Galvin, who oversees lobbying activities, objected to that sort of language. “The ambivalence of the agreement I find disturbing,” he said. “Contingency fees are illegal.”
The secretary of state said the fees at issue in the case are worrisome because they tie the development of public policy too closely to private financial gain.
Galvin’s office launched its investigation Wednesday with a letter to the Brennan Group requesting contracts, billing statements, and other documentation related to the firm’s work with Franciscan.
Galvin told the Globe he is also interested in whether Brennan had contingency contracts with other clients, suggesting a wider investigation could be in the offing.
The Coakley-Brennan agreement releases the lobbying firm from “any further civil or criminal liability” in the Franciscan matter. But Galvin argues that it does not prevent him from fining the Brennan Group or, if the facts warrant, suspending the firm.
The Brennan Group, in a statement, said it “vigorously denies any violation of law” but agreed to the settlement “to put this matter behind us.”
Franciscan Hospital, which referred the matter to the attorney general’s office in early 2012, said in a statement that it “would like to thank Attorney General Martha Coakley for resolving the issue.”
Coakley announced the deal in a press release Friday. The controversy bubbled up Tuesday, when the Boston Herald posted a story on its website that highlighted past political contributions from Brennan and other lobbyists at his firm to Coakley.
Treasurer Steve Grossman, who is running for governor, brought up the donations at a gubernatorial debate Tuesday night and asked Coakley why she did not pursue the full $370,000 in contingency fees the Brennan Group allegedly collected.
Coakley brushed off the attack, saying the Brennan campaign contributions were all public record and arguing that the $100,000 settlement was the best her office could do under the circumstances.
But Gregory Sullivan, a former state inspector general who now serves as research director for the right-leaning Pioneer Institute think tank, said that Coakley was not tough enough on Brennan. “If someone robs a bank, you don’t say they can keep two-thirds of the money and walk,” he said.
Sullivan said the case was emblematic of an attorney general who has treated Beacon Hill with “kid gloves,” noting that it was federal prosecutors who took on the high-profile corruption cases of former Massachusetts House speaker Salvatore F. DiMasi and former Probation Commissioner John J. O’Brien.
The attorney general’s office defended her record, arguing federal prosectors were better positioned to take DiMasi and O’Brien to court given the wide range of federal laws at their disposal. Puffer said Coakley has taken action against more than 40 public employees and officials since 2007.
The Brennan Group lobbied state lawmakers, on Franciscan’s behalf, for funds that buttress hospitals with large numbers of Medicaid patients and others who struggle to pay for care. The attorney general’s office asserts, in the settlement, that some of the funds were specifically earmarked for Franciscan.
But in some cases, according to the agreement, Franciscan was added to a pool of hospitals eligible for state funding. It was then up to Massachusetts Health and Human Services officials to disburse the money.
The Brennan Group argued that because the ultimate decision was made by Health and Human Services officials — and not the legislators it lobbied under its contract with Franciscan — there was no true contingency fee arrangement.
Joshua Miller of the Globe Staff contributed to this report. David Scharfenberg can be reached at firstname.lastname@example.org.