By Charles Wolfe
The Associated Press

FRANKFORT - Attorney General Ben Chandler has pulled out the biggest club in his bag for use against Bruce Lunsford, his most aggressive rival in the Democratic race for governor.

The club is Vencor, the Louisville-based nursing home and hospital company Lunsford founded and once ran. The issue is what happened to Vencor, and that depends on whose version of events one is hearing.

The Chandler version is that Vencor went bankrupt and Lunsford cashed out before the fall while other investors lost their shirts. Chandler also claims the company was fined $104 million by the federal government for Medicare fraud.

The Lunsford version is that Vencor had financial problems because the government cut reimbursement rates for Medicare and Medicaid.

But Vencor was reorganized, not bankrupted. Lunsford calls it "a great success story" because three companies, totaling 50,000 employees, emerged from it. According to Lunsford, Vencor was not fined; it paid to settle the government's fraud charges, never admitting guilt.

The two candidates have spent the last two weeks swapping accusations of lying, hypocrisy and distortion, and they seem destined to do so until the May 20 primary election.

Control is crucial for Lunsford. His "great success story" has also been his most vulnerable spot since he entered the governor's race and positioned himself as an outsider.

It rankles him that the Chandler campaign, in statements and in an attack commercial that recently went on the air, uses the word "bankrupt" in describing Vencor.

"It's not an unusual thing for big companies who grow, who have, as a part of their structure, debt," Lunsford said in an interview. "They do it to keep everybody at bay until they have time to (formulate) a workout."

The Chandler camp contends that Lunsford has been hypocritical in asserting that Chandler, if elected, would be beholden to the "special interests," among them road contractors for giving money to his campaign.

Lunsford is financing his own campaign from his personal fortune. But he, too, has been a financial contributor to political candidates and causes, having given more than $100,000 since 1997.

Charles Wolfe is a statehouse reporter for the Associated Press.