The roots of the nursing home/judicial election scandal | Arkansas Blog

Tuesday, January 20, 2015

The roots of the nursing home/judicial election scandal

Posted By on Tue, Jan 20, 2015 at 9:43 AM

click to enlarge MIKE MAGGIO: Only the latest chapter in a 15-year story of nursing home political influence.
  • MIKE MAGGIO: Only the latest chapter in a 15-year story of nursing home political influence.
Ernest Dumas this weeks takes readers on a historical and contextual journey to the roots of a modern-day controversy — an elected judge who admitted he took a bribe in the form of campaign contributions to reduce by $4.2 million a jury verdict against a nursing home.

It's another addition to the growing list of reasons to end election of judges. It is also, as Dumas notes, a tale of three Mikes — once-Gov. Mike Huckabee, nursing home owner Michael Morton and defrocked judge Mike Maggio.

Highly recommended for a full understanding of why nursing homes care about politics and why they are a focus of so much attention. In a word: Money.

The full column follows:


Three MIkes

By Ernest Dumas

Judge Mike Maggio gave Faulkner County, the judiciary and the nursing home industry a bad name by taking bribes to knock 81 percent off a jury award to the family of a woman who died of neglect in a Conway nursing home, but let’s be fair. Maggio did not start this stinking business of buying public policy and judicial decisions.
Sadly, he won’t end it either.

Sunday, the Arkansas Democrat Gazette joined bloggers and others who have chased down the hundreds of campaign gifts that nursing home magnate Michael Morton gave to politicians, including court candidates like Maggio who could influence policies favoring his businesses. Over 15 years, the checks have totaled at least $1.2 million, according to the newspaper’s research. But Morton’s gifts go back further.

It seems unfair for nursing homes that Maggio has focused all the attention on them when other industries—say, the Koch brothers and their oil, gas and coal fortunes—dwarf them in buying favorable regulatory and tax policies from the government. But nursing homes have always depended on the state for their prosperity. Actually, the federal government is the primary source of their livelihood, but the state controls the spigot.
Bear with me as we trace this Maggio matter back a few years.\

In 2000, a nursing home could be pretty profitable if it kept costs low without scrimping too much on care. Ohio and a couple of other states had found a way to collect massive federal aid under Medicaid: levy a big tax on each nursing home bed of private-paying patients and use the money to match federal aid. In Arkansas it would mean three more federal dollars for each dollar of bed tax. To get it done, the industry generated campaign money for legislators and the governor, Mike Huckabee, who got about $25,000 from Michael Morton alone.
Huckabee announced in 2001 that nursing homes were in crisis and the state needed new taxes to increase payments to the homes and maintain good care for their 18,000 Medicaid patients. He chose the industry’s plan: a $5.25 a day tax on each private bed (now more than $16 a day). It passed and Huckabee signed it, although when he ran for president in 2008 he told Fox network that it was not a tax but a “quality assurance fee.”

Owing to the bed tax, Medicaid payments to the homes have more than doubled to $700 million a year at no new cost to the state. Care improved, but the owners, including the largest one, Mike Morton, pocketed millions.
The other problem for the nursing homes was the risk of jury awards for negligence, a concern shared by much of the medical business as well as manufacturers and other industries. The legislature in 2003 took care of that by passing a sweeping “tort reform” bill, which made it harder to get sizable judgments for personal injury, wrongful death and negligence.

State Senator Gilbert Baker, the new Republican star, future state Republican chairman and facilitator of the Morton-to-Maggio gifts last year, was a sponsor of the act and a driving force to elect judges who would be sympathetic to business in injury lawsuits.

But in three cases, in 2009, 2011 and 2012, the Arkansas Supreme Court voided major parts of the act because they either clearly violated the state Constitution’s mandate that the legislature not restrict people’s right to be compensated for wrongs or because the act infringed on judicial prerogatives.

Industry found itself in the shoes of the Texas corporate lawyer who explained after he and other defendant lawyers regained control of the Texas Supreme Court in 1988: “We woke up one morning and found that the plaintiff bar had bought the Supreme Court, so we bought it back.”

Retiring Arkansas Justice Robert L. Brown, in an Arkansas Law Review article in 2011, warned that the Arkansas judiciary was about to be corrupted, like Texas’s, by a wash of secret money into campaigns from groups with axes to grind and that the state should take steps to maintain an independent judiciary. David Stewart, the retiring head of the Arkansas Judicial Discipline and Disability Commission, penned a similar essay.
But the bidding had already begun.

Arkansas law bars a person from giving more than $2,000 to one candidate in an election but U. S. Supreme Court decisions have made mincemeat of federal and state efforts to limit the influence of big money on public officials. Until this year, corporations also could give, so Morton could send a judicial candidate like Maggio not only his $2,000 check and his wife’s $2,000 but $2,000 more through each of the many nursing home LLCs he controlled. Baker and his friends also set up a passel of political action committees to which Morton and others could send checks, and each PAC in turn would channel the money anonymously to the candidates. Morton sent the new attorney general, Leslie Rutledge, who is now in charge of Medicaid nursing-home fraud, $88,000.

From 2010 to 2014 Morton gave $145,000 to six Supreme Court candidates, five of whom now sit on the court.
It would have been beautiful as ever but no one counted on a judge being dumb or arrogant enough to keep evidence of his sellout. When the relentless Blue Hog Report reported that Maggio slashed the judgment that Morton would have to pay the family by $4.2 million on the same day he got a bundle of PAC checks originating from Morton, and after the FBI found incriminating texts and emails suggesting a quid pro quo, the judge had to give up his alibi that it was all coincidence.

Now every judge’s protestations of impartiality after getting bushels of special-interest money will sound lame.
Justice Rhonda Wood of Conway, newly robed after $40,000 in gifts from Morton, was bolder. After taking the oath, she let it be known that she would look askance at constitutional challenges to acts of the legislature.

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