Burying the Competition
Robert Waltrip has proven he can bury his customers. Lately, he’s been trying to bury his critics, too. Waltrip, the burly, surly, C.E.O. of the world’s largest death-care company, Houston-based Service Corporation International, has no compunction about throwing his considerable weight around. Over the past year, S.C.I. has used the governor’s office and a state senator in an effort to crush an investigation into S.C.I.’s operations. The company has also succeeded in crippling the Texas Funeral Service Commission, and drafted a bill that could have stripped the commission of its investigative powers. Oh, and Waltrip has also succeeded in getting himself sued by T.F.S.C.’s former director. But I’ll get to that in a minute.
Funerals are big business, worth an estimated $850 million per year in the Lone Star State alone. About ten percent of the 1,261 funeral homes in the state are owned by S.C.I., which in 1998 had worldwide revenues of $2.8 billion. S.C.I. is extremely profitable. Its prices are routinely among the highest in any given city, and its profit margins on some funerals are as high as 80 percent. The company isn’t a cash cow – it’s a cash stampede, that just happens to trample grieving widows and orphans on its way to the bank.
S.C.I. achieves its high profits in part by centralizing specific funeral operations, like embalming. That practice garnered the attention of T.F.S.C. staffers, who noticed during a routine check of embalming records that some of S.C.I.’s filings contained puzzling discrepancies. When asked for additional documents, S.C.I. balked. On March 31, 1998, the agency issued twenty-three subpoenas, seeking fifteen months’ worth of funeral-related documents. Specifically, the agency wanted more information on two Metroplex funeral homes: the Dallas Sparkman-Crane Funeral Home, and the Hurst Lucas Funeral Home. On April 10, 1998, T.F.S.C. officials showed up unannounced at the two facilities.
Waltrip was apoplectic. He fired off a six-page letter to T.F.S.C. chairman Dick McNeil, calling the agency’s actions “outrageous, unwarranted and unexplained.” He went on to say that the agency’s “‘storm trooper’ tactics have no place in responsible government,” and that the agency had engaged in an “abusive and pointless display of power.” He complained that the T.F.S.C. employees had been discourteous to the S.C.I. employees, and said McNeil should “consider disciplinary action, including termination” of the staffers involved. According to former T.F.S.C. executive director Eliza May, Waltrip also threatened to sue the agency.
A month after the surprise inspection of the S.C.I. funeral homes, May found herself in the office of Governor Bush’s chief of staff, Joe Allbaugh. According to May, Waltrip was also there with his Austin lawyer Johnnie B. Rogers Sr. So was McNeil and Senator John Whitmire, the Houston Democrat who had requested the meeting. As May recalls, shortly after she sat down Whitmire began demanding all the details of her investigation into S.C.I.’s operations, while Waltrip sat and listened.
Whitmire denies trying to slow or stop the Commission’s investigation, but said he was trying to be a mediator, and called for the meeting “to try to bring all the parties together to try to resolve the issues. It was an opportunity to sit down and work out and to see what the complaints were and to give everyone an opportunity to go forward.” May, however, believes the meeting “was clearly designed to intimidate me and to obtain information about what we were doing. They were unhappy with the fact that I was doing this investigation.”
The efforts to intimidate May were just getting started. On August 3, the T.F.S.C. voted to fine S.C.I. $445,000 for violations of state embalming laws. That same day, a private investigator working for S.C.I. called three of May’s friends: Dennis Garza, Jeff Heckler, and Pat Crow. “He wanted some dirt on Eliza May. And I didn’t have any,” recalls Crow, an Austin political consultant.
Chairman McNeil, a Fort Worth funeral director appointed to the Commission by Governor Bush, said he was “flabbergasted” by S.C.I.’s actions. But he insisted the investigation of the company was done because “I want them to understand that the law is to be applied to everybody equally, regardless of who they may be. Everybody has to meet the same standards.”
Perhaps. But S.C.I. can afford to change the standards, or at least try to get them changed. According to a March report by Texans for Public Justice, campaign finance records show that since 1996, S.C.I.’s political action committee has given Governor Bush $35,000, Lieutenant Governor Rick Perry nearly $10,000, and Senator Whitmire, $5,000 – more than any other member of the Senate. According to T.P.J., S.C.I.’s PAC pumped just over $113,000 into statewide and legislative races between 1996 and 1998, and 75 percent of that money was spent during the 1998 election cycle.
The political donations and the pressure to stop the T.F.S.C. investigation are at the heart of a lawsuit May filed in March against the T.F.S.C., Waltrip, S.C.I., and S.C.I. Management Corporation. The suit alleges that during her stint at the T.F.S.C., May, who was forced out of the T.F.S.C. in February, reported violations of thirty-seven different statutes, including ten violations of the Texas penal code. It also alleges that May was fired by the agency because she “repeatedly and in good faith reported violations of the law and conduct that she reasonably believed to constitute violations of the law.”
May’s lawsuit, which asks for a jury trial, seeks unspecified exemplary damages from Waltrip and S.C.I. The suit charges that the conduct of Waltrip and S.C.I. “constitutes intentional infliction of emotional distress.” It further charges that Waltrip and his company “engaged in a civil conspiracy directed at Plaintiff May” – a conspiracy that the suit claims caused May severe mental stress, invaded her privacy, and violated state statutes. May is seeking back pay and mental anguish costs. Her lawyers say if they win, May will get, at most, $500,000 from the state.
Meanwhile, the future of the Funeral Service Commission is in jeopardy. Representative Jim Pitts, a Waxahachie Republican, is pushing a bill that would shutter the agency and move its duties to the Texas Department of Health. But a bill more likely to become law was drafted by a lobbyist hired by S.C.I. Janis Carter, who represents the Texas Funeral Directors Association, said she was paid by S.C.I. to draft H.B. 3516 (officially authored by Coppell Republican Ken Marchant). Currently, the T.F.S.C. executive director, in investigating funeral homes, can issue subpoenas at will. But Marchant’s bill, as drafted by S.C.I., would strip the director of her authority to issue surprise subpoenas. Instead, the Commission’s board would have to vote in an open meeting on any pending subpoenas, and then instruct the executive director to act accordingly – thereby giving advance public warning to any potentially offending funeral homes.
Fortunately, the worst aspects of Marchant’s bill were deleted on the House floor. But the measure still strips the agency of its general counsel, a move that will force agency staffers and commissioners to go to the Attorney General’s office on any and all legal questions. That provision infuriates one source at the agency, who asked, “How are we going to study and apply the law?” Marchant’s bill, said the source, will effectively “handcuff the board.”
There are some good aspects of Marchant’s bill. It would replace the agency’s nine-member board (five public members and four from the industry) with a six-member board (four public and two industry members), and it would require that the Commission chair and vice-chair be public members.
However, as amended in the House, Marchant’s bill would also preclude the agency from discussing any proposed fines against a funeral operator until the fines are paid, or until the entity being fined waives its right to a hearing. That language was inserted by Houston Republican Kyle Janek, who said discussing the fines is “like saying the police have arrested somebody and that person has been sent to jail for twenty years when the person hasn’t even been tried yet.” Perhaps it’s just a coincidence, but Janek, a physician, also has ties to S.C.I. He owns between 1,000 and 5,000 shares of S.C.I. stock, worth a minimum of $20,000. He has also received large campaign donations from the funeral giant. According to Ethics Commission records, S.C.I.’s PAC gave $1,000 to Janek on May 12, 1998. Just three weeks earlier (April 20), Janek had fired off a letter to McNeil objecting to the T.F.S.C.’s investigation of S.C.I., including the unannounced visit to the Dallas-area funeral homes. In early June, 1998, the S.C.I. PAC gave Janek another $1,855.
At press time, Marchant’s bill was on its way to the Senate. But the S.C.I. story is far from over, as depositions in Eliza May’s lawsuit will likely begin next month. The list of people to be deposed includes Governor Bush, chief of staff Joe Allbaugh, Robert Waltrip, and John Whitmire. All are likely to be asked questions about influence peddling and conspiracy to interfere with a state investigation. And you thought the funeral business was boring.
Robert Bryce is a contributing editor for the Austin Chronicle.