Capitol Offense



Tom Craddick, photo by Jana Birchum

The breadbasket wasn’t the only item passed around when Midland Republican state Rep. Tom Craddick met Chris Winkle on the night of October 21, 2002, for dinner at Anthony’s, an upscale eatery near the Galleria in Houston. The election that would make Craddick speaker of the Texas House was still two weeks away, and the veteran legislator was helping lead an insatiable fundraising drive for GOP House candidates. Winkle was there on behalf of the nation’s largest nursing home trade group. Nursing homes had a big financial stake in a Republican takeover of the Legislature—the industry desperately wanted to cap damages in malpractice lawsuits in Texas. It was an influential Austin lobbyist for the industry, Neal “Buddy” Jones, a friend of Craddick, who had arranged the meeting. Winkle wasn’t there just to discuss policy, though. At some point during the dinner, he handed Craddick an envelope containing a $100,000 check.

The check was corporate money—illegal in Texas campaigns if spent on candidates—from an industry trade group called the Alliance for Quality Nursing Home Care. It was made out to Texans for a Republican Majority, or TRMPAC, the Tom DeLay-founded political action committee that was instrumental in boosting Craddick into the speaker’s chair. The $100,000 check from the Alliance was the single biggest check received by TRMPAC. (Check out the Observer’s full coverage of the TRMPAC scandal).

The details of the dinner meeting were first reported in September 2004 by the Austin American-Statesman’s Laylan Copelin. “I don’t even know if I looked at the check, to be truthful,” Craddick told Copelin in 2004. “I wasn’t down there collecting anything. I was just down there visiting with these people on their issues—election issues—and they gave [the check] to me.”

But records recently obtained by the Observer suggest that Craddick was far more than simply a courier that night. It appears his office was involved in soliciting and collecting campaign money from Winkle and other special interests whose preferred legislation he would later push through the House. Craddick’s phone records show an almost nine-minute call to a representative from the Alliance for Quality Nursing Home Care a little more than two weeks prior to the meeting with Winkle. Records also show calls to HillCo, Buddy Jones’ lobby firm that day. (On the day Craddick met with Winkle in Houston, records show more calls with someone at Jones’ firm.)

Eight months after Craddick’s check-collecting expedition to Houston, the Legislature gave the nursing home industry exactly what it wanted. With Craddick presiding, the Lege passed a so-called “tort reform” bill that capped damage awards for pain and suffering in malpractice lawsuits—including those against nursing homes—at $250,000.

On July 17, 2003, just weeks after lawmakers approved the damage cap, Craddick met with Winkle for a “tort reform thank you,” according to a copy of Craddick’s calendar obtained by the Observer. The second meeting, again convened at the request of lobbyist Buddy Jones, was scheduled to include Gov. Rick Perry, Mike Toomey (a lobbyist and the governor’s then-chief of staff), and Kirill Goncharenko (the founder of the alliance and a consultant who did campaign work for Texas Republicans). The meeting’s subject, according to Craddick’s schedule, was a “tort reform thank you and what can they do to help.”

Nursing homes weren’t the only industry to benefit from the pay-to-play culture Craddick institutionalized at the Legislature. In the past two legislative sessions, the insurance, health care, and homebuilding industries—Craddick’s main sources of campaign funds—have been beneficiaries of legislation passed on their behalf. While business interests have long had considerable sway at the Lege, critics charge that Craddick’s ascension in 2002, with the help of DeLay, the former U.S. House majority leader, marked the arrival of a “K Street Project” style of governing in Austin. Named for the street where many lobbyists reside in Washington, D.C., the K Street Project was created by DeLay and Republican strategist Grover Norquist to seamlessly fuse business lobbyists and their campaign cash with the GOP majority and its lawmaking power.

“Craddick took DeLay’s K Street template, slapped it on Congress Avenue, and created a cartel dealing in corporate campaign cash, cronyism, and public policy,” says Cris Feldman, a plaintiff’s lawyer who spearheaded a civil lawsuit against TRMPAC. “It has fundamentally changed for the worse how public policy is made in this state.”

But those inside the system say that this view is too simplistic. Lobbyists in order to be successful must work with everybody and comprehensive legislation like the tort reform package takes years to come to fruition. “That bill was 10 years of frustration from a lot of people, it was not the result of one cycle,” says Bill Miller, who works with Buddy Jones at HillCo.

Craddick’s attorney, Roy Minton, said that Buddy Jones arranged the dinner after repeated requests by the Alliance for Quality Nursing Home Care. He said that Craddick did nothing wrong in meeting with a group whose issue he already supported. “Tom’s been trying to get tort reform passed since he was a boy,” he said. Craddick gave the $100,000 check to his office staff, who forwarded it to TRMPAC. Minton said he didn’t know of any later contacts between Craddick and Alliance representatives, but added “there’s nothing wrong with it if there were.”

The election of a Democratic congressional majority in 2006 and the resignation in disgrace of DeLay has killed the K Street Project in Washington. But despite felony indictments of DeLay and three associates by Austin grand juries over their involvement in the TRMPAC scandal, the Texas version of the project appears alive and kicking. And after four years in action, the policy results are coming into view.

In Harris County, Texas’ most populous county, in 2005, malpractice cases, which included lawsuits against nursing homes, dropped 41 percent from pre-2003 averages, according to the American Bar Association. The $250,000 cap on so-called noneconomic damages in lawsuits is particularly harsh on nursing home residents, who, without jobs, cannot demonstrate economic damages such as lost wages. For-profit nursing homes have a horrendous record of abuse in Texas—many had been hit with multimillion-dollar verdicts in civil suits before 2003. The cap likely has saved Texas nursing homes millions in legal fees and civil awards. Some nursing homes have even dropped liability insurance coverage, according to Alex Winslow, director of the consumer group Texas Watch. The cap has made it cheaper for these nursing homes to pay a worst-case $250,000 verdict than to foot ongoing insurance premiums. “Nursing homes are all but exempted from legal responsibility if they harm a resident,” said Winslow. “There is no way to hold [them] accountable.”

Advocates for the elderly say there is ample anecdotal evidence that nursing homes increasingly cut corners in caring for elderly residents. At the same time, cuts to state regulatory programs have resulted in decreased inspections and fines for abuse in Texas nursing homes, according to state records. Nursing home abuse cases are some of the most expensive and time-intensive civil cases a lawyer can undertake. Advocates say that, with a maximum award of $250,000, victims of abuse have trouble finding a lawyer to take their case [see “A Death in McAllen,” September 23, 2005]. Many attorneys in Texas have decided it just isn’t worth it—or they settle quickly for small awards. “You hardly hear of [trials] anymore,” said Beth Ferris with Texas Advocates for Nursing Home Residents. “Our residents suffer. Nursing homes need a backup [through the threat of litigation] so they can’t get away with any of the abuse and neglect.” Ferris noted that certified nurse’s aides in nursing homes need only 16 hours of training before they can care for residents—far less training time than dog groomers and beauticians receive.

The 2003 cap on malpractice suits also helped insurance companies, large, private hospitals, and other health-care providers. Insurers contributed lavishly to TRMPAC and the campaign to make Craddick speaker. As with the nursing homes, insurance companies greatly benefited from Craddick’s speakership. For instance, Texas homeowners pay among the highest premiums in the country for home insurance, and in 2002, the issue was front and center as a political campaign issue. Yet a 2003 home insurance “reform” bill passed by the newly minted Republican Legislature, and written by the industry, has reduced premiums as of 2005 by only about 4 percent, according to Texas Watch. In 2004, the insurance industry enjoyed its most profitable year in Texas ever. Even in 2005, when the state suffered damage from Hurricane Rita, insurers had their second most profitable year in a decade. “It’s pretty clear that big insurance and nursing homes and other industries that contributed something in 2002 got exactly what they hoped to get in [tort reform],” Winslow said.

One reason they may have done so well is that a handful of insurance and health-care companies also accounted for most of the $1.9 million that the Texas Association of Business (TAB) used to finance its campaign mailers in 2002. The TAB was indicted in 2005 for its corporate-funded mailer campaign on behalf of 22 GOP candidates that it launched in conjunction with TRMPAC’s campaign efforts. The TAB’s lawyers and officers have long argued that there is no quid pro quo between the contributions it gives and legislation, rather it simply supports ideologically compatible candidates. An internal TAB document from July 2002, obtained by the Observer, shows that the business group asked prospective GOP candidates whom they would support as speaker prior to launching the mailers on their behalf.

The nursing home alliance also contributed $300,000 in corporate funds to the TAB’s campaign efforts. (Some of that money may have found its way back to Goncharenko, the Alliance founder, who also had created his own New York PR firm. As the Observer reported last year, the TAB hired Goncharenko’s firm to help create campaign mailers the day after it received the $300,000 from the Alliance.) Of the $2.5 million in corporate money used by TRMPAC and TAB in 2002, $400,000 of it—or 17 percent—came from the Alliance, the most from any single source.

But perhaps the most glaring example of the sway of campaign contributors in Craddick’s House involves Bob Perry, the reclusive owner of Houston-based Bob Perry Homes. Perry gives more money to Republican candidates than most people earn in their lifetimes. Since 2001, he has contributed more than $15 million to candidates in Texas races, mostly to the GOP. In 2003, the Legislature and the governor created a housing regulatory agency that was little more than a sop to homebuilders (Perry’s corporate attorney, John Krugh, helped write the bill). The Texas Residential Construction Commission was supposed to help resolve disputes between consumers and builders, but in practice it has functioned as a barrier to keep the industry out of court [see “The Agency that Bob Perry Built,” February 4, 2005].

While most of the original funders to the 2002 GOP campaign that made Craddick speaker have benefited, there are two special interests that have yet to receive their due. The first is San Antonio hospital bed magnate James Leininger. He is one of the biggest campaign contributors in Texas, giving $1.3 million to the 2002 effort. Leininger’s No. 1 issue is the creation of a school voucher program in Texas. In 2005, Craddick, despite protests from members of the GOP caucus, brought the issue up for a vote—and it failed. In the 2006 cycle, Leininger gave $5 million to pro-voucher Republicans in the primary and general elections, but his vote count did not improve.

Another special interest to support Craddick’s speakership and his lobbyist allies is the gambling business. Gambling interests gave $1,220,423 to legislative candidates in the 2006 cycle, according to campaign watchdog Texans for Public Justice. Craddick, who had no opponent, ranked third in contributions, receiving $54,000. Craddick’s new leadership PAC, which replaced TRMPAC in 2004—known as Stars over Texas—received another $128,888 from pro-gambling interests.

In early January, House members will elect their speaker for the 80th legislative session. Craddick is campaigning for a third term. The political environment in the Texas House has changed since 2003. The major industries that funded the Republican takeover have received most of what they wanted, and successive election losses have slightly eroded Craddick’s power. He can no longer muscle through any special-interest legislation he desires. But the speaker still sets the agenda for the House. And so continues a culture in which a proposal has little chance of passing—regardless of the merits—unless its supporters contribute to leadership and hire connected lobbyists such as Buddy Jones. It’s a culture likely to last as long as Craddick occupies the speaker’s chair.

Additional material from Craddick attorney Roy Minton that was not available at press time has been added to this story.