May 16, 2018
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Tort Reform in Arkansas

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The Arkansas Times reported the suspicious and mysterious payment from the nursing home industry to legislators considering tort reform.  The Southwest Times Record continues its excellent reporting on a mysterious payment sent by a major player in the nursing home lobby to a company owned by former state Sen. Jake Files (previous coverage on Arkansas Blog here). Files pleaded guilty in federal court earlier this year to unrelated charges of wire fraud, bank fraud and money laundering.

An $80,000 wire transfer from a nursing home executive (a business partner of nursing home magnate Michael Morton) was sent to Files’ company in 2014 just a week after an effort was filed to legislatively refer a proposed constitutional amendment to voters that would have limited damages in civil lawsuits. The situation looks smelly enough that a county prosecutor recently wrote a letter to a federal prosecutor asking whether the transfer had been made in “violation of federal law,” an FOI request by the Times Record revealed.

Previous reporting by the Times Record uncovered the $80,000 wire transfer to Files’ Fort Smith company FHH Construction from David Norsworthy, part-owner in more than a dozen nursing homes in the state with Michael Morton. The transfer took place on Nov. 24, 2014 according to documents provided to the Times Record. A week earlier, on Nov. 17, 2014, a resolution was filed by Sen. Eddie Joe Williams, one of the nursing home lobby’s most reliable soldiers, to send a proposed constitutional amendment limiting civil damages to voters.

That resolution ended up dying in committee (a follow-up attempt to get the measure on the ballot by petition was ultimately blocked by the courts). However, a similar effort in 2018, co-sponsored by Files, will be on the ballot as Issue 1 this fall, the so-called “tort reform” amendment. The measure is strongly supported by the nursing home lobby. It would impose caps on the damages that places like nursing homes would have to pay out if a jury found that abuse led to pain, suffering, or death.

Norsworthy — who in addition to co-owning nursing homes has also been a business partner of Morton’s in a health insurance company for Medicare Advantage patients, Arkansas Superior Select — is a board member of Arkansas Health Care Association, the lobbying arm of the nursing home industry (which is pushing hard for Issue 1). In 2014, when Morton’s term was up for his seat on the state commission that oversees the issuance of permits to nursing homes, Governor Hutchinson tapped Norsworthy to replace him (Morton was under federal investigation at the time). Norsworthy continues to serve on that commission; his term is up this year but he plans to re-apply, according to commission staff.

Morton funneled large amounts of money in recent years to various candidates friendly to his interests, in part via a scheme arranged by Gilbert Baker, the former state legislator and lobbyist. The defrocked judge Mike Maggio pleaded guilty in 2015 to taking a bribe to reduce a verdict by millions of dollars in a negligence case involving one of Morton’s nursing homes, around the same time that Baker had arranged multiple contributions from Morton to Maggio for a planned campaign for Court of Appeals. Baker and Morton deny any wrongdoing and have not been charged.

Baker’s partner, Linda Leigh Flanagin, was with Baker when they approached Morton about Baker’s scheme to set up multiple PACs (thus dodging campaign contribution limits) that could funnel additional Morton dollars to candidates, including Maggio. In a deposition, Flanigan also described meetings she had with Morton to discuss efforts to enact “tort reform” to limit damages for maltreatment by nursing homes.

As for Files, about six months after his company received the $80,000 from Norsworthy, he received a $30,000 loan from lobbyist Bruce Hawkins, as first reported by the Arkansas Blog.  Hawkins’ name came up at the periphery of the Maggio case.  Hawkins had used the same attorney Baker had, Chris Stewart, to set up a series of political action committees for a similar bundling scheme. Those PACs received some of the money aimed at Maggio. In a deposition, Hawkins testified that he moved to distance himself after he got tied up through news articles in the effort to aid Maggio, in part by a contribution made by Stewart from one PAC without Hawkins’ approval.

Files got into his own hot water with federal investigators in a separate matter related to misuse of General Improvement Fund money appropriated by the legislature in 2016 and pledging a forklift he did not own as collateral for a $56,700 bank loan. Files admitted to misdirecting more than $25,000 in taxpayer money for a sports complex his construction company was supposed to build and pocketing GIF funds for personal purposes. He faces sentencing in federal court this summer.



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Tort Reform

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