Washington Prowler

Grassley, Lott & Scruggs

A law firm? No, just the GOP Senate Finance chairman making life sweeter for Trent Lott and Lott's trial-lawyer brother-in-law.

By 6.14.05

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So is Sen. Chuck Grassley in bed with Sen. Trent Lott and his brother-in-law, trial lawyer par excellence Dickie Scruggs? It sure looks that way, and Republicans should be getting nervous.

Scruggs has been waging a war across the country with nonprofit hospital groups, filing suits against them in federal and lower courts claiming that healthcare facilities that get tax breaks should charge uninsured far less for services, and not berate those low-income individuals who do not pay, and should stop cutting exclusive deals with groups of doctors in which the physicians get free use of the facilities, but other doctors are shut out.

Scruggs and his band of trial lawyer buddies have filed at least 30 such cases, the majority of which have been thrown out of federal court. But the ambulance chasers have filed in lower state courts, as well. At stake could be millions of dollars to line attorney pockets if judges award attorney fees based on a portion of the amount repaid by hospitals to plaintiffs.

The failure of the trial lawyers to get any traction on the federal level has been frustrating, to be sure, and Grassley, chairman of the Senate Finance Committee, has been looking at nonprofit hospitals for a while. He has said that he will introduce legislation that would draw nonprofit hospitals under tighter federal regulations, particularly on the way they bill and collect fees for services.

Various hospital groups had been in discussions with Finance Committee staffers on the legislation, and things seemed to be moving apace. While no one was happy with Grassley's legislative plans, there were expectations, according to sources on both sides of the issue, that they would be able to work something out.

Then out of the blue, Grassley sent a letter to 10 hospitals and hospital systems, requesting information on their charitable activities, patient billing, and ventures with for-profit companies and hospitals.

In a press release, Grassley noted that the inquiry is a "continuation of his effort to review the nonprofit sector in advance of legislation he will introduce to prevent abuse of the federal tax laws that created nonprofit organizations and encourage charitable donations."

What he should have added was that his letter appeared to come right of Scruggs's lawsuit playbook. "The fact is these are the exact kinds of documents and information that Dickie Scruggs has been trying to get his hands on for his lawsuits," says a conservative Republican staffer on the Finance Committee. "We're essentially doing the heavy lifting in discovery for the trial lawyers and Senator Lott's brother-in-law."

Lott has not been out front on this issue, and has found himself in the middle of some ugly political battles because of his relationship with Scruggs. This appears to be yet another such instance.

Some Republican staffers, though, weren't surprised to see Lott's name associated with this budding controversy: "Any chance Lott gets to dance on an area that will annoy [Senate Majority Leader Bill] Frist, is a chance Lott will take," says a Senate GOP staffer. "Some of these are high-profile hospital groups, and I'm sure Frist has some ties to them."

Among the hospital groups that received the Grassley letter were: The Cleveland Clinic; New York Presbyterian Hospital System; Phoebe Putney Health Systems, Inc., Phoebe Putney Memorial Hospital, Inc., Albany, Ga.; Sutter Health, Sacramento, Calif.; Fairview Health Systems, Minneapolis; and Banner Health, Phoenix, Ariz.

Hospital groups found the letter curious, since it appeared that they were making reasonable headway with Grassley's staff. Now all bets are off.

"How a Republican chairman ends up essentially helping the trial lawyers is beyond me," says a healthcare lobbyist. "Healthcare is an issue Grassley cares about, perhaps this is his staff's doing, but someone needs to step in and take care of this. It stinks."

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