Health care judge gets political dividends

How lovely it would be to believe that political ideology never influences federal judges’ rulings. Well, at least we can be sure that they step off any case in which they have a financial interest, can’t we?

Not necessarily.

This week, a deeply Republican federal jurist, U.S. District Court Judge Henry Hudson, found a key element of the health care law unconstitutional.

The fact that two other federal judges, both appointed by Democratic presidents, found the same provision perfectly constitutional means that so far judges are dividing along party lines like elected officials do.

Perhaps Hudson views cases through a legal perspective different from that of the other two (and from most constitutional scholars). Like a good conservative, he sees constitutional red lights where other judges see green. Fine.

Hudson acknowledges his partisan history, and there’s nothing unusual in political work leading to the federal bench. George W. Bush nominated him in 2002.

But he has something more than the usual political connections.

For the past 13 years, he has held an investment in a Republican political consulting firm, which pays him dividends every year.

Campaign Solutions Inc. gave him $5,000 to $15,000 in 2009, as it had in 2008, according to his latest financial disclosure reports, which only specify ranges for the amounts. Those were especially good years for advisers to Republicans. In all, over the past seven years since he has been reporting, Hudson’s dividends from the firm were $12,000 to $38,000.

He puts the value of his investment at $15,000 to $50,000. The Huffington Post, which reported the link July 30, described Campaign Solutions as “a powerhouse Republican online communications firm.”

Hudson isn’t commenting on his investment in the context of the health care case, according to Steven Popps, a law clerk to the judge.

But according to a Washington Post story published Dec. 7, Hudson said in an interview that he still owns shares in the firm, explaining that he and his wife invested in it before he joined the federal bench in 2002. They were invited to do so by a friend and neighbor, Republican fundraiser Becki Donatelli, who founded the firm in 1997.

(She also advises the political action committee of Sarah “death panels” Palin.)

‘Kind of silly’

Hudson told the Post he has had nothing to do with the company since becoming a judge. Well, nothing other than referring some nonprofits to it as potential clients.

“This is all getting to be kind of silly,” Donatelli said Tuesday in a telephone interview.

Yes, the Hudsons invested 13 years ago, before he was a judge. He’s a “passive investor” with no involvement in the firm, she said, noting he has “fully disclosed” his investment.

“His ownership in the company is 1 percent,” Donatelli said. She declined to comment any further.

The explanation may lessen the flagrancy of Hudson’s conflict but it doesn’t eliminate the problem.

First, the judiciary’s Code of Conduct, which all federal judges are supposed to follow, says: “A judge should refrain from political activity.”

And yet, Hudson is part-owner of a political firm. He has invested in Republican politics and is making money from it, money from clients such as the Republican National Committee and the National Republican Congressional Committee.

True, neither of them is directly involved in the case that Hudson’s judging. But if you think the legal effort to invalidate the national health care law isn’t one prong of a fierce Republican effort to get rid of the law and tarnish Democrats, you need to pick up a newspaper every now and then.

Besides, Republican Virginia Attorney General Kenneth Cuccinelli II, a plaintiff in the case, paid Campaign Solutions $9,000 this year and $9,000 last year to advise him, the Post reported.

When he learned of Hudson’s investment, Cuccinelli cancelled his contract with the firm. Not that there was anything wrong with it, you understand.

To recap, the plaintiff in the case and the political party trying mightily to undo the health care law have paid thousands of dollars to a political firm that annually pays thousands of dollars to a judge ruling on the constitutionality of that law.

Gray areas

I’m not saying this is some sort of payoff. Nor am I saying Hudson would have ruled differently if he didn’t have this investment.

But whatever gray area may exist on the question of when judges should recuse themselves, this isn’t one of them.

Judges are not supposed to decide cases in which they have a financial interest, “however small,” according to federal law. A judge “shall” disqualify himself from a case if he or his spouse “has a financial interest in the subject matter in controversy or in a party to the proceeding,” the statute says.

Some judges sell investments so they can hear more cases. Why hasn’t Hudson?

His health care ruling is dead wrong legally as well as a policy matter, in my view. But more important is the idea that issues be judged by people without a stake in the outcome. I would have said so sooner had I known of Hudson’s investment.

For similar reasons, I’ve argued that liberal judge Stephen Reinhardt should have recused himself from the gay marriage case in California because his wife played at least a tangential role in it.

Hudson told the Post that criticism like that stemming from his investment in Campaign Solutions simply “rolls off” his back.

It shouldn’t.

Ann Woolner is a Bloomberg News columnist.