By Patricia Zengerle
LAS VEGAS (Reuters) - Harry Reid's future as U.S. Senate majority leader may hinge on whether fellow Nevada Democrat Shelley Berkley can survive an ethics probe involving her kidney doctor husband's businesses.
The House of Representatives Ethics Committee announced in July it was investigating Berkley, a seven-term congresswoman, over whether some of her actions as a legislator were meant to benefit her husband financially.
The news comes at a bad time for Berkley, who is locked in one of the country's closest Senate races against Dean Heller, even before news of the ethics probe. Polls since have shown her trailing the Republican ahead of the November 6 election.
Heller, a former congressman and Nevada secretary of state, has a higher statewide profile than Berkley and the benefit of incumbency. He was appointed to the Senate seat in May 2011 to replace fellow Republican John Ensign, who resigned after a sex scandal.
Berkley is known as a tireless campaigner, but she is not well-known across Nevada and risks having the ethics probe being the main reason voters know her outside of her Las Vegas-area district.
"If that's the first and the last thing people say about Shelley Berkley, she's in trouble," said Eric Herzik, chairman of the political science department at the University of Nevada in Reno. "She certainly has some major damage control to do."
Reid, Nevada's senior senator, is the major force in state Democratic politics. He survived a tough re-election race of his own in 2010 against Republican Sharron Angle and has thrown his organization behind Berkley.
Reid will be replaced as Senate majority leader if the Democrats lose their slim four-seat edge in the Senate, and the Nevada seat could be a key. Respected as a tough campaigner, Reid has been in the spotlight this month for his unflinching talk demanding that Republican presidential candidate Mitt Romney release his tax returns.
"If she wins, it will be because of the Democratic machine that Harry Reid created ... because she's not going to do it on her own," Nevada political expert Jon Ralston said.
STATEWIDE RACE, NATIONAL IMPLICATIONS
Outside groups including the conservative Americans for Prosperity and American Crossroads are already investing heavily in the race on Heller's behalf. But Berkley's campaign leads Heller's in out-of-state donations 60 percent to 40 percent, according to the Las Vegas Sun.
Analysts say Berkley will need Reid's organization, a strong performance in Nevada by Democratic President Barack Obama - and possibly mistakes by Heller - if she hopes to win in November.
Nevada is a complicated state for both parties this year. Its large Hispanic population is an advantage for Democrats, but its struggling economy - leading the country in mortgage foreclosures and unemployment - could back Romney's case for change.
"I don't think anybody out there is feeling especially secure," said Jennifer Duffy, senior editor at the Cook Political Report in Washington, which rates the Nevada senate race a toss-up.
An average of polls compiled by RealClearPolitics.com shows Obama leading Romney by 5.3 percent in Nevada. Obama won the battleground state by 12 percentage points in 2008, fueled by strong support among Hispanics, who account for about 15 percent of its voters.
In a case stemming from a September 2011 article in The New York Times, Berkley is accused of saving a Las Vegas kidney transplant center, which benefited her husband, a kidney specialist who owns a string of dialysis centers.
But investigators are also interested in how she introduced legislation and wrote letters to regulators on federal healthcare reimbursements that benefited her husband's businesses.
Berkley has denied any wrongdoing and dismissed the case as frivolous, contending that she was working for the residents of her district when she saved the center. She notes that Nevada Republicans - including Heller - also worked on its behalf.
The ethics panel is pursuing the case even though Berkley is leaving the House after the election, whether or not she wins the Senate seat.
It is not expected to rule on her case before election day, but the fact that a probe is taking place at all is something of a stigma.
Berkley's campaign is dealing with the issue head-on. She has released advertisements promoting her work to protect Medicare coverage for kidney dialysis patients and to keep the transplant center open. She also has attacked Heller for supporting Republican budget plans that would change Medicare.
But some analysts said the fact that Berkley is talking about the ethics investigation shows she is worried about it.
"They probably have polling data that her image has suffered because of this issue," Ralston said.
(Editing by Xavier Briand)
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