Fort Lauderdale federal grand jury subpoenas Broward Health’s purchasing records

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

A Fort Lauderdale federal grand jury has slapped a subpoena on Broward Health, demanding records related to an ongoing FBI investigation focused on its purchasing practices, two knowledgeable sources have told FloridaBulldog.org.

The subpoena, served earlier this month, is said to seek information about former hospital district procurement officer Brian Bravo and 16 companies that do business with Broward Health. They include MedAssets, a Georgia-based group purchasing organization for the Broward system and other hospitals (NASDAQ: MDAS) with a market capitalization of $1.87 billion.

The subpoena seeks those records going back 10 years. The name of veteran Assistant U.S. Attorney Neil Karadbil is on the subpoena.

“I’m told the (administrative) staff is on shutdown, spending hours finding all these documents,” one source said.

Broward Health’s attorneys declined to release a copy of the federal grand jury subpoena, saying it is exempt from disclosure under Florida’s public records law.

Fort Lauderdale Assistant U.S. Attorney Neil Karadbil

Commissioner Joel Gustafson, asked if he was aware of the grand jury’s subpoena, said, “I don’t know if I’m allowed to answer that question. We’ve been admonished not to talk about any alleged investigation. If I find that I can, I’ll call you back.”

At the same time, FloridaBulldog.org has learned that top Broward Health staff – chief executive Kevin Fusco, general counsel Lynn Barrett and security director and ethics officer Carlos Perez-Irizarry – have phoned board members to privately update them on the status of the criminal investigation. The move avoided a public discussion of those details.

Commissioners were told that district administrators, criticized in Miami-based investigator Wayne Black’s email for having blocked the FBI’s investigation, are cooperating and turning over requested records, although no time frame for compliance was given. They were also told that general counsel Barrett has waived a claim of privilege to certain documents, facilitating their production.

One of the items turned over: Bravo’s laptop.

The decision by Fusco and the others to brief commissioners individually, thus possibly outside the Sunshine Law, is problematic.

Sunshine law

Florida’s Government-in-the-Sunshine Manual, compiled by the attorney general’s office, cites a 1979 appeals court ruling that held a series of private meetings between a school board superintendent and individual members of the school board were subject to the Sunshine Law.

“While normally meetings between the school superintendent and an individual school board member would not be subject (to the Sunshine Law), these meetings were held in ‘rapid-fire succession’ in order to avoid a public airing of a controversial redistricting problem,” the manual says.

Joe Jacquot, a lawyer with the Foley Lardner law firm that represents Broward Health, said private updates for commissioners don’t violate the Sunshine Law. “As you say, staff appears to be updating individual board members in the normal course,” said Jacquot.

Broward Health officials have said Bravo was fired in December. On Sunday, hospital district board chairman David Di Pietro told This Week In South Florida that Bravo received an “unbelievable” severance package while he was under investigation by the FBI. The deal included a $17,000 payout for personal leave time, plus Bravo remains on Broward Health’s payroll until June.

Black, the private investigator hired last year to look into corruption allegations at Broward Health, told commissioners in a recent email that Bravo “was bragging about getting $75,000 BH (Broward Health) to pay his criminal defense attorney.”

Bravo did not respond to detailed requests for comment. Joel Hackney, chief executive officer of MedAssets, also did not respond to a detailed voicemail requesting comment.

Broward Health spends tens of millions of dollars on medical supplies every year. The district hired MedAssets in December 2007 in an effort to reduce the cost of supplies.

An undated company press release quotes Bravo: “MedAssets has been very effective in working with our leadership team, departments and physicians to review utilization and to implement strategies to reduce physician preference item supply costs while maintaining the quality of patient care.”

Supply costs can represent as much as 31 percent of a hospital’s cost per case, according to a 2006 academic study cited by the Milbank Quarterly, a healthcare journal.

“Gaining control of the hospital’s supply chain – the flow of products and associated services to meet the needs of the hospital and those who serve patients – presents special challenges,” the journal reported. “This is because the most expensive materials – up to 61 percent of the total supply expenditures – are for items about which physicians have a strong preference.”