Lawsuit: Corrupt giveaway at Broward Health to cost $2.5 billion over 25 years

By Dan Christensen, FloridaBulldog.org 

Fort Lauderdale’s Broward Health Medical Center, flagship of the North Broward Hospital District.

A corrupt deal at Broward Health that “gave away” the public hospital district’s radiation business for treating cancer patients is costing the troubled public hospital system an estimated $100 million a year in revenue.

That stunning allegation about taxpayer-supported Broward Health’s 25-year contract with 21st Century Oncology is contained in an amended complaint in the federal whistleblower case brought by former Broward Health chairman David Di Pietro and unsealed last week.

Florida Bulldog reported in February 2016 that Gov. Rick Scott had a financial interest in 21st Century when Broward Health’s board awarded it the unprecedented 25-year, no-bid contract to provide radiation oncology services at the district. Republican Scott, who as governor appoints Broward Health’s board, was then an investor in a private-equity firm that owned 21st Century.

“Under the terms of the original deal over the course of a 25-year contract, [former Broward Health President/CEO Frank] Nask gave away in excess of $2.5 billion in potential revenues to 21st Century Oncology with a potential profit margin in excess of $500 million,” says the complaint.

“In return, Broward Health would receive annual lease payments from 21st Century for the radiation equipment and hospital space. The lease payments totaled approximately $880,000 a year.”

The original length of the contract is for 10 years, with an option for the company to extend the contract three times for five-year periods.

Gov. Scott’s appointments ‘controlled’

According to the complaint, Nask accepted kickbacks delivered by the governor’s friend, 21st Century’s Fort Lauderdale lobbyist William “Billy” Rubin, to make the deal happen. The complaint says Rubin “controlled” the governor’s appointments to Broward Health’s board.

Lobbyist William “Billy” Rubin, left, and Gov. Rick Scott

Following the board’s approval of the contract in January 2012, 21st Century contributed nearly $400,000 to Gov. Scott’s re-election campaign, Florida Bulldog previously reported. The company likewise gave generously to the Republican Party of Florida.

Nask did not respond to an emailed request for comment. Rubin did not respond to a message left at his office.

The governor’s office released this two paragraph statement:

“Neither the Governor’s office nor the Governor are named as a party in this lawsuit, which was filed against a private company four days after Mr. Di Pietro resigned from the board in April 2016. Governor Scott has acted to make sure that the North Broward Hospital District is accountable to the taxpayers they serve and will continue to do just that.

“In fact, after Governor Scott took office in 2011, he put all his assets in a blind trust so they would be under the control of an independent financial professional. As such, the Governor has no knowledge of anything that is bought, sold or changed in the trust.”

The governor’s statement is at least partially incorrect, however. The trustee of the governor’s blind trust is Hollow Brook Wealth Management, a New York firm whose chief executive is Scott’s longtime business crony, Alan Bazaar.  Further, U.S. Securities and Exchange records show that Gov. Scott personally filed required reports disclosing large stock sales while those securities were in the “blind trust.”

The amended complaint has not yet been filed in the whistleblower case now before Fort Lauderdale U.S. District Judge Kathleen Williams. It was, however, filed last week in federal bankruptcy court in New York, where Fort Myers-based 21st Century is seeking to reorganize and shed more than half of its $1.1 billion in debt.

21st Century announced its voluntary filing for Chapter 11 bankruptcy protection in May in the wake of declining revenues and two expensive settlements with the Justice Department of alleged Medicare billing fraud in 2015 and 2016. The total cost of the settlements: $54.5 million.

Lawyers for Di Pietro, appointed by Scott to Broward Health’s board in September 2011, filed the amended complaint as part of an adversary action in bankruptcy court that asks the court to declare that, unlike 21st Century’s other debts, Di Pietro’s whistleblower action under the federal False Claims Act should not be discharged by the court.

The whistleblower suit

The lawsuit against 21st Century and 100 “John Doe” defendants seeks to recover money wrongfully billed to Medicare, Medicaid and other federal healthcare programs. Federal prosecutors recently declined to intervene in the case, but are keeping a careful watch on developments. Di Pietro stands to receive a substantial reward if his lawsuit leads to any recovery.

Kickback schemes traditionally involve payments that are doled out to facilitate an illicit scheme. But the alleged kickback scheme described in the complaint does not involve cash-stuffed envelopes.

Rather, the lawsuit contends that lobbyist Rubin told CEO Nask that if he supported approval of 21st Century’s contract, the governor would appoint board members who would protect his job, $680,000 annual salary and pension.

Nask allegedly accepted Rubin’s offer and later paid what the complaint calls “hush money” to buy the silence of the operators of another cancer care company, HealX, that Nask pushed out to pave the way for 21st Century. In all, the lawsuit says, Nask authorized the payment of $830,000 to Heal X and Dr. Anurag Agarwal.

Nask did not tell the board about the kickbacks that induced the deal or his hush-money payments, and led the board to believe that HealX had quit, the complaint says. Further, Nask “obscured” financial information about the deal, including “major losses” and the fact that the contract let 21st Century “bill, collect and keep all global revenues associated with outpatient radiation oncology services” – a “major change in the billing arrangement” for the district’s oncology services, the complaint says.

Broward grand jury hears first witnesses in criminal probe of Broward Health

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

Broward State Attorney Michael Satz Photo: Tom Tracy, Florida Catholic

A Broward grand jury began hearing testimony Wednesday about alleged criminal conduct at long-troubled Broward Health, the taxpayer-supported public medical system for the northern two-thirds of the county.

A panel of 18 grand jurors were on hand to examine potential criminal violations of Florida’s Government-in-the-Sunshine Law and state ethics laws by the seven-member commission appointed by Gov. Rick Scott that runs the health-care agency.

The grand jury may also take a broader look at Broward Health, which has been buffeted by allegations of mismanagement and insider dealing for years. Grand jurors have the power to recommend changes in the system’s governance and have done so with various governments in the past.

“I decided our office should focus on possible Sunshine Law violations and related matters that had come to our attention,” said Broward State Attorney Michael Satz.

Office spokesman Ron Ishoy indicated that grand jury testimony would reach into many areas of the public health-care system.

“We are in the midst of a wide-ranging investigation,” he said.

News of the county grand jury’s probe comes amid an ongoing federal grand jury’s look at suspicious purchasing practices at Broward Health. Florida Bulldog reported in February 2016 that the federal grand jury has subpoenaed Broward Health’s records about former procurement officer Brian Bravo and 16 companies, including MedAssets, a publicly traded, Georgia-based group purchasing organization.

‘No overlap’

Satz was reluctant to convene a grand jury on Broward Health last year because he felt that it might duplicate or get in the way of the federal investigation. On Tuesday, he indicated that was no longer an issue. “There continues to be good cooperation between the investigative agencies involved and no overlap,” Satz said.

Former Broward Health General Counsel Sam Goren entering the grand jury room on Wednesday. Photo: Florida Bulldog

Grand jury proceedings, both federal and state, are secret. Wednesday morning, however, subpoenaed witnesses began showing up outside the grand jury’s new home — Courtroom 10175 on the 10th floor of the new Broward County Courthouse Tower.

The kickoff witnesses were Broward Health’s former general counsel Sam Goren and ex-board chairman David Di Pietro. Goren, accompanied by his colleague attorney Jacob Horowitz, testified for an hour and 15 minutes. Di Pietro testified for nearly two and a half hours. Neither man would discuss his testimony nor disclose what matters he was asked about.

Appearing to testify in the afternoon were Pam Hatfield, senior executive secretary to Broward Health’s president/CEO, and former Broward Health Commissioner Maureen Canada.

Investigators led by Assistant State Attorney Tim Donnelly, chief of the office’s Public Corruption/Special Investigations unit, brought nine boxes of documents with them to the grand jury room. Accompanying Donnelly at yesterday’s proceedings were prosecutors Whitney MacKay and Chris Killoran.

Broward corruption prosecutor Tim Donnelly outside the grand jury room on Wednesday. Photo: Florida Bulldog

Broward Health is an independent special district whose legal name is the North Broward Hospital District. It operates four hospitals, including its flagship Broward Health Medical Center in Fort Lauderdale, and additional urgent care and outpatient centers.

The governor appoints a board of commissioners that runs the district and levies property taxes to help support its mission, which includes providing treatment for indigent patients. The board has seven seats, but two are currently unfilled. All five commissioners are Republicans appointed by Gov. Scott.

Di Pietro blows whistle

Di Pietro filed a federal whistleblower suit last year shortly after he quit the board. The lawsuit was unsealed late last week, and Florida Bulldog reported Monday that it contains a number of politically explosive allegations about insider influence, including kickbacks and “hush money” payments at Broward Health that reach up to the governor himself.

Former Broward Health chairman David Di Pietro exiting the grand jury room on Wednesday. Photo: Florida Bulldog

Prosecutors have fielded numerous complaints about the governance of the public-health system during the past 18 months. At least two of the complaints involve the controversy swirling around the hiring of Interim President/CEO Beverly Capasso.

One complaint alleges Capasso, who was a Broward Health commissioner at the time, violated Florida ethics laws when she voted to give herself her current job. Florida law on voting conflict states that “no county, municipal, or other local public officer shall vote in an official capacity upon any measure which would inure to his or her special private gain or loss.”

The CEO job pays Capasso $650,000 annually. A search for a permanent chief executive is underway.

Another allegation is that board members discussed hiring Capasso in private, thus breaking the Sunshine Law, which requires most public matters to be discussed in the open.

An abrupt hiring

She was hired suddenly as CEO during a May 8 Broward Health Commission meeting. Before the vote, fellow board members did little questioning of her background, her health care experience or how she would approach the job. Because of the lack of meaningful debate at the meeting when Capasso was hired, the move appeared preplanned.

After her hiring, information about Capasso’s background surfaced that was never publicly discussed before she was hired. The Sun-Sentinel reported that Capasso held a master’s degree from an unaccredited mail and online university that a federal investigator called a diploma mill during congressional testimony.

Broward Health Interim President/CEO Beverly Capasso talks with Commissioner Christopher Ure after Monday’s board meeting. Photo: Florida Bulldog

Gov. Scott appointed Capasso, a registered nurse whose experience included a stint as chief executive of Jackson Memorial Hospital, to Broward Health’s board in October 2016.

Another complaint filed with the State Attorney’s Office alleges that Broward Health Commissioner Christopher Ure used his position to get an investigator to threaten his mistress.

“I filed the complaint and went in to talk to Tim Donnelly about it. Donnelly told me they were going to hold a Grand Jury concerning Broward Health” but gave no timetable, community activist and blogger Dan Lewis said.

Lewis outlined his allegations in an Aug. 21 post on his Broward Health Blog.

WestonGuy954

“Christopher Ure and Jane Doe met online late in 2015.  He used ‘Guy Weston’ and ‘WestonGuy954@gmail.com’ as his online profile (clever, he lives in Weston and he’s a ‘guy’).  He also used an anonymous Google voice number 770-580-4009 to keep his communications secret,” Lewis wrote.

Lewis posted pictures that Ure allegedly texted the woman, including one he described as taken outside his daughter’s school play.

Dan Lewis

Late last year, Ure and the woman had a falling out.  She felt she was jilted and tried to contact Ure’s wife and Ure’s minister, Lewis wrote. Then one day she received a call from a private investigator trying to warn her off.

“As you know, um, our friend has a very important job and I, uh, look out after these guys so you can look it up,” the investigator said in a message that was recorded and given to Lewis.

The investigator worked for a law firm that in the past had sued Broward Health for malpractice.

Lewis complained to the State Attorney’s Office that Ure received “a favor” because he was a Broward Health commissioner involved in a lawsuit with the investigator’s employer. If proved, such a favor would constitute unlawful misuse of public office.

Ure did not return phone messages requesting comment.

Tools for change

Grand jury reports can be powerful tools for change, but their success has been mixed in Broward.

In 2009, grand jurors recommended tougher regulation of pain clinics that had proliferated in Broward, where 33 of the nation’s 50 leading dispensing physicians of Oxycodone were then located. The report helped bolster the argument that stricter laws were needed, and Tallahassee acted.

Repeated examinations of the Broward schools construction practices by local and state grand jurors failed to produce the same results.

In 1997, the grand jury blasted the Broward public schools for shoddy construction and overspending. But as a 2002 grand jury report noted, it changed nothing.

A 2015 report from the State Attorney’s Office again slammed the School Board for not following earlier grand jury recommendations, including those by a statewide grand jury.

Attorney General Bondi gives Broward Health deep discount in fraud settlement

By Dan Christensen, FloridaBulldog.org 

Florida Attorney General Pam Bondi

Eighteen months ago, the office of Florida Attorney General Pam Bondi demanded Broward Health pay more than $5.3 million to settle state Medicaid fraud claims uncovered during a federal whistleblower probe that cost Broward Health $69.5 million.

On Monday, Broward Health’s commissioners gleefully approved paying instead $1.5 million to settle with the state.

“Obviously we would have preferred zero, but we need to get this behind us and have it over done,” said Commissioner Linda M. Robison, the board’s secretary/treasurer.

Commission Chairman Rocky Rodriguez called the settlement payout “a drop in the bucket.”

No explanation was given to explain the deep discount that Broward Health got.

Florida Bulldog reported the state’s claim on Broward Health in March 2106 after Bondi’s office released a copy of the state’s demand letter in response to a public-records request.

The precise amount originally sought was $5,325,671, which Assistant Attorney General Jill Bennett informed Broward Health’s lawyers “represents damages recoverable under the Florida False Claims Act.

“This settlement demand amount is based upon (the) North Broward Hospital District having entered into financial relationships with physicians that violated the Physician Self-Referral Law, the Florida Anti-Kickback Statute, Florida statutes and the Florida False Claims Act,” Bennett’s letter said.

The North Broward Hospital District is Broward Health’s legal name.

Scheming to defraud

The letter accused Broward Health of scheming to defraud Medicaid with nine of its doctors who had been given improper and illegal contracts. The various contracts were in force for between six and 14 years. The doctors named in the letter were George Caldwell, Michael Chizner, Violeta McCormack, Hector Rodriguez-Cortes, Rudolph Roskos, John Rozanski, Ashok Sharma, Erol Yoldas and Shazia Zafar.

Coincidentally, commissioners on Monday renewed for two years Broward Health’s employment agreement with Dr. Rodriguez-Cortes. Rodriguez-Cortes is the Medical Director for pediatric hematology oncology services at the Salah Foundation Children’s Hospital at Broward Health Medical Center in Fort Lauderdale.

The state’s allegations mirrored the federal Medicare/Medicaid fraud case against Broward Health.

Broward Health General Counsel Lynn Barrett announced the settlement at Broward Health’s regular board meeting. “We thought this is a very, very good settlement,” she told commissioners while recommending they approve the deal.

Negotiations that led the state to significantly discount its own claim also put an end to concern that the state might go through with its threat to sue in Leon County Court and seek treble damages and civil penalties of not more than $11,000 for each false claim that Broward Health submitted.

Florida and the federal government share the cost of the state’s Medicaid program, which provides medical coverage to low-income individuals and families.

Corruption allegations involving Broward Health, Gov. Scott unsealed in whistleblower suit

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott, left, and Fort Lauderdale lawyer David Di Pietro

New and politically explosive corruption allegations surrounding Broward Health’s no-bid, 25-year contract with 21st Century Oncology – a company financially tied to Gov. Rick Scott – are spilling out publicly with the unsealing of a federal lawsuit in Fort Lauderdale.

Florida Bulldog exclusively reported last year about 21st Century’s unprecedented 2012 contract to provide radiation oncology services at Broward Health, and how it was inked while the governor was an investor in a private-equity firm that owned 21st Century Oncology.

The 53-page whistleblower lawsuit brought by former Broward Health board chairman David Di Pietro against Fort Myers-based 21st Century and 100 “John Does” claims to provide the inside story behind the deal.

“The existence of the 21st Century contract was recently revealed in the media to the public. What hasn’t been revealed is why and how 21st Century received this extraordinary contract from Broward Health,” the lawsuit says. “The answer is kickbacks.”

Along the way, the complaint alleges, Broward Health’s former chief executive officer, Frank Nask, paid hundreds of thousands of taxpayer dollars in “hush money” to grease the deal. To get Nask on board with 21st Century’s plans, Fort Lauderdale lobbyist William “Billly” Rubin, one of the governor’s closest friends, allegedly offered Nask kickbacks of financial security and the governor’s political protection, while applying political pressure in the governor’s name where necessary.

Lobbyist William “Billy” Rubin

Specifically, “Rubin promised Nask that [the governor’s] appointments to the Broward Health Board would protect Nask’s continuing employment salary and pension as CEO,” the suit says. “Rubin also communicated the message to Nask that if he did not support the contract with 21st Century, then the appointments to the board would not be his allies and his employment would be terminated.”

Nask’s annual salary at the time was about $680,000, plus performance bonuses and benefits. At the time, it had been publicly reported that the federal government was investigating the district’s contracts with 27 of its physicians – a probe that led to a $69.5 million settlement in 2015 – and Nask “needed allies … Nask agreed to Rubin’s demands,” the complaint says.

21st Century executives ‘fully aware’

“Executives at 21st Century were fully aware and complicit in this kickback scheme,” the complaint says.

Neither Rubin nor Nask could be reached for comment. A spokeswoman for 21st Century said the company does not comment on pending litigation.

Gov. Scott’s Office released this statement: “(Neither) the Governor’s office nor the Governor are named as a party in this lawsuit, which was filed against a private company four days after Mr. Di Pietro resigned from the board in April 2016.  Governor Scott has acted to make sure that the North Broward Hospital District is accountable to the taxpayers they serve and will continue to do just that.”

Di Pietro declined to comment. His lawsuit seeks to recover tens of millions of dollars it says were wrongfully billed to Medicare, Medicaid and other federal health-care programs. If successful, whistleblowers like Di Pietro can collect huge rewards.

21st Century operates approximately 145 cancer treatment centers in 17 states. According to the lawsuit, 21st Century “orchestrated” the scheme “to control referrals of cancer patients for radiation oncology services,” targeting Broward Health because it is a major regional treatment center for cancer patients. “Thousands of patients insured by Medicare and other federal healthcare programs” provide “a lucrative revenue stream for 21st Century.”

The entrance to 21 Century Oncology’s headquarters in Fort Myers

21st Century has been a reliable contributor to Gov. Scott’s election campaigns. For example, state records show that between May 2012 and January 2014 – the year Scott faced a tough re-election challenge from former Gov. Charlie Crist – 21st Century gave more than $360,000 to Scott’s Let’s Get to work political committee. After Scott was re-elected, the company gave an additional $30,000.

Broward Health, whose legal name is the North Broward Hospital District, has 8,000 employees and operates more than 30 healthcare facilities including Broward Health Medical Center, Broward Health North, Broward Health Imperial Point and Broward Health Coral Springs. It is an independent special district run by an all-Republican board of commissioners appointed by the governor. The district is obliged to treat indigent patients and levies ad valorem taxes of about $170 million a year on property owners in North Broward.

Gov. Scott allegedly involved himself directly in the matter about March 2012 with a phone call to Di Pietro, whom he’d appointed to Broward Health’s board on Rubin’s recommendation in September 2011. Scott’s call came around the time “a colleague of Di Pietro’s” called then-Lt. Gov. Jennifer Carroll “to advise her that Rubin was using undue influence and political patronage to appoint commissioners to the Broward Health Board in order to get his clients’ contracts approved.”

Broward Health CEO Frank Nask Photo: Karla Bowsher

Scott phoned on a day he was interviewing two potential board members. “Di Pietro told Governor Scott that Nask and Rubin were hand-picking ‘candidates’… and that the two interviews he had that day were not independent candidates; rather they would be doing the bidding of Nask and Rubin. Governor Scott acted upset but he ignored Di Pietro’s concerns. Governor Scott continued to follow Rubin’s lead in appointments to the board,” the suit says.

Days later over lunch, March 27, 2012, Rubin “expressed frustration” at Di Pietro, telling the governor about “my appointments” to Broward Health’s board, the complaint says.

Pressure on El Sanadi

Among those who felt pressure from Rubin was Dr. Nabil El Sanadi, who succeeded Nask in December 2014. El Sanadi commited suicide on Jan. 23, 2016.

Shortly after El Sanadi was hired, Rubin set a Jan. 19, 2015 meeting with El Sanadi, lobbyist Jim Eaton, 21st Century boss Dr. Daniel Dosoretz and Di Pietro. The complaint says that at the gathering, Dosoretz is said to have “bragged” about his “close friendship with Governor Scott” and urged El Sanadi “to give more business to 21st Century.” Specifically, Dosoretz allegedly asked El Sanadi to arrange for Broward Health to circumvent eligibility rules of a government drug discount program for hospitals and buy the chemotherapy drugs used by his company to “save 21st Century monies on those drugs.”

Dr. Nabil El Sanadi, Broward Health’s late chief executive

Di Pietro, who operates his own Fort Lauderdale law firm, contends that Rubin continued to meet with El Sanadi “on a weekly basis” until El Sanadi’s abrupt death.

The complaint blames the corrupt 21st Century deal for leading to losses of more than $30 million for taxpayer-supported Broward Health between September 2011 and its filing in April 2016.  “Over the course of the potential 25-year term of the contract, Broward Health is on track to lose over $125 million.”  Potential billings by 21st Century during the 25-year term “will exceed $800 million,” the suit says.

Di Pietro and his attorneys filed the case under seal in April 2016 under the False Claims Act and Qui Tam statute, part of a Latin phrase that means “he who sues in this matter for the king as well as for himself.” The case was ordered unsealed Friday by Fort Lauderdale U.S. District Judge Kathleen M. Williams after the government declined to intervene. No explanation was given for that decision, though it could involve 21st Century’s July filing in bankruptcy court that seeks to reorganize and shed massive debt.

Prosecutors, however, reserved the right to intervene later “for good cause” or seek dismissal. The decision means the case will proceed with Di Pietro’s team of attorneys prosecuting. Lead counsel is Atlanta’s Bryan Vroon, who in 2015 represented whistleblower Dr. Michael Reilly while extracting $69.5 million from Broward Health to settle allegations of health-care fraud.

The death of Dr. El Sanadi marked the beginning of the end of Di Pietro’s chairmanship.

Six days after El Sanadi’s death, the governor’s chief inspector general, Melinda Miguel, informed Di Pietro that with Scott’s support she would be conducting a review of all of Broward Health’s contracts dating from July 1, 2012.

Timing of state probe of Broward Health ‘no coincidence’

“The cutoff date of contracts to be reviewed by the governor’s chief inspector general is no coincidence. Broward Health originally entered the contract with 21st Century in September 2011,” the complaint says. “There would be a public appearance of an investigation by the governor’s office but the 21st Century contract would escape review.”

Melinda Miguel

On March 18, 2016 Miguel sent a letter to Scott accusing Di Pietro and board member Darryl Wright of interfering with her investigation by hiring outside legal counsel for the board. “Within minutes” Scott suspended Di Pietro and Wright for “acts of malfeasance,” the complaint says.

Days later, Di Pietro asked a Broward judge to reinstate him to the board. On April 11, following a hearing, Circuit Judge Carol Lisa Phillips determined that Miguel’s letter and Scott’s executive order suspending Di Pietro were “devoid of any specific acts of malfeasance” and granted Di Pietro’s petition for reinstatement. Three days later, Di Pietro resigned from the board.

According to the lawsuit, the contract was the result of political intrigue initiated by 21st Century and led by lobbyist Rubin. Specifically, it says Rubin was hired in the summer of 2011 to approach Nask about obtaining a lengthy, exclusive contract.

Di Pietro voted to approve the 21st Century deal in January 2012, apparently not knowing of the governor’s indirect ownership interest in the company or Nask’s hush money payments to HealX Oncology. Months later, after learning of the payout from Broward Health’s then-internal auditor, Maria Panyi, Di Pietro began asking questions.

That summer and fall, Rubin told Di Pietro “not to discuss or investigate the HealX payouts because the issue would ‘hurt’ Nask, 21st Century Oncology and Governor Scott.” Rubin allegedly kept up the pressure on Di Pietro, instructing him to be a “team player” and to support the governor.

To obtain the contract for 21st Century, Nask first had to terminate the existing contract with HealX Oncology. To do so, he arranged for the payment of $830,000 in “hush money” intended to “buy silence” of HealX and Dr. Anurag Agarwal, the complaint says.

The complaint says Broward Health cut three checks to HealX without the board’s approval. Two checks were for $250,000, the limit on payments Nask had authority to authorize alone. The third check for $330,000 was justified as “director fees” for three years, and the district paid “without any supporting documentation.”

Nask ‘obscured’ major losses

The lawsuit says Nask didn’t tell the board about the kickbacks that induced the deal or his hush money payments, while leading board members to believe that HealX had quit. Likewise, Nask “obscured” financial information about the deal from the board, including “major losses” from the deal and the fact that the contract let 21st Century “bill, collect and keep all global revenues associated with outpatient radiation oncology services” – a “major change in the billing arrangement” for the district’s oncology services.

Nask also did not obtain a fair market valuation regarding “the economics of the deal with 21st Century.” Di Pietro didn’t learn the truth until years later, the complaint says.

In the summer of 2014, Nask “saw an opportunity to escape the kickback control of 21st Century” by supporting Charlie Crist over Scott in the gubernatorial race, the complaint says. Nask wanted to leak information then about the ongoing federal probe or to settle prior to the election to hurt Scott. But Rubin learned of Nask’s plan and told Di Pietro to “squash Nask like a bug” and “have him fired.”

Nask was gone by the end of the year, and Di Pietro recommended Dr. El Sanadi as his replacement. After apparently being reassured that El Sanadi would back 21st Century, Rubin pushed the governor to appoint to the board Maureen Canada and Sheela Van Hoose, two El Sanadi supporters. After El Sanadi’s appointment, “Rubin communicated to El Sanadi that he was indebted to Rubin,” the complaint says.

Rubin apparently forgave Nask for his political transgression. The complaint says Rubin lobbied Di Pietro to give Nask a ‘generous’ severance package. “Broward Health paid Nask a full-year of compensation after his retirement,” the complaint says.

In late 2014 and early 2015, Di Pietro “discussed with El Sanadi the unfortunate reality of political control at Broward Health” and that he would “face the challenge of working closely with Rubin” and his addressing his demands to protect and favor 21st Century.

“The message to El Sanadi was clear,” according to the lawsuit.

In addition to counts alleging false claims, the lawsuit also accuses 21st Century of making false statements to obtain payments, conspiring to submit false claims, causing claims to be falsely certified, knowingly retaining overpayments and making false records to avoid having to make refunds.

The complaint’s bottom line: “Without any bids or independent fair market valuations, a private company gained control of a major public hospital system’s referral stream of cancer patients, the entire radiation oncology infrastructure of general space, vault space and radiation equipment and ‘global revenues’ from treating such patients.”

Broward Health data breach released patient information to tax fraud ring

By Dan Christensen, FloridaBullog.org bhmcentrance

For the second time in three years, a data breach at Broward Health has caused the release of personal patient information in what one district executive called “a ring of thugs.”

Broward Health disclosed the breach on its website last month, saying it was advised by “law enforcement authorities” on May 12 that “patient information was discovered at an individual’s home during a routine investigation.”

Broward Health’s internal investigation later determined the sensitive patient information “was taken from Broward Health Imperial Point” in Fort Lauderdale by “an unidentified individual.”

The stolen information were hospital Facesheets that contain a patient’s full name, date of birth, address, phone numbers, Social Security number, primary insurance provider, insurance guarantor, reason for visit, emergency contact/next of kin information.

“The data removal is believed to have occurred between November 2011 and March 2012. We have notified 126 former patients or their listed next of kin of the privacy breach by mailing a letter to their last known address on September 23, 2016,” Broward Health’s disclosure said. “We also offered them an identity theft protection service at no cost.”

No explanation was given for the gap in time between the breach and the date it was discovered. Broward Health, however, said it has completed its internal probe and is “reviewing and enhancing safeguards to better ensure the security of patient information.”

Doris Peek, Broward Health’s senior vice president and chief information officer, said the breach is the latest in a series of data thefts at Florida hospitals, including Fort Lauderdale’s Holy Cross, Hollywood’s Memorial Regional and the University of Florida’s Shands Hospital in Gainesville.

‘Busted last year’

“This ring of thugs got busted last year,” said Peek. “They send in tax information to the IRS about persons to get their tax refund. They targeted the older and sick population.

Peek said the identity theft ring has paid hospital registrars, among the lowest paid of hospital workers, to provide them with printed copies of the Facesheets.

Police in Coral Springs, responding to a domestic violence report, found the Broward Health Facesheets, and turned them over to Broward Health’s security department, said Peek.

Broward Health disclosed a larger data breach in 2013 at Broward Health Medical Center, the hospital district’s flagship in downtown Fort Lauderdale. That time Broward Health sent letters to approximately 960 former patients notifying them of the breach involving their personal information.

Again the breach involved misappropriated Facesheets. However, Broward Health managed to identify the culprit as “an employee who no longer works at the hospital.” The ex-employee was not named. The breach was said to have occurred between October and December 2012.

In September 2013, Holy Cross notified 9,900 former patients that a former employee had wrongly accessed their personal information. CBS Miami reported then that an investigation by the hospital found “the employee may have wanted the information to file fraudulent tax returns.”
Holy Cross suffered another breach in 2010 when an identity theft ring obtained emergency room files to steal Social Security numbers and other information of about 1,500 patients, according to a report in the Sun-Sentinel. Four people were arrested, including an emergency room employee.

In 2012, Memorial Healthcare System notified about 9,500 patients of an investigation into two ex-employees who improperly accessed patient records. The former employees were apparently using the private information in those records to file false tax returns, according to a story at the time by Modern Healthcare.

Report: Taxpayer-supported Broward Health engaged in ‘cultural civil war’

By Dan Christensen, FloridaBulldog.org bhcompliance2

The law firm that’s overseeing taxpayer-supported Broward Health’s compliance with conditions imposed by the U.S. last year when it paid $70 million to resolve alleged lawbreaking has concluded the troubled hospital district is in a state of “cultural civil war.”

Baker Donelson was hired in December to serve as the “Independent Review Organization” (IRO) under the terms of a five-year Corporate Integrity Agreement between the North Broward Hospital District (NBHD) – Broward Health’s legal name – and the U.S. Department of Health and Human Services.

The IRO’s 137-page annual report, obtained by Florida Bulldog using Florida’s Public Records Law, lays out what it says are Broward Health’s “numerous systems deficiencies” while also defending itself from anonymous, yet widely distributed accusations that it was not truly independent and was hired thanks to insider connections.

The report, often citing unnamed sources, is highly critical of Broward Health’s recently departed Chief Compliance Officer Donna Lewis for refusing to produce, among other things, requested information about employee complaints. Also singled out for criticism: Broward Health’s Interim CEO Pauline Grant and Chief Information Officer Doris Peek, who, along with Lewis, are accused of planting “negative articles regarding the IRO in the local media.”

Former Broward Health Chief Compliance Officer Donna Lewis

Former Broward Health Chief Compliance Officer Donna Lewis

Grant and Peek both denied the accusation on Sunday. “I never planted any negative articles,” said Grant. Lewis could not be reached for comment.

The report and its exhibits can be downloaded here.

“There has been a pervasive pattern of personal destruction in which former and some current members of the senior management team use public meetings, the media, self-serving reports disguised as work product, and frivolous ‘anonymous’ complaints through the disclosure program as a means to falsely attack the character of, pressure, or aid in the termination of NBHD’s Board of Commissioners, senior management, and others,” the report says. “In other situations, it appears the methods are used to enhance the influence of senior management’s departmental fiefdoms.”

The report goes on to assert that management actions “appear to be routinely based upon self-interest, protection of position and department, not for the betterment of the system.” That “lack of professionalism” fails “not only the patients the system services, but the taxpayers who help fund it.”

Anticipating the report’s release, Broward Health’s board voted last week to authorize management to request up to 60 days to respond to the IRO report which will be sent to a federal monitor and could lead to further government action against Broward Health.

A new CEO coming soon

Who will author the response is unclear. The board recently has interviewed several candidates to become Broward Health’s permanent President/CEO. A meeting to make that selection is set for Oct. 31.

Broward Health, with four hospitals, three outpatient facilities and nearly 9,000 employees all north of Griffin Road, is the ninth-largest public health system in the country. It is a special taxing district overseen by a board of commissioners appointed by the governor.

The report says Broward Health suffers from “operational mismanagement” to include “considerable understaffing” in key areas such as physician services and the compliance and ethics office. Likewise, the report notes, two seats on the governing board of commissioners remain vacant. (On Friday, Gov. Rick Scott appointed Parkland’s Bev Capasso, a former chief executive officer of Jackson Memorial Hospital, to one of those seats.)

The report traces Broward Health’s “cultural war” to the hospital district’s “pervasive physician-centric tradition, in which senior management and staff instinctively defer to physicians, particularly regarding compensation.”

Broward Health Interim CEO Pauline Grant

Broward Health Interim CEO Pauline Grant

Allegedly illegal pay deals between Broward Health and its physicians was the focus of the False Claims Act lawsuit brought by whistleblower Dr. Michael Reilly that led to the $70 million settlement in September 2015. Allegedly violated in the scheme: the Stark Law, which generally prohibits physicians from referring patients to hospitals with whom they have a financial relationship, and the Anti-Kickback Statute, which prohibits paying physicians for healthcare referrals.

Without naming names, the report says some physicians are involved in “repetitive upcoding,” or assigning improper billing codes for medical procedures to increase their Medicare and Medicaid reimbursements. Baker Donelson says it has “encouraged” Broward Health to hire “expert coders” to handle coding for it doctors “to help remove even the appearance of a conflict of interest in coding.”

The report is similarly critical of Broward Health’s “ineffective response to the implementation” of compliance monitoring and auditing procedures, notably the lack of what’s known as a “Focus Arrangements” database that can track government-reimbursed physician referrals and sales.

‘Lack of commitment to compliance’

Baker Donelson’s report, prepared under the direction of attorney J. Scott Newton, accuses Broward Health of a “lack of commitment to compliance” both before and after the embarrassing federal investigation and costly settlement. It says problems began after Lewis was hired as chief compliance officer in April 2011.

One month later, a federal subpoena announced the start of the government’s fraud probe. It sought a multitude of records about physician contracts and other matters, yet appears to have had no “impact whatsoever on the operation or effectiveness of the compliance program,” according to the report.

The report’s litany of deficiencies, however, neglects to note that Broward Health’s compliance troubles pre-date Lewis’ arrival. For example, for more than a decade both management and the board ignored a lobbyist registration policy adopted in 2004. The district finally implemented a policy requiring lobbyists to register last month as a result of a Florida Bulldog story in May.

Baker Donelson’s report praises the “outstanding work” of Broward Health’s controversial General Counsel Lynn Barrett and her Legal Department in making important changes to the district’s poorly crafted compliance program by re-writing its Code of Conduct and ethics policies. The problem: the implementation of those measures was “seriously deficient in many critically high risk areas,” the report says.

The report, however, makes no mention of various controversies that have swirled around Barrett. They include allegations Barrett improperly attempted to block the public from meetings, steered millions of dollars in legal work to law firms with strong ties to Gov. Scott, and failed to cooperate with the FBI during an ongoing federal grand jury investigation into allegedly corrupt purchasing practices at Broward Health.

The report also details Baker Donelson’s annoyance at an article published in Medicare Compliance Review that “impugned the IRO’s qualifications.” The report suggests Interim CEO Grant, Compliance Chief Lewis and Chief Information Officer Peek planted the story.

A newsletter’s upsetting story

The story apparently at issue was published in June by a newsletter with a different name, Report on Medicare Compliance. Among other things, the story quoted Donna Lewis as criticizing the board’s efforts to identify the author of the anonymous email that raised questions about Baker Donelson’s independence and other matters. She told the newsletter that anonymous allegations are “routine” compliance matters and that the board’s high-profile hunt for the author had “eroded” trust.

“I have never seen a compliance complaint take up so much time from a governing body,” she said.

At a subsequent meeting by Baker Donelson with top Broward Health management, “it was emphatically noted to Grant that what appeared to be senior management-placed negative articles regarding the IRO in the local media would not deter our work. We advised Grant that we did not believe any articles or public comments were made without her authorization.”

The report adds that anonymous employees had told the law firm that Grant, Lewis and Peek “were overheard in Peek’s office discussing” what later became the article.

“Contacting the media, particularly because of the Florida Sunshine law, appears to be used as a common weapon in the cultural war at NBHD as a means of asserting false allegations and/or pressure on those who would refuse to change the culture of corruption,” the report says.

“Here, while it is certainly beyond the scope of our review, the IRO questions whether tax dollars were used to publish the ‘Medicare Compliance Review’ article and if so, if that constitutes an improper misuse of public funds. We will leave that determination for state officials, should they undertake a review.”

Broward Health begins lobbyist registration – 12 years and millions in contracts late

By Dan Christensen, FloridaBulldog.org 

Broward Health's corporate headquarters in Fort Lauderdale

Broward Health’s corporate headquarters in Fort Lauderdale

Broward Health’s long-lost lobbyist registration policy is, at last, resurrected. Lobbyists looking to influence district policy or the award of profitable contracts must now publicly identify themselves and their clients.

Six lobbyists have registered since the program began Sept. 12 – all representatives of large, out-of-state pharmaceutical or hospital and medical supply companies like Sandoz, Genentech and Carefusion.

Who to watch out for going forward: politically connected local lobbyists like William “Billy” Rubin and Fred Karlinsky, who’ve operated behind the scenes at Broward Health in the past.

Rubin is a confidant of Gov. Rick Scott. Karlinsky was co-chair of Scott’s 2014 statewide campaign finance committee. The governor appoints the board of commissioners that governs the billion-dollar public health system whose legal name is the North Broward Hospital District.

FloridaBulldog.org reported in May that for 12 years Broward Health had ignored its own lobbyist registration rules, adopted in 2004, allowing lobbyists to operate freely behind the scenes.

That was news to Broward Health’s current board of commissioners.

Broward Health Chairman Rocky Rodriguez and Commissioner Sheela VanHoose

Broward Health Chairman Rocky Rodriguez and Commissioner Sheela VanHoose

Said Chairman Rocky Rodriguez, “You assume these things are being taken care of.” Said Commissioner Sheela VanHoose, who spent two months on the board’s legal affairs committee holding workshops to establish a lobbying policy, “It was a little shock to see.”

Broward Health CEO Pauline Grant announced in May that registration would begin in June, but it took much of the summer to actually get a system in place.

The revised rules require lobbyists to pay an annual $40 fee for each client “before any advocacy can take place.” Lobbyists must declare under oath that the information they provide is “true and correct.” That includes their yes or no response to this question: “Do you have any direct or indirect business association, partnership or financial relationship or live in the same household with or are related to any Broward Health board member, board committee member, employee or agent?”

So far, no lobbyist has answered yes.

Lobbyists must also file annual expenditure reports under oath “disclosing each lobbying expenditures [sic] to any person or entity,” including such items as food and beverage, travel and entertainment expenses. Those reports, however, don’t have to be filed until the July 30 of the fiscal year after registration, so they will likely not be timely.

Unlike the Florida Legislature, the district does not require lobbyists to disclose how much they are being paid to lobby.

The district’s revised lobbying policy forbids “lobbyists and lawyers” from lobbying any Broward Health board members, employees or agents “during the consideration of any contracts and contract negotiations and related discussions. This prohibition shall include, but not be limited to, physician contracts, professional service contracts, services contracts, design-build contracts and construction contracts.”

A list of registered lobbyists is published online.

Broward Health awarded many multi-million dollar contracts during the years its lobbying policy was not enforced. One of the biggest, and most unusual, was an unprecedented 25-year, no-bid deal in 2012 that outsourced the district’s radiation oncology services to 21st Century Oncology, the Fort Myers-based cancer care company.

FloridaBulldog.org reported in February that at the time of the deal Gov. Scott had an indirect ownership interest in 21st Century Oncology via his $210,000 investment in Vestar Capital Partners, the private equity firm that owns 21st Century.

The governor’s office has said Scott had “no conversation or contact about Vestar Capital or 21st Century Oncology with the North Broward Hospital District.”

Still, Scott’s good friend, lobbyist Billy Rubin, has lobbied at the district and counts 21st Century Oncology among his clients, according to the website of his firm, The Rubin Group.

Gov. Scott’s blind trust and a company with a massive pollution problem

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott

Gov. Rick Scott

When Gov. Rick Scott put $133 million of his assets into a blind trust two years ago, he included his shares of Mosaic, owner of the Central Florida fertilizer plant where 215 million gallons of contaminated wastewater recently drained into an aquifer that provides drinking water for millions of Floridians.

Scott’s ownership interest in Mosaic was relatively small – he valued it at about $14,000 on the list of assets he placed in the blind trust – yet it provides another example of how the governor’s sprawling personal finances conflict, or appear to conflict, with his official duties.

Does Gov. Scott still have an ownership interest in Mosaic? Has it increased? On Wednesday, his office released a statement saying the governor is unaware of any sales, purchases or changes in the trust because it is “under the control of an independent financial professional.”

The trustee is New York-based Hollow Brook Wealth Management, whose chief executive is longtime Scott crony Alan Bazaar.

U.S. Securities and Exchange Commission documents filed earlier this year state that Bazaar also serves as an advisory board member of G. Scott Capital Partners, the private equity firm co-owned by First Lady Ann Scott and run by a trio of the governor’s former employees at Richard L. Scott Investments. Both the governor and Mrs. Scott have been substantial investors in Scott Capital’s investments.

Republican Gov. Scott’s handpicked Secretary of the Department of Environmental Protection, Jon Steverson, is now overseeing Mosaic’s response to the massive dump of contaminated water that occurred in late August when a 45-foot wide sinkhole opened at Mosaic’s New Wales fertilizer manufacturing plant in Mulberry, about 55 miles east of Tampa.

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

The Mosaic plant sinkhole in what was a large pond atop a gypsum stack. When the sinkhole opened, millions of gallons of acidic wastewater drained into an aquifer used for drinking water. Photo: WFLA Tampa

“Governor Scott will hold all responsible parties accountable for their actions and has directed the Department of Environmental Protection (DEP) to expedite their investigation,” Scott’s communications director Jackie Schutz said in a Wednesday statement. “Governor Scott has also directed the Department of Health to partner with DEP in their investigation to ensure all drinking water in the area is safe. We know Mosaic has taken responsibility, but our job is to ensure 100 percent safe drinking water.”

Earthjustice is a large nonprofit environmental law firm. Informed that Gov. Scott previously disclosed his ownership of Mosaic stock, Senior Associate Attorney Bradley Marshall said, “We’re always concerned about the governor’s ties to industry. We certainly do think the governor has not been a good protector of the environment in Florida. We’ve already seen veterans at DEP fired for doing their jobs.”

Mosaic, based in Plymouth, Minnesota, is a Fortune 500 company (NYSE: MOS) with extensive operations in Florida, where it employs 4,000 workers. According to the company’s web site, it mines phosphate rock from nearly 200,000 acres of Mosaic-owned land in Central Florida and potash from mines in Canada. The products are processed into crop nutrients that are shipped around the world. Mosaic’s revenues last year were about $9 billion.

Mosaic politically active

Mosaic Fertilizer LLC, the company’s principal operating subsidiary in Florida, is politically active. State records show it fields a team of 14 executive branch lobbyists in Tallahassee. Since 2008, Mosaic entities have contributed about $1.9 million to political candidates and causes, with about $840,000 going to the Republican Party of Florida and the Florida Republican Senatorial Campaign Committee, records show.

In October 2015, Mosaic Fertilizer LLC agreed to a nearly $2 billion settlement with the U.S. Environmental Protection Agency (EPA) regarding charges that its New Wales facility and other plants in Florida as well as Louisiana improperly handled 60 billion pounds of hazardous waste. Specifically, EPA inspectors found that Mosaic had mixed certain types of highly corrosive substances like sulfuric acid from its fertilizer operations with phosphogypsum and wastewater from its mineral processing. Sulfuric acid is used to extract phosphorus from mined rock.

Phosphogypsum is the radioactive byproduct that’s created when phosphate is turned into fertilizer.

An EPA press release at the time said the settlement “will ensure that wastewater at Mosaic’s facilities is properly managed and does not pose a threat to groundwater resources.’’

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

Gypsum stacks at a a phosphate plant in Florida Photo: Engineering and Mining Journal

The sinkhole formed beneath one cell of a mountainous phosphogypsum stack topped with a 250-million-gallon pond filled with acidic wastewater from the fertilizer manufacturing process.

According to the company, plant workers noticed a decline in the water level on Aug. 27. While Mosaic quickly notified the DEP and the EPA, no public announcement was made until Sept. 15.

“A sinkhole formed under the west cell that we believe damaged the liner system at the base of the stack,” said the company’s initial press release. “The pond on top of the cell drained as a result, although some seepage continues.”

Mosaic went on to say it “immediately implemented additional and extensive groundwater monitoring and sampling regimens and found no offsite impacts.”

Company officials who appeared Tuesday before the Polk County Commission reiterated, “No water from the stack has migrated off our property.” The company also apologized for not notifying the public sooner.

Gov. Scott’s blind trust – his second while in office – was created under the terms of a secret trust agreement signed in June 2014. His office has declined to make the agreement with the trustee public.

Scott acquired Mosaic while in office

Gov. Scott acquired his Mosaic investment while in office. His first blind, created in April 2011 a few months after he was sworn in, disclosed no ownership of Mosaic shares.

Florida’s qualified blind trust law was passed by the Legislature and signed into law by Scott in 2013. The idea was to prevent conflicts of interest by blinding public officials and the public to their holdings, and also afford those who use them immunity from prohibited conflicts.

“The Legislature finds that if a public officer creates a trust and does not control the interests held by the trust, his or her actions will not be influenced or appear to be influenced by private considerations,” the law says.

But Florida’s blind trust law, crafted with mega-wealthy Gov. Scott in mind, did not contemplate that such a trust could at times become a see-through entity, making it ineffective.

For example, in March 2014 Florida Bulldog reported that SEC records showed Gov. and Mrs. Scott had recently sold $17 million worth of shares in Argan (NYSE:AGX), a company whose principal subsidiary builds and operates power plants in Florida and elsewhere.

Florida Bulldog reported in July 2014 about Scott ownership of shares in a natural gas pipeline firm, Spectra Energy, looking to build the $3-billion Sabal Trail pipeline across North and Central Florida.

In 2013, Florida’s Public Service Commission – five members appointed by Gov. Scott – unanimously approved construction of Spectra’s controversial pipeline venture with Florida Power & Light. Florida’s Department of Environmental Protection subsequently approved it, too.

What didn’t become known until the following year, however, was that Scott had investments totaling $110,000 in Houston-based Spectra and DCP Midstream Partners, a natural gas limited partnership 50 percent owned by Spectra. Scott only disclosed those interests in June 2014 when he closed his first blind trust and created his second blind trust while qualifying to run for re-election.

Florida’s ethics laws generally prohibit public officials like the governor from owning stock in businesses subject to state regulation, or that do business with state agencies. A similar prohibition exists on owning shares in companies that would “create a continuing or frequently recurring conflict” between an official’s private interests and the “full and faithful discharge” of his public duties.

The governor has said he was unaware of his Spectra investments because they were in his blind trust.

In February, Florida Bulldog reported that in 2012 Scott owned a $210,000 stake in a private equity firm that owned Fort Myers-based 21st Century Oncology when it was awarded a unprecedented 25-year, no-bid contract to supply radiation oncology services to taxpayer-supported Broward Health. An all-Republican board of commissioners appointed by Scott and his Republican predecessor made the award.

A spokeswoman for the governor said Scott wasn’t aware that 21st Century had sought the Broward Health contract and that no one at the private equity firm, Vestar Capital Partners, or 21st Century, had asked him to try to influence the hospital district’s selection process.

Gov. Scott’s undisclosed interest – via First Lady – in Zika mosquito control company

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott and First Lady Ann Scott

Gov. Rick Scott and First Lady Ann Scott

Florida Gov. Rick Scott has an undisclosed financial interest in a Zika mosquito control company in which his wife, Florida First Lady Ann Scott, owns a multi-million dollar stake through a private investment firm she co-owns.

The company is Mosquito Control Services LLC of Metairie, LA. According to its web site, MCS “is a fully-certified team of mosquito control experts – licensed throughout the Gulf Coast, including Louisiana, Georgia, Mississippi, Alabama and Florida.”

On June 23, Gov. Scott signed an executive order allocating $26.2 million in state emergency funds for Zika preparedness, including “mosquito surveillance and abatement, training for mosquito control technicians and enhanced laboratory capacity.”

It is not known whether MCS, whose services include monitoring and aerial spraying, stands to benefit from Florida government funds. Company manager Steven Pavlovich holds an active Florida “public health applicator” license with the Department of Agriculture and Consumer Services through April 2019, but MCS is not a registered state vendor. The Department of Health contracts with two other two mosquito control vendors.

MCS did not respond to two requests for comment.

Ann Scott’s large stake in MCS is via G. Scott Capital Partners, an investment firm that boasts $291 million of client assets. The firm manages several private equity funds and various “family accounts primarily comprised of trusts and family entities,” according to U.S. Securities and Exchange Commission records.

The Florida Bulldog reported in 2014 that Scott Capital, as it is known online, is operated by a trio of men who once worked at Richard L. Scott Investments, the private equity firm where Gov. Scott made millions for himself and his family putting together big-money investment deals when he was in the private sector.

Scott Capital posts its portfolio online. All nine listed companies are current and former investments of the governor and/or Mrs. Scott, including Mosquito Control Services, described as providing “mosquito abatement services primarily to municipalities.”

The SEC requires investment companies like G. Scott Capital Partners to file periodic disclosure reports. The firm’s most recent report, filed in March, shows that the three-employee, Connecticut-based firm caters to a handful of high net worth individuals – less than 25 – who invest directly and through various pooled investment funds.

A mosquito control investment

The firm’s latest fund is GS MCS, LLC, a Delaware company formed two years ago this month to recapitalize and take control of Mosquito Control Services. The current value of the fund is just under $10 million and the fund has nine beneficial owners, SEC records say. The owners’ names were not disclosed.

The managing director of G. Scott Capital Partners is Gregory D. Scott – no relation to Gov. Scott. He directs the firm’s investments, as he did when he led the private equity group at Richard L. Scott Investments from 2000 to 2012.

A screenshot from the web site of Mosquito Control Services LLC.

A screenshot from the web site of Mosquito Control Services LLC.

Gregory Scott owns 50 to 75 percent of the Delaware holding company that owns 100 percent of G. Scott Capital, according to the SEC. The First Lady owns the rest through the Frances Annette Scott Revocable Trust, which owns Tally 1, a Delaware company that in turn owns 25 to 50 percent of G. Scott Holdings LLC.

Gregory Scott has described Ann Scott, an interior decorator and owner of AS Interiors LLC, as a “passive investor” in G. Scott Capital.

Gov. Scott has not disclosed his ownership interest in his wife’s investments. Florida law, unlike federal law, does not require state public officers to disclose the assets or income of a spouse or minor child.

The governor’s office on Tuesday declined to discuss the matter or make Gov. Scott or the First Lady available for an interview.

The Republican governor, a multimillionaire, puts his personal investments in a “qualified blind trust” that his office has described as being overseen by “an independent financial professional.” Florida public officers who use such a trust to “blind” themselves to the nature of their holdings get in exchange immunity from prohibited conflicts of interest under a law that Gov. Scott signed in 2013.

FloridaBulldog.org has reported, however, that the person overseeing Gov. Scott’s trust is yet another former employee at Richard L. Scott Investments and that the trust has been ineffective in keeping the governor’s assets secret.

When Gov. Scott opened his current blind trust in 2014 – the second of his administration – he was required to disclose the assets he put into it. His current mix of assets is not known, but the Florida Bulldog reported last year that the blind trust has in the past coordinated stock transactions with the First Lady’s trust a family partnership.

The Solantic transfer

When Gov. Scott took office in 2011, he transferred tens of millions of dollars in assets to his wife, including a $62-million investment in the walk-in clinic chain Solantic. Mrs. Scott reportedly sold the family’s stake in Solantic that same year.

Gov. Scott’s transfer of his Solantic shares came amid an uproar about perceived conflicts of interest. Florida ethics laws generally prohibit public officials from having an ownership interest in companies that do business with the state or are subject to state regulation.

In 2013, Gov. Scott had an undisclosed ownership stake in Houston-based Spectra Energy when Florida’s Public Service Commission – five members appointed by Gov. Scott – unanimously approved construction of the controversial $3-billion Sabal Trail natural gas pipeline by a joint venture of Spectra and NextEra Energy, parent of Florida Power & Light.

The governor’s investment in Spectra became known about a year later when he filed a lengthy list of his assets as of Dec. 31, 2013 when he closed his original blind trust and opened a new one while qualifying to run for re-election.

FloridaBulldog.org reported in July 2014 that Gov. Scott’s list included a $53,000 stake in Spectra Energy and a $55,000 stake in DCP Midstream Partners, a natural-gas limited partnership 50 percent owned by Spectra Energy.

The governor’s investments included numerous other oil and gas assets, including a $712,000 stake in Texas-based Energy Transfer and its affiliates and subsidiaries. Through other subsidiaries, giant Energy Transfer owns a 50 percent interest in the Florida Gas Transmission pipeline, which delivers nearly 65 percent of the natural gas consumed in Florida.

Gov. Scott has had other conflicting investments.

FloridaBulldog.org reported in February that in 2012 Scott owned a $210,000 stake in the private equity firm that owned 21st Century Oncology when the all-Republican governing board of taxpayer-supported Broward Health awarded the company an unprecedented 25-year, no-bid contract to supply radiation oncology services. The governor appoints Broward Health’s board members.

A Scott spokeswoman has said the governor wasn’t aware that 21st Century had sought the Broward Health contract prior to its award in January 2012 and that no one at the private equity firm, Vestar Capital Partners, or 21st Century had asked him to try to influence the hospital district’s selection process.

Broward Health will start lobbyist registration in June, according to CEO

By Dan Christensen and Karla Bowsher, FloridaBulldog.org 

Broward Health's board of commissioners at a meeting last month.

Broward Health’s board of commissioners at a meeting last month.

As Broward Health’s board of commissioners dithered last week about how to implement a 12-year-old, yet newly discovered lobbyist registration policy, reform-minded CEO Pauline Grant said she would have a registration system up and running in June.

“I have come up with procedures to implement registration over the next couple of weeks,” Grant said in an interview on Friday. “It will be done.”

News of Broward Health’s failure to enforce its own lobbyist registration policy gave yet another black eye to a beleaguered hospital system that’s already the focus of federal and state agents.

In a brief discussion at Wednesday’s regular board meeting, Commissioner Sheela VanHoose said board members want an online registration system. In an interview afterward, she said it should be comparable to those used by Broward County or Broward Public Schools.

“That to me is accountability and transparency at its best,” said VanHoose, whose paying job is as a lobbyist for Charter Schools USA.

VanHoose heads the district’s Legal Affairs Committee, which spent months studying how to develop a lobbyist policy without being told by staff that a policy already existed.

“You assume these things are being taken care of. The board doesn’t get involved in operations,” said Broward Health board Chairman Rocky Rodriguez. “The public has a right to know who is lobbying the hospital district.”

Broward Heath CEO Pauline Grant

Broward Heath CEO Pauline Grant

What’s happened has caused VanHoose to wonder whether other policies have not been followed. She said she’s talked with Grant about creating a searchable database of district policies.

“People come and go … so there has to be a process put in place to make sure nothing slips through the cracks in the future,” VanHoose said in an interview.

Unlike city and county governments, hospital taxing districts like the North Broward Hospital District – Broward Health’s legal name – are not required by law to register lobbyists or compel them to publicly disclose what they’re up to and who they represent.

Lobbying policy adopted, not implemented

In 2004, however, Broward Health’s board adopted a five-page lobbying policy requiring lobbyists to register, identify their clients and disclose both the nature of their business activity and any business or financial relationships they have with Broward Health board members, employees or agents. Also while under oath, lobbyists were supposed to submit an annual statement for each of their lobbying expenditures before the district in excess of $100. Violators can be debarred.

Still, the district has never required a single lobbyist to register.

Nevertheless, district records show that the board was aware of its policy enough to modify it in 2014 after Rodriguez complained about being swamped by “tons and tons of phone calls” from advocates for doctors and others in contract negotiations. The change: lobbying was prohibited “during the consideration of any contracts.”

Wednesday’s board meeting also included a brief speech by Broward Health compliance manager Brian Nicholas, who talked about a “culture of fear, retaliation and bullying” at the district.

As an example, Nicholas cited the reaction of board Chairman Rocky Rodriguez and Commissioner Christopher Ure to a recent anonymous letter that accused General Counsel Lynn Barrett of impropriety involving the Baker Donelson law firm.

Broward Health hired Baker Donelson last year to serve as the “independent review organization” that monitors its compliance with the terms of its federal settlement of Medicare and Medicaid fraud allegations last fall. Nicholas said that when the anonymous complaint was discussed at a May 18 committee meeting, Rodriguez and Ure were only concerned with trying to identify the author, not with the complaint itself.

“I believe you’ve now given a figurative middle finger to the federal government,” Nicholas told commissioners. “I will undoubtedly be retaliated against.”

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