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.

Republican-led Broward Health paid $3 million in legal fees to firms tied to Gov. Rick Scott

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

The Foley & Lardner law firm recently removed from its Facebook page this photo of Gov. Scott paying a visit to its Jacksonville office on Aug. 24. Pictured with the governor, left to right, are Scott's former environmental secretary Herschel Vinyard, office managing partner Kevin Hyde and Karen Bowling, Scott's ex-partner in the Solantic urgent-care clinic chain

The Foley & Lardner law firm recently removed from its Facebook page this photo of Gov. Scott paying a visit to its Jacksonville office on Aug. 24. Pictured with the governor, left to right, are Scott’s former environmental secretary Herschel Vinyard, office managing partner Kevin Hyde and Karen Bowling, Scott’s ex-partner in the Solantic urgent-care clinic chain

Republican-controlled Broward Health paid two law firms with strong ties to Republican Gov. Rick Scott more than $3 million in legal fees in the last 12 months.

The law firms are Foley & Lardner, which billed $1.72 million, and Greenberg Traurig, whose invoices totaled $1.65 million, according to data compiled by Broward Health.

Foley & Lardner’s Republican-heavy roster includes Herschel Vinyard, the governor’s former environmental protection secretary; Christopher Kise, general counsel to Scott’s transition team who was later appointed by Scott to the board of Enterprise Florida, and Karen Bowling, Scott’s partner in the multi-million dollar Solantic urgent-care clinic chain.

Foley & Lardner has been generous to the Republican Party of Florida, giving it more than $195,000 during the last two gubernatorial campaigns won by Scott.

Greenberg Traurig was similarly helpful to the state GOP. Since 2010, it donated more than $192,000 to the Republican Party of Florida.

Greenberg Traurig’s principal connections to Gov. Scott are Fred Karlinsky and Hayden Dempsey.

Karlinsky is a Fort Lauderdale lawyer, insurance lobbyist and Republican finance official who co-chairs Lt. Gov. Carlos Lopez-Cantera’s bid to replace retiring U.S. Sen. Marco Rubio. Dempsey is a former special counsel to both Gov. Scott and his campaign. Dempsey leads Greenberg’s Florida government practice.

Greenberg Traurig lawyer/lobbyist Fred Karlinsky

Greenberg Traurig lawyer/lobbyist Fred Karlinsky

Karlinsky is responsible for all three contracts Greenberg Traurig obtained from Broward Health last year – one for legal services and two more to supply federal and state lobbying.

The district’s legal costs, with hourly rates as high as $695, were the focus of criticism at a meeting of Broward Health’s board in late February when it was disclosed that the work of the two law firms was in addition to Broward Health’s in-house staff of six lawyers.

“The chair [David Di Pietro] expressed concern that the legal bills are completely out of control,” say minutes of the meeting. “He feels this is runaway lawyering with no governance from the board.”

Less than a month later, Gov. Scott suspended Di Pietro and board colleague Darryl Wright for alleged malfeasance after his chief inspector general, Melinda Miguel, expressed concern that Broward Health board members might be interfering with her ongoing review of contracts and other matters at the district.

Di Pietro is suing to be reinstated, contending the governor overstepped his authority. A hearing was held Friday; a ruling is expected this week.

El Sanadi signed contracts

The contracts of both Foley & Lardner and Greenberg Traurig were signed last year by then-Broward Health Chief Executive Dr. Nabil El Sanadi, who killed himself in January. El Sanadi was a long-time contributor to the Republican Party of Florida who gave the party more than $90,000 during Scott’s two gubernatorial campaigns, state records show.

Broward Health’s governing board, whose members were appointed by Gov. Scott, hired El Sanadi as CEO in December 2014.

Within months, El Sanadi hired Foley & Lardner and Greenberg Traurig. District sources say El Sanadi acted at the direction of Fort Lauderdale lobbyist and Scott confidant William “Billy” Rubin.

Lobbyist William "Billy" Rubin

Lobbyist William “Billy” Rubin

Rubin did not respond to requests for comment. His company, The Rubin Group, posts on its website a client list that includes a trio of companies that do business with Broward Health, including 21st Century Oncology.

In February, FloridaBulldog.org reported that Gov. Scott owned an indirect financial interest in Fort Myers-based 21st Century Oncology in 2012 when it was awarded an extraordinary no-bid, 25-year contract to supply radiation oncology services to Broward Health. The governor’s ownership interest was through his $210,000 investment in Vestar Capital Partners, the private equity firm that owns 21st Century.

State records show 21st Century later contributed nearly $400,000 to Scott’s re-election campaign and another $275,000 to the Republican Party of Florida.

Invoices sent to Broward Health by Foley & Lardner and Greenberg Traurig were reviewed and approved by El Sanadi and Broward Health General Counsel Lynn Barrett, whose duties include employing and directing outside counsel.

In her contract with the hospital district, Barrett agreed not to “engage nor retain her prior employers to provide any legal representation on behalf of the district and not to refer any district legal services to her prior employers.”

Barrett listed three of her recent prior employers in the contract, including the Jones Walker law firm.

Legal work referred to general counsel’s ex-boss

As general counsel, Barrett has referred no legal work to Jones Walker. She has, however, referred hundreds of thousands of dollars of work to her former boss at Jones Walker, Myla Reizen.

Reizen led Jones Walker’s healthcare practice when Barrett joined that firm in January 2010. Reizen was quoted in a press release then as calling Barrett an “outstanding addition…to our healthcare practice.”

Broward Health General Counsel Lynn Barrett, left, and Foley & Lardner partner Myla Reizen

Broward Health General Counsel Lynn Barrett, left, and Foley & Lardner partner Myla Reizen

Reizen jumped to Foley & Lardner in December 2013.

In March 2015, El Sanadi hired Foley & Lardner to represent Broward Health with regulatory and compliance issues “as requested” at rates as high as $695 an hour. The contract gave Reizen “primary responsibility” for that representation.

About the same time, El Sanadi was looking to hire an in-house lawyer to replace Broward Health’s then-outside General Counsel Sam Goren. Sources said Reizen recommended Barrett for the job. Barrett, following approval by the board, took over in July 2015.

Between June 2015 and January 2016, Foley & Lardner billed $1.51 million, records show.

Barrett did not respond to a detailed request for comment.

Reizen also did not respond to a request to discuss Foley & Lardner’s connections to Gov. Scott and how Broward Health came to hire her and her firm.

Karlinsky, of Greenberg Traurig, referred a similar request for comment to a law firm spokeswoman, who released this statement: “We believe we provide high quality and responsive legal services nationally and internationally; we believe that is why we have been retained here, as well as by many other clients in the healthcare field throughout the U.S. and internationally.”

Ties run deep

Karlinsky’s ties to the governor run deep. In addition to serving as statewide finance co-chair for Scott’s re-election campaign last year, he accompanied the governor on two foreign trade missions – to London in 2012 and Israel in 2011. Also on the governor’s Israel trade mission: Billy Rubin.

The two Broward Health lobbying contracts Karlinsky secured for Greenberg are for terms of 19 months. The total value of the federal contract is $150,000. The state lobbying contract is worth another $50,000.

Information compiled by Broward Health staff and disclosed at a February board meeting says that Greenberg Traurig was tasked with reviewing approximately 1,700 contracts. The firm also assisted in drafting and negotiating contracts for doctors, including Dr. Zachariah P. Zachariah, who recently switched his hospital affiliation from Holy Cross to Broward Health Imperial Point.

Zachariah is an important Republican fundraiser whose son, Zachariah P. “Reggie” Zachariah Jr., is an associate in Greenberg Traurig’s Fort Lauderdale office. In 2012, Gov. Scott appointed Reggie Zachariah to a four-year term on Broward’s Judicial Nominating Commission that expires in July.

Broward Health’s contract with Greenberg Traurig says that when conflicts of interest arise, the law firm will either obtain a written conflict waiver or, if the conflict can’t be waived, will recommend other counsel. It is not known whether Greenberg Traurig sought such a waiver from Broward Health regarding Zachariah.

Curiously, Foley & Lardner’s contract with Broward Health includes an “advance waiver of conflict” in which the hospital district agreed up front to allow the firm to represent “current or new clients in work directly adverse” to Broward Health. That includes “clients in contract negotiations adverse to the company.”

Broward Health gave company with financial ties to Gov. Scott 25-year, no-bid contract

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

Gov. Rick Scott announces plans to seek new cancer research funds during an April 2014 visit to the Fort Myers headquarters of 21st Century Oncology, a company in which he owns an indirect financial interest. Company chief executive Dr. Daniel Dosoretz is at far right. Photo: NBC-2, WBBH Fort Myers

Gov. Rick Scott announces plans to seek new cancer research funds during an April 2014 visit to the Fort Myers headquarters of 21st Century Oncology, a company in which he owns an indirect financial interest. Company chief executive Dr. Daniel Dosoretz is at far right. Photo: NBC-2, WBBH Fort Myers

An oncology company financially connected to Gov. Rick Scott got a no-bid contract four years ago from taxpayer-supported Broward Health for as long as 25 years – an unprecedented term.

Scott was an investor in a private equity firm that owns 21st Century Oncology, state records show. The Fort Myers-based cancer care company got the contract in 2012 to supply radiation oncology services to Broward’s biggest public health system.

The value and language of the contract with 21st Century Oncology are not known. The hospital system’s lawyers denied a public records request by FloridaBulldog.org for a copy of the contract.

The North Broward Hospital District, Broward Health’s legal name, is and was at the time run by an all-Republican board of commissioners appointed by the governor. Gov. Scott, who took office in January 2011, is a Republican. He was re-elected in 2014.

“This is news to me,” said Commission Chairman David Di Pietro, who seemed stunned last week when told of the governor’s indirect ownership interest in 21st Century Oncology, a contract he voted to approve. “In 2012 I was unaware of that, and I have no further comment at this time.”

Broward Health awarded the contract, with an initial term of 10 years and three separate five-year renewal options, to 21st Century Oncology after deciding to outsource its day-to-day business of providing radiation treatment services for cancer patients.

“In all my years I’ve never heard of a contract for that duration, especially at a tax-supported system like Broward Health,” said Florida International University healthcare professor Sal Barbera, a former hospital CEO who blew the whistle on Medicare fraud by Tenet Healthcare Corp. in 1997.

Information about the contract is contained in publicly traded 21st Century’s filings with the U.S. Securities and Exchange Commission (SEC) and the minutes of a Jan. 30, 2012 board meeting when the deal was approved in a 5-1 vote.

Financial disclosure filings by Gov. Scott indicate that at that time he owned a $210,000 indirect interest in 21st Century Oncology. The governor’s stake came via his investment in Vestar Capital Partners, the private equity firm that owns 21st Century.

Spokeswoman: Scott didn’t contact district about 21st Century

“The governor and his staff have had no conversation or contact about Vestar Capital or 21st Century Oncology with the North Broward Hospital District,” Scott’s communications director Jackie Schutz said in a statement on Sunday.

Schutz also said Gov. Scott wasn’t aware 21st Century Oncology had sought the Broward Health contract prior to its award in January 2012. Likewise, she said no executives at Vestar or 21st Century asked the governor to try to influence the selection of 21st Century by the district.

21st Century co-founder and chief executive Dr. Daniel Dosoretz

21st Century co-founder and chief executive Dr. Daniel Dosoretz

Two of the commissioners who voted for the deal continue to serve on the board today, Di Pietro and Joel Gustafson. Gustafson, who was chairman the day of the vote, could not be reached for comment.

In April 2014 Gov. Scott publicly touted 21st Century Orthopedics and its chief executive and co-founder Dr. Daniel Dosoretz during a visit to the company’s Fort Myers office while pushing a 60 percent hike in state funding for cancer research, including $20 million in new state grants for companies like 21st Century Oncology. Scott signed the measure into law two months later.

“There’s something in this for us, and it’s not exactly the same as what’s in it for the University of Florida and other centers,” 21st Century Oncology Chief Medical Officer Constantine Mantz told the Naples Daily News. “But to his credit, (Scott) has thought about some of the little guys in the state…We really have not had any ability to access state funds for any of our research activities, and so this is important for us.”

Last March, Scott named 21st Century gynecologic oncologist Dr. James Orr of Bonita Springs to the Florida Board of Medicine. At the same time, the governor appointed to the board Dr. Nabil El Sanadi, the Broward Health chief executive whose Jan. 16 suicide sent shock waves through the district, and prominent Republican fundraiser and Fort Lauderdale cardiologist Dr. Zachariah Zachariah, who recently jumped to Broward Health from Holy Cross Hospital.

Details of Gov. Scott’s indirect ownership interest in 21st Century Oncology are contained in his 2010 and 2013 financial disclosure forms and documents filed by his lawyers with the Florida Commission on Ethics.

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

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

Gov. Scott keeps his assets, which his most recent disclosure form valued at $146.8 million, in a blind trust. He has had two such trusts while in office and as such maintains he has no knowledge of his investments, and thus no conflicts of interest.

While establishing Scott’s first blind trust in April 2011, his attorneys identified for the ethics commission several “passive investments” in companies that do business in Florida and are subject to state regulation. They explained that to avoid conflicts Scott was putting those assets in a blind trust modeled after the model federal blind trust and under the control of an “independent” financial professional. They asked for the commission’s blessing and it was soon granted.

In 2014, however, FloridaBulldog.org reported that Scott’s blind trust deviated substantially from the U.S. model and that the independent trustee was a New York investment advisory firm whose chief executive was former Scott business crony Alan Lee Bazaar.

One investment, in which Gov. Scott was said by the lawyers to play no managerial or decision-making role, was Vestar Capital Partners, 21st Century Oncology’s owner. Vestar has raised about $8 billion in capital in six equity funds since the late 1980s.

Scott’s investment in Vestar Capital Partners

“Governor Scott owns, through limited partnerships, interests in private investment partnerships in New York operated by Vestar Capital Partners,” says an April 20, 2011 letter signed by Scott’s attorneys Richard E. Coates, of Tallahassee, and James T. Fuller of Washington’s Williams & Connolly. “Governor Scott owns a 1% or less limited partnership interest in one investment fund, Vestar Capital Partners V, that has approximately $43 million in equity capital.

“Among its other investments, in 2008 this investment fund acquired a controlling interest in Radiation Therapy Services Inc. The stock of this corporation is owned by the investment fund. This corporation, based in Fort Myers, Florida, operates more than 90 radiation therapy centers in over 15 states, including Florida, under the name 21st Century Oncology,” the letter says.

Radiation Therapy Services changed its name to 21st Century Oncology in 2013.

On July 1, 2011, less than three months after his lawyers wrote to the ethics commission, Gov. Scott reported on his financial disclosure form that his assets included a $210,000 investment in Vestar Executives V, LP. The governor didn’t publicly disclose his financial assets again for nearly four years until he decided to terminate his blind trust in order to qualify to run for a second term. He disclosed, then immediately placed his assets into a new blind trust that by law affords him immunity from prohibited conflicts of interest.

That financial disclosure form, filed in June 2014, revealed that Scott continued to own about $210,000 worth of Vestar Executives V, one of a number of interconnected Vestar Capital Partners V funds.

Both Vestar Capital Partners V and Vestar Executives V are organized in the Cayman Islands, according to paperwork filed with the SEC.

Broward Health’s board approved its 2012 deal with 21st Century Oncology with only then-Commissioner Clarence McKee dissenting.

McKee “questioned why it did not go out for bid,” the minutes say. “Also, assuming that everything else goes well and Broward Health does not terminate 21st Century within the 10-year period, Commissioner McKee said that 21st Century would be getting a 25-year contract. He felt that the contract is too long and it should have gone out for bid.”

Then-CEO Frank Nask replied, “There was no requirement to do the RFP (request for proposals),” the minutes say.

In its annual report filed with the SEC last March, 21st Century Oncology described itself as “the largest integrated network of cancer treatment centers and affiliated physicians in the world.” It has grown by gobbling up a number of other treatment providers, including last summer’s buyout of South Florida Radiation Oncology and its network of treatment centers stretching from Miami-Dade to Vero Beach.

21st Century Oncology’s huge debt

To do that, however, 21st Century Oncology took on $1 billion in debt through the end of September, and continues to suffer from hundreds of millions of dollars in operating losses.

21st Century Oncology’s problems intensified in December with a U.S. Justice Department announcement that it had agreed to pay $19.75 million to settle whistleblower allegations that it had violated the False Claims Act by billing Medicare and Tricare, the U.S. military health care program, for laboratory tests that were not medically necessary.

Benjamin C. Mizer, the head of the Justice Department’s civil division, said the settlement demonstrated the government’s commitment to oppose “unscrupulous providers” of healthcare services.

21st Century Oncology’s problems have continued in 2016. In January the company announced, without explanation, that it was withdrawing an initial public stock offering that it had hoped would raise about $100 million to pay off debt.

Today, 21st Century Oncology is again in the spotlight due to Gov. Scott’s indirect investment and its extraordinarily long, no-bid contract with Broward Health. Yet the public hospital system has refused to make public a copy of that contract, citing an exemption in Florida’s public records law that protects some hospital records from competitors.

Miami attorney Thomas Julin represents the Florida Bulldog. He disagrees with the district’s decision.

“The Legislature gave public hospitals a limited amount of secrecy for small contracts that their governing boards are not required to approve,” Julin said. “Contracts that must go before the board, the big ones, must be made public a month before the vote takes place.

“The public owns these hospitals and is entitled to know how they spend the public’s money,” he said. “We’re deciding now whether to challenge in court the withholding of these records.”

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