Broward Health’s liability in federal kickback probe estimated at $100 million

 By Karla Bowsher, 

Four Broward Health commissioners at a January board meeting. Left to right, Jennifer O'Flannery Anderson, chair Joel Gustafson, David Di Pietro and Clarence McKee  Photo: Karla Bowsher

Four Broward Health commissioners at a January board meeting. Left to right, Jennifer O’Flannery Anderson, chair Joel Gustafson, David Di Pietro and Clarence McKee Photo: Karla Bowsher

Broward Health faces $100 million in potential civil liability due to an ongoing federal anti-kickback investigation into whether it submitted false Medicare and Medicaid claims.

“We’re looking at, I’ve heard, up to $100 million,” Broward Health Commissioner David Di Pietro said at a board meeting in June. That liability estimate has not been previously reported.

In interviews with in late January, Di Pietro said he does not personally know if that number is correct. He said, however, that he’d heard it used by Broward Health officials at prior meetings.

“This is a very serious matter that I will be monitoring closely in the upcoming months,” he said in an email.

Broward Health, whose legal name is the North Broward Hospital District, is currently the focus of a joint civil inquiry involving the Department of Justice, the Miami U.S. Attorney’s Office and the Inspector General’s Office of the Department of Health and Human Services (HHS).

The inquiry surfaced publicly in May 2011 when HHS agents subpoenaed records regarding Broward Health’s business dealing with more than two-dozen doctors. Broward Health’s general counsel, Sam Goren, has said that accusations by an as yet unidentified whistleblower triggered the probe.

Di Pietro cited the $100 million figure during a June 27 discussion by Broward Health’s board of its Fair Market Valuation Policy. That policy provides direction to Broward Health in determining whether a transaction with a physician should be considered arm’s length and “commercially reasonable” in order to comply with federal law.

Broward Health Chief Executive Frank Nask did not respond to a request for comment about the tax-supported public health care system’s potential liability should violations of federal law be found.

Broward Health General Counsel Sam Goren

Broward Health General Counsel Sam Goren

“We cannot and will not speculate as to any potential financial liability of Broward Health in this matter,” said attorney Goren.

Broward Health operates four hospitals, including flagship Broward General Medical Center in Fort Lauderdale. As a special taxing district, Broward Health is funded largely by property tax dollars from Broward homeowners who live north of Griffin Road.

In 2012, the district netted $150 million from property taxes, according to financial reports. Nearly $59 million of it went toward a program known as Physician Payment for Uncompensated Care (PPUC), through which Broward Health pays doctors who treat indigent patients.

Since it was served with the subpoena 21 months ago, Broward Health has turned over to federal authorities millions of pages of documents regarding the district’s business dealings with 27 doctors who are named in the subpoena.

And they are not done. At a board meeting last Wednesday, lawyers from the Arent Fox law firm in Washington, D.C. who represent Broward Health said they expect to deliver a final batch of records to federal agents sometime this month.

Attorneys Linda Baumann and Jacques Smith, who met privately with each commissioner earlier in the day, said that batch would include so-called privilege logs that list senders, recipients, dates, and other details of communications between the lawyers and their clients. Such communications – which include emails, letters, and memos – are considered confidential under attorney/client privilege.

While Broward Health’s current administration isn’t talking about potential liability, Commissioner Di Pietro has cited concerns raised by Broward Health’s previous general counsel, Marc Goldstone.

In May 2009, Goldstone warned commissioners and administrators that Broward Health’s physician payment practices violated federal anti-kickback and self-referral laws.


Goldstein’s three-page memo titled “Open Matter Discussion” criticized the lack of an adequate fair market value policy for “many PPUC services” and said “we pay some physicians for PPUC services not in accordance with their written agreements…(and) “we pay some physicians for PPUC service without written agreements at all.”

The federal Anti-Kickback Statute prohibits offering or receiving incentives for patient referrals involving any federal health care program, including Medicaid, for low-income patients, and Medicare, for patients age 65 and older.

Another law, known as the Stark or Self-Referral Law, prohibits doctors from referring Medicare patients to hospitals or other entities with which they have financial ties. It also prohibits those entities from billing Medicare for such referrals.

Violations of the Anti-Kickback Statute or Stark Law can result in civil money penalties, or fines and prison time if criminal violations are found.

According to the minutes of the June 27 meeting, Di Pietro cited Goldstone’s memo while expressing his concern that Broward Health may have heightened its liability by not self-reporting to the government the same kinds of contracts with physicians that agents were now looking at.

“There is a colossal difference, now that I understand it, between self-reporting and getting a subpoena and litigating with the United States of America,” said Di Pietro, noting that Broward Health’s liability may have been only $2 or $ 3 million had it self-reported the contracts.

“I guess my concern is I don’t want to be the board, and I don’t think we collectively want to be the board, that cuts a $100 million check to the federal government. If that scenario ever comes before us, I want to know why we didn’t self-report,” Di Pietro said.

CEO Nask replied that there had been no previous indication that that voluntary self-reporting was required, the minutes say.

Commissioner Richard Paul-Hus also raised questions about the PPUC program when he told the board in December that he’d recently learned from outside auditors that the district’s PPUC rates are two to three times those paid by similar hospitals.

At last week’s board meeting, CEO Nask announced that the PPUC program is now under review.

Goldstone, a health care law specialist, was hired as general counsel in late 2008. The board forced him to resign in May 2009, saying he had misled the district regarding his ability to practice law in Florida. Goldstone previously lived in Tennessee.

Goldstone, however, believed his dismissal was retaliation for his “Open Matter Discussion” memo. He sued in federal court in Miami.

The lawsuit was quietly settled in August 2010. Board minutes show commissioners approved a $100,000 settlement.

Karla Bowsher can be reached at [email protected].

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