By Dan Christensen and Buddy Nevins, FloridaBulldog.org
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.
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.
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.”
Rose / February 22, 2016 7:06 am
Why are you not reaching out to national media, to the DOJ with this? How could we possibly expect any transparency when we are run by crooks? Our own governor Rick Scott, was the CEO of Columbia/HCA – the one company which committed the largest Medicare fraud in the history of the United States. How could we possibly expect him to guarantee transparency in Browards’ Health mess? Let’s revise the background of the BH board members Gov Scott himself placed here (clueless, unfit people for such a monster of an institution with no experience, skills or any capacity whatsoever to manage it – in other words, people easy to manipulate
Maureen Canada — a marina operator.
David DiPietro — an attorney, GOP strategist and fund raiser.
Joel Gustafson — An attorney and former aide to the late U. S. Rep. Clay Shaw, R-Fort Lauderdale.
David Neland — A former U. S. State Department law enforcement officer.
Sheela VanHoose — A Broward Schools lobbyist and former Scott director of scheduling.
Rocky Rodriquez — Former GOP Property Appraiser appointed by Gov. Jeb Bush and a Realtor.
Darryl Wright — Retired military who served two terms in Iraq.
SHAME / February 22, 2016 9:12 am
How did i know this was coming
Insanity / February 22, 2016 11:46 am
All this at the expense of the public, much of which are not informed but paying for it.
Honesty / February 22, 2016 1:11 pm
And….. many patients where overdose with radiation therapy,
Constanza / February 22, 2016 2:56 pm
How are we all going to get every person in USA to vote and take these rats out of the system for once and for all??
Anonymous Too / February 22, 2016 4:26 pm
Shock and Awe. NOT
Raindancer / February 22, 2016 9:02 pm
The no bid marketing campaign in the tens of millions going to Scott’s friends and now this. It’s just the tip of the iceberg. Keep following the money. Scott also appointed DiPietro’s wife to the judgeship. Nice going Florida Bulldog.
SHAME / February 23, 2016 6:26 am
Guys…..please please please keep on digging! BH situtation is smelling like a month old fish. Waiting for the responsible cocker roaches to scramble.
Jim Sheets / February 23, 2016 8:13 am
Tallahassee is nothing more than a criminal conspiracy. It bears no resemblance to a government or democracy.
No surprise / February 23, 2016 10:30 am
No surprised to hear about the false billing claims…a famous trademark of Scott. As for Vestar organizing in the Caymens, where there’s smoke, there’s fire. It wouldn’t surprise me we discover at some point that Tricky Ricky has been stashing a lot of his ill-gotten gain in the Caymens to protect against taxes and federal prosecution. If we could only follow the money trail through the Caymens…
Raindancer / February 23, 2016 10:49 am
Florida has 5 of the 50 top grossing non-profit hospital districts in America. There’s Florida Hospital, Orlando Regional, Tampa General, Jackson Memorial, and Memorial Regional. I’m not sure how those are run, but I think I’ve got a handle on how Broward health is run. I wonder of our esteemed governor has figured out a way to steer a lot of those non profit dollars from the 5 of the top 50 into his pocket, or if it’s limited to just Broward Health? We have figured out the scam. Now, lets see what gets done about it.
Raindancer / February 23, 2016 10:19 pm
How much money is BH shelling out to doctors who also happen to be big republican fund raisers? What did the former CEO know that drove him over the edge? Thank you Florida Bulldog and please keep digging.
Sirius / February 24, 2016 8:17 pm
Two words: Frank Nask.
Connect the dots / February 24, 2016 8:43 pm
What about former commissioner Fernandez “Mike” he certainly was familiar with information at Broward Health he might have been instrumental in giving Mr Scott information about the inner workings of the Hospital’s strategy back then.
Look into it florida bulldog.
The Real Betrayal / February 25, 2016 6:45 am
Still don’t see the December 16,2015 Board of Commioners MInutes posted on the broward health.org website. Dan or Buddy: Did you have to do a 119 request to obtain a copy as I believe these minutes have been referenced in some of your recent BH articles. Thanks.
Awkward Moment / February 25, 2016 8:34 am
Another awkward moment. Maybe Rick thought that was a high-tech hair dryer behind his [bald] head?
Wake up call / February 25, 2016 1:58 pm
I hope everyone at BH gets what they deserve. The executives lie, cheat and manipulate to get what they want. They can’t be trusted…why else are people afraid to speak out against the back door dealings. Everyone knows Compliance and HR, cover for each other. HR should be investigated thoroughly.
Wake up people, you are powerless without a union.
Wise up / February 25, 2016 5:48 pm
No one and I repeat no one, is confident in speaking to Compliance or HR in this organization. There is no seperation between departments and both VPs cover for each other and only care about themselves. It is a travesty that the feeling of helplessness is felt by hard working employees. These employees see the dirty deals but have no recourse, they are not safe anywhere.
I hope the employees wise up and rise up against this type of oppression. I would challenge any employee afraid to speak out to write your state representatives and the governor an email stating you have a vote of no confidence in your executive leadership or the board that allows them to continue working there. If change does not come, then call the union. You have a right to tell the truth and not get fired
an honest soul / February 29, 2016 9:17 am
Why isn’t Frank Nask indicted yet? He walked by all of us in the halls, elevator too good to say hello, too wealthy to care, too interested in his”girls”, the highly paid executives, who always surrounded him.
Frank ….you couldn’t even write your own columns or speeches. Outside PR people had to handle you. But even they couldn’t ever make you likeable to the people who really care for the people you were supposed to be caring about.
Then you reretired to enjoy that big pile of money you earned through no effort of your own. It was from all of our hard work, our late nights and working with less than what we needed to get the job done. You hid behind your executive assistant. How many times we tried to talk with you, but you were never available.
Why aren’t YoU and other executives having to pay the fine from the OIG? YOU ARE THE ONES RESPONSIBLE, not the Tax payers.
You, Frank Nask should be ashamed.
Concerned / March 4, 2016 2:11 pm
How do they justify these continuous multi-million dollar no bid contracts? What a cesspool it is. And after all of the investigations, will anything change and anyone on the Board be forced to leave? They must be shaking at the information being uncovered by the Bulldog. For decades no one has busted them and exposed their greed and corruption. How they are allowed to spend taxpayers money like this is beyond me. They need to be exposed for the ruthless cowards that they are. God bless the Bulldog. Keep it going please. We need you.
Awkward Moment / March 15, 2016 9:22 am
Any updates on the fl inspector generals hoax of an investigation into “illegal” contracts, aka lucrative contracts given to friends on behalf of Slick Scott, supported by mini me DiPietro?
saint stephen / April 8, 2016 7:02 pm
SCOTTS A CROOK