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

By Dan Christensen, FloridaBulldog.org 

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 21^st 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 21^st 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 21^st 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 21^st 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 21^st 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, 21^st 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.

Following the board’s approval of the contract in January 2012, 21^st 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 21^st Century is seeking to reorganize and shed more than half of its $1.1 billion in debt.

21^st 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 21^st 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 21^st 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 21^st 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 21^st 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.