By Dan Christensen, FloridaBulldog.org
Three years ago, state healthcare regulators moved to block Dr. Jack Michel’s bid to buy the Hollywood nursing home where more than a dozen elderly patients later met their deaths in the wake of Hurricane Irma.
But months later, after Michel retained a lobbyist confidant of Gov. Rick Scott – Fort Lauderdale’s William “Billy” Rubin – the state’s Agency for Health Care Administration (AHCA) reversed course. Records show it approved a pair of license transfers that Michel and his wholly-owned Larkin Community Hospital needed to buy and operate The Rehabilitation Center at Hollywood Hills and an adjacent mental health hospital.
As governor, Scott controls AHCA. For example, in the immediate aftermath of the loss of life at the Rehabilitation Center, he directed AHCA to terminate the facility as a Medicaid provider.
Rubin is Scott’s long-time friend and past business partner. In September, he was accused in a federal whistleblower suit brought by the former chairman of the North Broward Hospital District of being a behind-the-scenes power broker at Broward Health who boasted of controlling the governor’s appointments to its board of commissioners.
State lobbying records show that Rubin began representing Larkin affiliate Hollywood Property Investments LLC (HPI) before the executive branch on April 24, 2014. That was two months after AHCA sought to revoke the licenses of both the Hollywood nursing home and the mental health hospital, facilities Larkin was attempting to take over.
At the time, the businesses were owned by affiliates of High Ridge Management Co.
Under pressure to sell
High Ridge was under heavy pressure to sell. Seven months earlier its chief executive, Karen Kallen-Zury, was sentenced to 25 years in prison and ordered to pay $39 million in restitution for her role in a $67-million Medicare fraud. Three other company executives were also jailed and ordered to pay millions in restitution. Then, in December 2013, a hedge fund lender sought to foreclose on its properties, pushing High Ridge toward an eventual bankruptcy filing.
HPI is the Larkin-owned entity that in 2015 bought the property that housed both the Rehabilitation Center and Larkin Behavioral Health Services, a private psychiatric facility. With related asset purchases, including the licenses, the total cost of the sale was $24.6 million.
To make the deal happen, however, Larkin needed the licenses and consequently needed the state to drop its action to revoke them.
What role Scott and Rubin may have played in the process, or what impact their relationship may have had on AHCA’s ultimate decision, isn’t known. Scott’s office, however, said the governor had no communication with Rubin about the matter and did not influence AHCA’s decision.
Rubin did not respond to a request for comment.
AHCA spokesman Mallory McManus said, “The change of ownership process is a common standard practice at AHCA. There are requirements for licensure and before any license is awarded these requirements must be met. To insinuate anything other than the normal practice was conducted in this situation is incorrect.”
Quarterly compensation reports the state requires lobbyists to file show that in 2014 HPI paid Rubin’s firm, The Rubin Group, between $50,000 and $80,000 for lobbying the executive branch.
Florida Bulldog first reported on Oct 26 that HPI had retained Rubin. Since then, Rubin’s firm has removed HPI’s name from its online list of clients.
Last month, Florida Bulldog reported that since 2013 Larkin has received more than $23 million from a Scott-recommended program that uses Medicaid tax dollars to train future doctors. The story also reported that at least twice in the last four years the governor’s office tapped Michel to publicly endorse Scott’s budget and healthcare proposals.
The Hollywood nursing home lost power on Sept. 10 as Hurricane Irma passed through South Florida. Eight elderly patients died three days later after enduring sweltering conditions due to a lack of air conditioning. At least six have died since. Hollywood police are conducting a criminal investigation.
A public outcry
The deaths brought a public outcry at what some saw as a preventable tragedy, and raised concerns about whether enough was being done to protect the state’s frail seniors in nursing homes.
Details about the sale of the Hollywood facilities are contained in records from U.S. bankruptcy court, state court and administrative files. They show that Larkin took its first step toward taking control of High Ridge’s facilities and its state licenses in January 2014 with the signing of asset purchase and management agreements for Larkin to operate the hospital.
In February, however, AHCA tossed a monkey wrench into Larkin’s plans when it filed complaints seeking to revoke High Ridge’s licenses for the nursing home and hospital. About the same time, Larkin applied to AHCA to change the ownership of the hospital license to Larkin.
HPI, the Larkin affiliate, retained lobbyist Rubin in April 2014. In mid-June things got worse for Larkin when AHCA issued a notice of intent to deny its change of ownership application, bankruptcy records say.
But Larkin’s fortunes changed abruptly for the better just a few months later.
On Oct. 10, 2014, AHCA Secretary Elizabeth Dudek signed an order withdrawing the agency’s administrative complaint as well as its notice of intent to deny Larkin’s change-of-ownership application.
“The Notice of Intent is withdrawn and (AHCA) shall resume the processing of the change of ownership application,” Dudek’s order says.
High Ridge and its affiliates sought Chapter 11 bankruptcy protection in April 2015. In July of that year, The Real Deal, a real estate publication, reported that Larkin “bought the distressed mortgage and took over management of both the 50-bed hospital and the 152-bed rehabilitation facility.”
With AHCA’s approval, High Ridge also transferred ownership of its facilities to Rubin’s client, HPI.