Rick Scott paid $200,000 in tax incentives to company in which he had financial interest

By Dan Christensen, FloridaBulldog.org 

Gov. Rick Scott’s administration paid $200,000 in job-creation tax incentives to a Fort Myers-based cancer treatment company in which the governor had a personal financial interest.

The incentives to a management services subsidiary of 21^st Century Oncology were approved by the state three days after Scott’s election in November 2010, while then-fellow Republican Gov. Charlie Crist was still in office. Two years later, at the company’s urging, Gov. Scott’s Department of Economic Opportunity amended the incentives agreement to make it more favorable to 21^st Century.

Specifically, the new deal gave 21^st Century an extra year to create promised jobs and wage levels, relinquished the state’s previously negotiated contractual power to “unilaterally cancel” the agreement if 21^st Century refused to allow public access to certain information about the deal and added an additional state excise tax to the list of taxes eligible for refunds.

Florida Bulldog previously reported that Republican Scott – via his “blind trust”  – owned an indirect interest in 21^st Century Oncology via his $210,000 investment in Vestar Capital Partners, the private-equity firm that owned about two-thirds of its stock. The February 2016 story disclosed how in 2012 21^st Century was awarded an unprecedented no-bid, 25-year radiology contract by Broward Health’s board of commissioners, which are appointed by the governor.

During Scott’s tenure, 21^st Century was paid an additional $340,000 in tax refunds stemming from a separate multi-year jobs-for-incentives deal approved in October 2007 by Gov. Crist’s administration, which kicked in $80,000 before Crist chose not to run for re-election in 2010.

Cash out, Cash in

The total of $620,000 that Crist and Scott funneled to 21^st Century was delivered as the company shoveled tens of thousands of dollars in political contributions at Crist, Scott and the Republican Party of Florida (RPOF).

State election records show that during 2006, when Crist was running for governor, his campaign collected $3,000 from 21^st Century while the RPOF pulled in $45,000. The company forked over another $35,000 to the party in 2007 in the months before it got the first incentives award in October 2007 worth a total of $420,000.

Since Scott was first elected in November 2010, 21^st Century has given the RPOF $340,000.

The company also gave Scott’s Let’s Get to Work political action committee more than $360,000 between May 2012 and January 2014 when Scott faced a tough re-election campaign against Crist, who had switched parties to become a Democrat in 2012. 21^st Century gave an additional $30,000 to Scott’s PAC two months after Scott’s second inauguration in January 2015, for a total of $390,000.

Today, Crist is a freshman congressman representing St. Petersburg and Clearwater. And 21^st Century is no longer passing out campaign contributions. The company sought protection in federal bankruptcy last year in New York and recently reorganized with new owners while shedding about half of its more than $1 billion in debt.

Tiffany Vause is a spokesperson for Scott’s Department of Economic Opportunity (DEO). After releasing information about 21^st Century’s incentives in response to a public records request, she pointed out that the $200,000 award to 21^st Century under Florida’s Qualified Target Industry Tax Refund program was made during Crist’s administration and that the 2012 extension was granted under another program developed to help companies affected by the recession.

“It’s worth noting that under Governor Scott’s leadership, DEO has reformed the incentive process, requiring companies to meet strict performance metrics, including total jobs and capital investment, before receiving any payments. This highly accountable process works to recruit businesses to our state, while at the same time protecting Florida’s taxpayers hard-earned money,” Vause said in an emailed statement.

An award recommendation

Scott was first elected on Nov. 2, 2010 when he narrowly defeated Democrat Alex Sink. The next day, a memo went out from Crist’s Office of Tourism, Trade and Economic Development recommending that 21^st Century be awarded $200,000 in tax refunds for creating 40 jobs with an average wage of $41,000 at a proposed billings, collections and management support service center that it wanted to relocate from Kentucky to Lee County. The company’s capital investment would be a meager $10,000. The then-confidential deal was approved on Nov. 5. Due to the extension, the first of five annual payments was sent to 21^st Century in 2013, records show.

Gov. Scott’s financial ties to 21^st Century Oncology are also at the center of a politically explosive whistleblower lawsuit unsealed in September 2017. Former Broward Health chairman David Di Pietro sued 21^st Century and 100 “John Does” alleging corruption regarding the award of the district’s 2012 no-bid, 25-year contract award to 21^st Century.

The False Claims Act complaint alleges that former Broward Health chief executive Frank Nask paid hundreds of thousands of taxpayer dollars as “hush money” to facilitate the radiology contract award. To get Nask on board with 21^st Century’s plans, Fort Lauderdale lobbyist William “Billy” Rubin, one of the governor’s closest friends and a lobbyist for the company, offered Nask kickbacks of financial security and the governor’s political protection, while applying political pressure in Scott’s name where necessary, the 53-page whistleblower complaint says.

“Rubin promised Nask that [the governor’s] appointments to the Broward Health Board would protect Nask’s continuing employment salary and pension as CEO,” the suit says. “Rubin also communicated the message to Nask that if he did not support the contract with 21^st Century, then the appointments to the board would not be his allies and his employment would be terminated.” Nask’s annual salary at the time was about $680,000, plus performance bonuses and benefits.

Di Pietro’s lawsuit, filed on behalf of the U.S. government, seeks to recover tens of millions of dollars it contends were wrongfully billed to Medicare, Medicaid and other federal healthcare programs by 21^st Century. If successful, Di Pietro could collect a huge reward.

But Di Pietro’s allegations may never be fully tested in federal court in Fort Lauderdale.

The case has been on hold since 21^st Century filed for Chapter 11 bankruptcy last year. In turn, Di Pietro filed an adversary complaint in bankruptcy court seeking a ruling that his whistleblower claim was not a dischargeable debt that 21^st Century could sidestep. Recently, however, U.S. bankruptcy Judge Robert Drain dismissed Di Pietro’s complaint saying he had not supplied sufficient evidence to back up his assertions. Di Pietro has a month to file an amended complaint.

Meanwhile, 21^st Century may be out of the business of making political contributions but its deposed founder is not.

Federal election records show that on May 8, two limited liability companies – Theriac Management Associates and TEM – that list Dr. Daniel Dosoretz as managing member gave a total of $70,000 to Scott’s New Republican PAC as Scott seeks to defeat incumbent U.S. Sen. Bill Nelson, a Democrat.

Dosoretz resigned as 21^st Century’s chairman and chief executive in January 2017.