By Karla Bowsher, BrowardBulldog.org
Ryan Tannehill accepts a football signed by all Broward Health orthopedic surgeons from Broward Health President/CEO Frank Nask Photo: Downtown Photo/Ryan Pinder
The newest face of Broward Health hangs shoulder pads around his neck instead of a stethoscope.
But like a doctor, he earns six figures a year from the tax-subsidized public health care system.
Miami Dolphins quarterback Ryan Tannehill recently signed a three-year endorsement deal to represent Broward Health’s orthopedics and sports medicine program. BrowardBulldog.org obtained a copy using Florida’s public records law. Click for a link to the contract.
The move, announced last month, follows criticism from within of Broward Health’s marketing expenses and was made amid a federal anti-kickback investigation. A subpoena issued in that probe named more of Broward Health’s orthopedic surgeons than any other type of doctor.
$100,000 A YEAR AND CLIMBING
Created by the Florida Legislature and legally known as the North Broward Hospital District, Broward Health is largely supported by property tax revenue from county residents who live roughly north of Griffin Road. Last year, the district netted $150 million from property taxes, according to financial reports.
In return, Broward Health’s four hospitals and various clinics treat poor patients who are uninsured or otherwise unable to pay for health care.
Despite this obligation, the district believes spending upwards of $100,000 a year on a professional athlete’s endorsement is a wise investment.
“It just seemed like such a great opportunity for us because we would normally never be able to afford something like this,” said Sara Howley, head of the district’s marketing department. “It just ended up working out really well for us.”
Howley said research by an outside ad agency helped Broward Health’s marketing department determine that the endorsement expense was “a tremendous value” below Tannehill’s market value.
According to his contract, Tannehill will earn $100,000 this year, $110,000 next year and $121,000 in 2015.
The contract, approved in January by Broward Health Chief Executive Frank Nask, will automatically renew unless terminated.
While it’s in effect, Broward Health may use the 24-year-old Fort Lauderdale homeowner’s name and likeness – including his voice, autograph, biography and photos – to promote the district.
Tannehill must make nine personal appearances a year at district events and co-chair the district’s annual fundraising gala with his wife, Lauren. He must also donate at least two items for the gala’s silent auction and buy a table at the event for up to $7,500.
This year’s gala is scheduled for April 6 at the Harbor Beach Marriott Resort & Spa.
Broward County’s only other tax-subsidized hospital district, Memorial Healthcare System, has no plans to follow suit with a paid celebrity endorsement of its own, said spokesperson Kerting Baldwin.
Neither does the public Jackson Health System in Miami-Dade County.
“Jackson is the hospital of choice for all of Miami-Dade,” said spokesperson Edwin O’Dell, “and no, we don’t have any plans [to pursue paid endorsements], whether celebrity or not.”
The North Broward Hospital District rebranded itself as Broward Health in 2007. The names of its hospitals followed suit last year, despite objections from doctors and commissioners.
The flagship Broward General Medical Center became Broward Health Medical Center, and the other three hospitals dropped “Medical Center” from their names, to make the facilities sound less like public hospitals for uninsured patients.
Former Broward Health Commissioner Clarence McKee, who voted against the renaming last year, questioned the district’s marketing expenses prior to his January resignation.
Former Broward Health Commissioner Clarence McKee
At a Sept. 17 tax hearing, McKee brought up the district’s $6.5 million marketing and advertising budget, minutes show. He questioned what Broward Health “gets back from those dollars.”
CEO Nask said, “The marketing is basically to keep us out there in the community,” according to the minutes.
At a December 19 Board of Commissioners meetings, McKee asked Broward Health CFO Robert Martin if he thought the district’s $700,000 in branding expenses proved cost-effective.
“We’re not gaining, but we’re not losing,” Martin said of the number of patients admitted to Broward Health hospitals. “So we’re right in line with where they were last year.”
Martin also pointed out that other hospitals invest in marketing.
“So it’s worth it then?” McKee said.
“I’d say you really don’t know that unless you had a crystal ball,” Martin said. “If you didn’t [advertise], how far would [admissions] be down?”
McKee did not return a voicemail or email to his government relations firm.
At a Feb. 7 press conference, Nask called Tannehill the perfect representative for Broward Health’s orthopedics and sports medicine services because he lives in Broward County and has an interest in orthopedics.
Tannehill purchased his home in Fort Lauderdale’s Portside Yacht Club in August 2012 for $785,000, according to property records.
Before the NFL, Tannehill considered becoming an orthopedic surgeon. He underwent a knee procedure in high school and went on to study biology at Texas A&M University.
Tannehill already knew some of Broward Health’s orthopedic surgeons because they are team doctors for the Miami Dolphins, spokeswoman Howley said.
The Broward Health endorsement is Tannehill’s first since moving to South Florida.
Tannehhill’s endorsement coincides with the ongoing federal inquiry into whistleblower allegations of false Medicare and Medicaid insurance claims submitted by Broward Health.
A May 2011 subpoena from Department of Health and Human Services (HHS) demanded documents detailing Broward Health’s business dealings with 27 physicians. HHS is conducting the inquiry jointly with the Department of Justice in Washington, D.C. and the U.S. Attorney’s Office in Miami.
Most of the 27 doctors specialize in orthopedics or cardiology, which are two of the most lucrative specialties for hospitals because orthopedic and cardiac procedures generally offer higher insurance reimbursement rates than other types of medical care.
The orthopedic surgeons named in the subpoena include two district doctors who treat the Miami Dolphins, Dominic Carreira and Erol Yoldas, as well as William Burke and John McAuliffe, district doctors affiliated with Broward Health’s orthopedics and sports medicine program.
Those doctors are to have offices in Broward Health’s new 36,000-square-foot Orthopedics & Sports Medicine Center in Fort Lauderdale, expected to open this summer.
Karla Bowsher can be reached at firstname.lastname@example.org.
By Tracy Weber and Charles Ornstein, ProPublica
Dr. Jon W. Draud, the medical director of psychiatric and addiction medicine at two Tennessee hospitals, pursues some eclectic passions. He’s bred sleek Basenji hunting dogs for show. And last summer, the Tennessee State Museum featured “African Art: The Collection of Jon Draud.”
But the Nashville psychiatrist is also notable for a professional pursuit: During the last four years, the 47-year-old Draud has earned more than $1 million for delivering promotional talks and consulting for seven drug companies. (more…)
By Karla Bowsher, BrowardBulldog.org
Broward Health CEO Frank Nask Photo: Karla Bowsher
Broward Health could lose at least $6.5 million a year if Tallahassee lawmakers ignore their pleas not to reduce Medicaid health insurance payments. That’s on top of $179 million the north Broward public hospital system expects to lose to federal cutbacks over the next decade.
Preventing cuts to current Medicaid payments and expanding Florida’s Medicaid program are Broward Health’s top priorities during this year’s 60-day session of the Florida Legislature, which began March 5.
“Those are the two biggest issues that we monitor every day,” said Broward Health Chief Executive Frank Nask. “We talk about them every day.”
Other priorities include securing continued funding for its Memory Disorder Center and its health center at Deerfield Beach High School.
The Patient Protection and Affordable Care Act, also known as Obamacare, allows states to expand their Medicaid programs to provide health insurance for all adults whose income is up to 133 percent of the federal poverty guidelines – or $15,281 a year for an individual. Currently, Medicaid insurance is only available for certain low-income individuals.
If Florida expands its program, between 800,000 and 1.3 million people currently without insurance would become eligible for Medicaid. That includes as many as 107,000 Broward residents.
Broward Health, whose legal name is North Broward Hospital District, is a tax-subsidized health care system that includes four so-called safety-net hospitals that treat paying patients as well as indigent patients with the help of property tax revenue from Broward homeowners who live roughly north of Griffin Road.
In 2011, the district netted $154 million from property taxes, according to financial reports.
Broward Health is governed by a seven-member board of commissioners appointed by the governor.
This week, Nask and Broward Health CFO Robert Martin, chief lobbyist Charlotte Mather and three commissioners – Joel Gustafson, Jennifer O’Flannery Anderson and David Di Pietro – are taking their concerns about Medicaid to Tallahassee.
In states that accept it, the Affordable Care Act would increase federal funding to cover 100 percent of the costs to expand state Medicaid programs between 2014 and 2016. Federal funding would cover at least 90 percent of those costs starting in 2017.
Federal and state governments jointly fund Medicaid. In Florida, federal funding typically covers 58 percent of Medicaid costs.
Broward Health Chief Lobbyist Charlotte Mather
Gov. Rick Scott’s unexpectedly announced last month that he now supports President Obama’s Medicaid expansion option, but his support does not guarantee that Florida will expand Medicaid.
Other state officials, including Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater, still oppose expanding Medicaid. And the day before the session began last week, the House Select Committee on Patient Protection and Affordable Care Act voted 10-5 against expansion. The vote split along party lines, with Republicans against and Democrats in favor.
On Monday, the Select Senate Committee on the Patient Protection and Affordable Care Act voted 7-4 against expansion, with the vote again split along party lines. Instead, the committee proposed the state accept the extra federal funding for expansion but use it to help uninsured, low-income people obtain private insurance. It’s currently unclear whether the proposal will go any further, however.
Broward Health wants Medicaid expanded in part because the Affordable Care Act will cut special funding for safety-net hospitals that treat a high percentage of uninsured, indigent patients. The federal law assumed there would be fewer uninsured residents because of the Medicaid expansion option.
Currently, eligible hospitals receive what’s known as disproportionate-share hospital (DSH) funding via Medicaid and Medicare, the federal health insurance program for people age 65 and older. In 2011, Broward Health received $40 million in DSH payments from Medicaid and another $18 million from Medicare, according to Broward Health’s financial reports.
The federal law will cut Medicaid DSH funding by 50 percent between 2014 and 2022, and Medicare DSH funding by 75 percent starting next year. That means Broward Health stands to lose $179 million in DSH funding over the next 10 years, according to lobbyist Mather.
“We’re really looking for Tallahassee to be fair, to make sure that they’re looking at what the impact of expanding or not expanding is on your safety-net hospitals and all hospitals,” she said. “The legislators are the ones who are actually now addressing this, and the ball’s in their court.”
Gov. Scott’s proposed budget for the 2013-2014 fiscal year calls for a 2 percent cut to the Medicaid insurance payments that hospitals receive for treating hospitalized patients covered by Medicaid.
Broward Health opposes the cut because it could cost the hospital system $3.2 million a year, Mather said. Lawmakers will decide whether to approve the governor’s proposal.
In January, the Agency for Health Care Administration (AHCA), which administers the state’s Medicaid program, announced its proposal for a new Medicaid payment model.
Currently, Florida’s hospitals receive Medicaid payments based on a flat daily rate regardless of the type of illness treated, called a “per diem” rate.
Under AHCA’s new payment model, hospitals will receive Medicaid payments based on the type of illness treated, which the industry calls a “diagnostic related group” (DRG) rate.
The DRG payment model ensures all hospitals receive the same payment for treating a given illness, whether it’s an ankle sprain or a heart attack. AHCA hopes this will reward hospitals that reduce their treatment expenses.
Broward Health does not oppose the idea of a new payment model but disagrees with some of the ways AHCA has tweaked its model.
For example, the DRG model is set to take effect July 1 without a transition period.
Mather said it also lacks a wage-area adjustment, which means it doesn’t take into consideration the higher salary costs paid by hospitals in metropolitan areas like South Florida.
Lobbyist Ron Book, who works with Broward Health and other hospital systems, said the proposed DRG model also gives preferential treatment to stand-alone children’s hospitals. That means All Children’s Hospital in Miami-Dade County, for example, would fare better than the Chris Evert Children’s Hospital, part of the Broward Health system, and the Joe DiMaggio Children’s Hospital, part of the Memorial Healthcare System, he said.
“They should not be treated any different,” Book said. “That is a very big factor in the DRG fight.”
Broward Health stands to lose at least $3.3 million a year under the DRG payment model as it’s currently proposed by AHCA, Mather said.
“We just want to make sure that, if they’re going to switch to this methodology, the model that they use is based on criteria that’s fair to all hospitals,” she said. “That is something that we’re watching carefully.”
Broward Health is also counting on lawmakers to renew annual funding for its Memory Disorder Center and its Deerfield Beach High School Health Center.
The district is seeking $223,000 for the memory center, one of 13 state-designated clinics that receive annual funds to treat patients and conduct research on disorders like Alzheimer’s disease.
The district wants $367,000 for the school health center, which provides a variety of medical services, including school physicals, immunizations, dental care and gynecological exams. The center primarily serves students and nearby residents, but is open to the public.
Book is concerned about how it will fare in the Senate this legislative session.
“The Senate will cut a lot of programs,” he said. “Everything that’s on the project list has a concern.”
Karla Bowsher can be reached at email@example.com.
By Karla Bowsher, BrowardBulldog.org
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 BrowardBulldog.org 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
“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 firstname.lastname@example.org.
By Karla Bowsher, BrowardBulldog.org
A whistleblower apparently sparked the ongoing federal anti-kickback inquiry into allegations of false Medicare and Medicaid claims at Broward Health.
U.S. Department of Health and Human Services (HHS) agents surfaced the probe in May 2011 with a subpoena demanding records related to the public health care system’s business dealings with more than two-dozen doctors.
“We have reason to believe there’s a whistleblower,” said Broward Health General Counsel Sam Goren. He explained that belief is “based on the nature of the subpoena and its substance,” as well as the experience of Broward Health’s Washington, D.C. lawyers.
Under the False Claims Act, private individuals with knowledge of fraud against the government can blow the whistle – and seek rewards – by filing a lawsuit on its behalf. By law, such lawsuits are brought under seal to allow the Department of Justice time to investigate and decide whether to help prosecute the lawsuit.
An HHS official declined to say whether a whistleblower is involved in the Broward Health case.
BrowardBulldog.org, however, has learned that HHS agents are conducting the current civil inquiry jointly with the Department of Justice in Washington, D.C. and the U.S. Attorney’s Office in Miami.
Does that mean there is a parallel criminal probe? “Not to our knowledge,” said Goren.
Millions of pages of district documents have beenhanded over to federal authorities, Goren said. He explained it took so long because the district’s lawyers sought to limit how much information had to be turned over.
Broward Health, whose legal name is the North Broward Hospital District, did not finish producing all of the subpoenaed records until last month.
The 15-page subpoena from HHS’ Office of Inspector General (OIG) demanded Broward Health’s records concerning its contracts, negotiations and agreements with 27 doctors and one doctor-run business, North Broward Orthopedic Associates.
The kinds of documents sought included tax returns, financial data and other information regarding compensation, patient referrals and hospital admissions by the 27 doctors since January 2000.
The subpoena also required Broward Health to produce proof that it had taken steps, like employee training, to ensure that federal anti-kickback laws were not violated.
Click the chart for the complete list of names
State corporate records state that North Broward Orthopedic Associates was run by physicians Michael Abrahams and Sein Lwin, and was involuntarily dissolved in 2008 when no annual report was filed.
“I just happened to be the representative for the group,” said Lwin, one of the 27 doctors named in the subpoena. “It has nothing to do with my practice.”
Broward Orthopedic Associates’ contract with Broward Health ended more than five year ago, Lwin said, and he had not been served a subpoena himself.
Lwin is one of six orthopedic surgeons named in the subpoena. Seven other physicians are cardiologists or chest surgeons – the most common specialty among the 27 identified.
Cardiologists generally treat more Medicare patients than other types of specialists because cardiac problems are common among the elderly.
Most of the doctors named in the subpoena – 18 – belong to the Broward Health Physician Group, meaning they are district employees rather than independent doctors in private practice.
The tax-subsidized Broward Health has hired the Arent Fox law firm to represent it in the matter. Attorneys Linda A. Baumann and Jacques Smith specialize in false claims issues. Both declined comment because the investigation is ongoing.
Alicia Valle, spokeswoman for Miami U.S. Attorney Wilfredo Ferrer, declined to comment.
Agent Omar Perez with the HHS Office of Inspector General’s Miami Lakes regional office declined to discuss specifics of the inquiry.
“We’re still … inquiring whether there’s some substance to the allegations that were raised,” he said.
By law, whistleblower lawsuits filed under the False Claims Act must remain under seal for 60 days. If the government wants to keep it sealed after that, it must demonstrate “good cause” to a judge every 60 days
If Broward Health submitted false or otherwise improper insurance claims to Medicare or Medicaid, the district could be in violation of the federal Anti-Kickback Statute or the Stark Law.
The Anti-Kickback Statute prohibits offering or receiving incentives for patient referrals that involve any federal health care program, such as Medicare and Medicaid.
Criminal offenders can be sentenced to up to five years in prison and fined up to $25,000 per violation. Civil penalties can include fines of up to $50,000 per violation.
The Stark Law, also known as the Self-Referral Law, prohibits doctors from referring Medicare patients to entities, such as hospitals, to which they have financial ties. It also prohibits those entities from billing Medicare for such referrals.
Violators can be required to refund illegal payments and pay civil fines up to $15,000 per violation.
Broward Health commission Chair Joel Gustafson did not respond to interview requests.
Broward Health Chief Executive Frank Nask, through attorney Goren, declined to comment because the investigation is ongoing.
Karla Bowsher can be reached at email@example.com
By Karla Bowsher, BrowardBulldog.org
Broward General Medical Center
A new state-ordered study compares the value of Broward Health’s operating assets to those of a “distressed hospital” worth “significantly below book value.”
The study by the audit firm Deloitte determined Broward Health’s fair market value to be $271-$320 million, without counting the tens of millions of dollars in annual property tax revenues it receives. If those taxes are included, Broward Health’s value rises to $503-$532 million – or “slightly above book value,” Deloitte’s 69-page report says.
The firm will present its findings to Broward Health’s governing board at a public hearing at 5 p.m. today at the Westin Cypress Creek in Fort Lauderdale.
The hearing is a requirement of Florida’s “Sale or Lease” law, passed last March at the urging of Gov. Rick Scott, that required all public hospitals to determine how much they are worth and evaluate the possible benefits of selling or leasing their facilities to a private corporation.
Before the law was enacted, Broward Health’s board spent many months looking at whether to privatize. That effort, however, stalled for reasons that remain unclear.
The North Broward Hospital District, whose business name is Broward Health, operates four hospitals and 22 other medical facilities. Its flagship is Broward General Medical Center in Fort Lauderdale.
As a special taxing district, it receives property tax dollars from Fort Lauderdale to Parkland to help care for indigent patients. Last year, the district took in $154 million in tax revenues, according to an annual report.
Broward Health’s board of seven governor-appointed commissioners voted on July 25 to hire Deloitte for $275,000 to put a price on the district.
Deloitte’s final report, submitted to Broward Health last week, analyzed the district’s fair market value in two scenarios: with and without tax revenue.
“Deloitte made no conclusion or recommendation in the report,” Broward Health CEO and President Frank Nask said in an emailed statement. “The next step is for the board to review Deloitte’s report and vote on accepting it as a matter of public record.”
Frank Nask, president and CEO of Broward Health
Commissioners Debbie Kohl and David Di Pietro, board members appointed by Gov. Rick Scott, did not return phone messages seeking comment.
A PUBLIC PROCESS?
The board began to discuss the idea of leasing its facilities to a community nonprofit corporation prior to the passage of the federal Patient Protection and Affordable Care Act of 2010. Also known as “Obamacare,” the legislation requires uninsured individuals to obtain private health insurance or pay a penalty starting in 2014.
Nask broached the subject at a board meeting on July 22, 2009.
“If everyone gets insured, then we would not receive tax dollars,” he said, according to the meeting minutes.
At a special meeting on Sept. 10, 2010, the board passed a resolution authorizing Nask “to initiate and facilitate” the lease process.
Commissioner Clarence McKee, an appointee of former Gov. Charlie Crist, was the lone vote against the resolution. He said it seemed rushed and that he needed more information and time to make an informed decision.
“This looks like a done deal,” he said, according to the minutes.
The board acted without seeking public comment, fueling a backlash.
At a public tax hearing a few days after the meeting, critics berated board members for not allowing them to voice their opinions before the vote.
Four town-hall style meetings were later held about the matter. The resolution was ultimately repealed and replaced with a slightly different version.
The new resolution authorized Nask “to explore and to evaluate all potential options for the district to respond to the impacts of federal healthcare legislation … including, but not limited to, the potential lease of the district’s facilities.”
But according to Nask, the possibility of transitioning the public hospital system into a community-based nonprofit that could lease or sell its assets is now moot.
“As far as a transition process from 2010, the board simply made a motion to study a possible transition,” Nask said. “There’s nothing to proceed with because the law changed.”
By Dan Christensen, BrowardBulldog.org
Miami-Dade County Court Judge Steven Leifman
Two more South Florida judges may have violated ethics rules by serving on the board of a private company that controls public health care spending.
Those Miami-Dade judges sit on the board of a nonprofit corporation that is paid by the Department of Children and Families to administer tens of millions of behavioral healthcare dollars.
A Florida Supreme Court ethics committee issued an advisory opinion in June that said judges should not serve on such boards.
Four judges, including the chief judge of the Fourth District Court of Appeal, recently quit a similar healthcare board in Broward because of the ethics ruling.
Nevertheless, Miami-Dade County Judge Steven Leifman and Circuit Judge Jeri Beth Cohen, the court system’s gurus for mental health and substance abuse, have chosen to remain as volunteer board members of the Miami-based South Florida Behavioral Health Network. Leifman is board chair.
Leifman and Cohen say the Judicial Ethics Advisory Committee’s June 11 opinion is a narrowly drawn ruling that doesn’t apply to their situation. They are resisting it out of concern that their forced departure would seriously weaken an organization that “really serves the public,” said Cohen.
The judges together have asked their court’s general counsel to research the ethics ruling with an eye towards possibly getting the situation changed.
“We’re getting a second opinion,” said Leifman, a county court criminal division judge. “We’re in a holding pattern.”
Both judges said that if becomes clear they should step down, they will.
Cohen said the circumstances in Miami-Dade are not the same as in Broward.
“I think it’s a very different situation than what happened in Broward,” said Cohen, a circuit court judge in the unified family and juvenile divisions. “We were never put there to impress anybody.”
The Supreme Court’s ethics committee offers advisory opinions to judges and judicial candidates about whether their conduct might violate Florida’s Code of Judicial Conduct.
While opinions are only advisory, conduct consistent with an opinion may be evidence of good faith on the part of the judge in disciplinary proceedings.
SPIN OFF ISSUE
Whether judges should serve on the boards of private companies that have or are seeking government contracts arose as an issue as DCF spins off services it once handled.
An unidentified judge in Palm Beach asked the ethics committee its opinion after he was asked to serve on the board of a managing entity being set up there to administer $52 million “as part of the privatization of DCF funds.”
The ethics panel, made up of a dozen judges and lawyers from around the state, said judges should not serve on the board of a managing entity because it is “in essence a governing entity” – an inappropriate place for a member of the judicial branch.
Oversight of government spending “is a clear responsibility of the executive branch, no different than the operations of the police and fire departments,” the opinion says.
Miami-Dade Circuit Judge Jeri Beth Cohen
Judges Leifman and Cohen acknowledged that their board service may require them to vote on a contract or payout – but it is unusual.
“Rarely or never do we vote on money going to a particular provider,” said Leifman. “Bids are put out, people bid and there’s a point (ranking) system. There are committees that none of us board members sit on that decides who gets what.”
Leifman acknowledged that the board influences contracting indirectly through its personnel and policy decisions.
Relationships with private companies also can lead to conflicts, especially if the managing entity “is viewed as a conduit or agent for (a) vendor,” the opinion says.
It cites Canon 2(b) of the Code of Judicial Conduct: “A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others.”
That was a problem for the judges on the board of the Broward Behavioral Health Coalition, which is chaired by former DCF Secretary Bob Butterworth.
The names and titles of three of the judges were used in bid documents submitted to DCF last winter by Butterworth. Records show their presence on Broward Behavioral’s board impressed DCF negotiators.
Broward Behavioral signed a $44.8 million-a-year contract with DCF effective Nov. 1. The contract ends June 30, 2016.
Miami-Dade’s South Florida Behavioral Health Network became a DCF managing entity two years ago, with Leifman as chair.
Unlike in Broward, there was no bidding process when the Health Network got the contract “so there was no issue about someone using the prestige of the office to become a managing entity,” Leifman said.
Further, said Leifman, the June ethics opinion “flies in the face” of previous opinions that allow judges to serve on boards that have an impact on the administration of justice.
Leifman and Cohen, judges since the mid-1990s, will consider their options after they get their “second opinion.” Leifman said that could include asking the Supreme Court itself for its opinion.
Said Cohen, “We’re not interested in corralling money for treatment. We’re just interested in having a system that really serves the public…but without our expertise, it won’t be as good as it is now.”
By Dan Christensen, BrowardBulldog.org
When Bob Butterworth filed a bid last winter on a $44.8 million-a-year Department of Children and Families private management contract he signed a “Statement of No Involvement.”
By signing the statement, the former Florida Attorney General certified that neither he nor anyone else at the non-profit Broward Behavioral Health Coalition was involved in developing the DCF program for the project his company was bidding on.
Yet as DCF Secretary in 2008, Butterworth oversaw the state’s push to shift the job of administering local substance abuse and mental health services to private “managing entities” like the company he now chairs.
Butterworth described his involvement at Broward Behavioral’s inaugural board meeting last month.
The approved minutes of that Oct. 1 gathering say, “Chair Butterworth provided (a) history of managing entities created under his leadership in 2008 as DCF secretary with the goal of making local decisions and to advise the state how to best serve the community.”
The minutes also note: “At this time, the Department of Children and Families (DCF) has six (6) statewide ME’s and is now looking to Broward County to contract.”
Butterworth signed a four-year contract with DCF effective Nov. 6 to oversee government-funded programs in Broward. The deal was delayed for months by a competitor’s unsuccessful bid protest that alleged DCF illegally steered the contract to Butterworth’s group.
DCF will pay Broward Behavioral up to $162.6 million through June 30, 2016, the contract says.
‘TO INSPIRE PUBLIC CONFIDENCE’
DCF operating procedures require potential vendors to sign a “Statement of No Involvement” to promote fair competition “and to inspire public confidence that contracts are awarded equitably and economically.”
Fort Lauderdale attorney Joseph M. Goldstein, author of the Florida State Procurement Handbook, said the state relies on certifications made by those it does business with.
“There would be contractual and potentially criminal ramifications if you falsely certified in (bid documents), even if it’s not sworn,” he said.
In an interview last week, Butterworth downplayed his involvement in the creation of managing entities.
He said that while he supported their use as a way to increase local control, and recommended Gov. Charlie Crist sign the bill authorizing their implementation, managing entities were not a major emphasis of his administration and he was not actively involved in advocating for them.
“I don’t recall the issue coming up. It was a small portion of a large bill. I thought it was a good idea,” he said. “I asked my legislative director later on after I got involved, ‘What role did we play?’ He said we basically went along with the bill that the (service) provider organizations were pushing.”
BUTTERWORTH MADE MONEY
Broward Behavioral’s for profit partner in the deal, Concordia Behavioral Health, paid Butterworth and his Fort Lauderdale law firm, Fowler White Boggs, to represent them in the matter.
“Yes, I received compensation, but my total representation was at a drastically reduced rate and I didn’t bill all my hours because it was something I believed in,” he said.
However, Butterworth declined to say how much he and Fowler White were paid by Concordia.
BrowardBulldog.org reported last month that Concordia’s owners include a silent partner, Coral Gables healthcare entrepreneur Miguel B. Fernandez, who is a major contributor to Gov. Rick Scott.
Gov. Rick Scott
A Hollywood resident, Butterworth is a longtime Democrat and Florida political insider whose five decades of public service includes stints as Broward sheriff and judge.
Gov.-Elect Crist named Butterworth to head DCF in December 2006 amid a barrage of negative publicity focused on its failures to safeguard children under its protection. Butterworth served until August 2008.
PUSH TO REFORM
Butterworth said that as secretary his “major emphasis” was on restoring the agency’s reputation and reforming its foster care system.
State records, however, show that DCF under Butterworth was also focused on the development of managing entities as a “new business model” for the delivery of behavioral health services. In fact, it was a “strategic initiative” of the agency in its Substance Abuse and Mental Health Services Plan for 2007-2010.
In 2007, “the department began to strengthen community systems of care by encouraging the development of managing entities,” says a 2009 DCF report on their statewide implementation following the passage of enabling legislation the previous year.
Former DCF staff analyst John N. Bryant said he helped write the bill that ultimately passed the Legislature and was signed into law by Gov. Crist. Bryant said several people at DCF, including then Assistant Secretary Bill Janes “worked actively for its passage.”
Janes said he recommended the bill to Butterworth, but noted that Florida’s provider organizations, not DCF, initiated and developed it. ”It was the department’s role to provide comment on the bill,” he said.
Janes, who reported directly to Butterworth, said managing entities were then a “new concept” for DCF and Butterworth was not particularly familiar with them. “But I’m not going to head in a direction he doesn’t approve. He’s my boss. If he doesn’t agree with it, it’s not going to move forward,” Janes said.
QUIRK IN LAW
DCF Secretary David Wilkins announced in October 2011 that non-profits could submit bids for the job of Broward “managing entity.” Broward Behavioral was incorporated the same month.
Broward Behavioral and the Partnership for Community Health, a group of established local health care providers, were the only bidders. The Partnership ranked higher and state evaluators also deemed Broward Behavioral’s proposal “nonresponsive” because it did not include paperwork required to demonstrate financial stability.
Because there was only a single responsive reply, a quirk in state bid rules allowed DCF to ditch the sealed bid process in January and negotiate with anyone.
Two months later, Wilkins awarded the contract to Broward Behavioral.
By Dan Christensen, Browardbulldog.org
Gov. Rick Scott
Another political insider – this time a major contributor to Gov. Rick Scott – has cropped up in a $44.8 million-a-year government-business deal to manage mental health services in Broward County.
The Florida Department of Children and Families awarded the multi-year contract in March to Broward Behavioral Health Coalition and its for-profit partner Concordia Behavioral Health of Miami.
Bob Butterworth, the former head of DCF and an ex-Florida Attorney General, orchestrated the deal as president of Broward Behavioral. State officials say they expect to sign a deal by Nov. 1.
Now, BrowardBulldog.org has identified a second insider, this time as a silent partner.
Public records show that on Jan. 25, while DCF’s Broward procurement was pending, Concordia shareholder Miguel B. Fernandez gave $125,000 to Let’s Get to Work, a fundraising organization set up with the governor’s support.
Fernandez, a wealthy Coral Gables healthcare entrepreneur, and a company he controls, MBF Family Investments, together have contributed a total of $625,000 to Let’s Get to Work since September 2010, the records show.
“It sounds like maybe Gov. Scott is running Florida like a business – doing business with his friends, said Katy Sorenson, head of the Good Government Initiative at the University of Miami.
“It smells, and it’s not the way to encourage public confidence in the process. Even if it’s legal it doesn’t make it right,” she said.
Bob Sharpe, president of the Florida Council for Community Mental Health and a critic of how the contract was awarded, said, “I think we now need to know more. I’m not necessarily going to tie (Fernandez’s) contribution to his participation in the plan…That’s kind of like business as usual.”
KEEP A LID ON IT?
The DCF appears to have tried to keep a lid on Fernandez’s connection to Concordia.
Several hundred pages of public records released by DCF to BrowardBulldog.org about the Broward managing entity procurement make no mention of Fernandez.
And a DCF spokesman said in an interview that while the names of Concordia’s shareholders were disclosed to the department, they were not written down on paper and no one could remember them.
“I spoke to (lead negotiator) Tom Lewis, (Assistant Secretary) Rob Siedlecki – the two key guys – and Secretary (David) Wilkins and to a person none of us knew about Miguel Fernandez’s name or any contributions he may or may not have made,” said spokesman Joe Follick.
Follick added that Gov. Scott did not contact Secretary Wilkins about the contract.
BrowardBulldog.org contacted Concordia chairman and chief executive Carlos Saladrigas this week and asked about the company’s investors. He confirmed that Fernandez, who runs the private equity firm MBF Healthcare Partners, and Martin Perez, co-founder of Miami’s Medica Health Care Plans, are fellow Concordia shareholders.
“They are passive investors and it’s not even in a personal capacity. It’s through some of their funds,” said Saladrigas, reached by phone while traveling in Japan.
FUEL FOR A CONTROVERSY
The disclosure that a major contributor to Gov. Scott’s re-election committee stands to profit from DCF’s Broward contract seems likely to ratchet up controversy about the lucrative deal won by a team whose public face is Butterworth.
Butterworth, a Hollywood resident, has long been a political powerbroker. In Broward, he’s also served as sheriff and judge.
The DCF is privatizing the state’s current job of managing government-funded substance abuse and mental health services for adults and children in Broward. It is a change that is happening across the state.
Shortly after the award, a competitor, the Partnership for Community Health, filed a 22-page bid protest alleging that unidentified state officials had illegally steered the contract to Butterworth’s nonprofit. Likewise, it alleged that Broward Behavioral is a front for its putative subcontractor, Concordia.
DCF administratively rejected the protest and an appeals court tossed out the matter in August because the Partnership did not post a required appeal bond. The underlying accusations were not examined.
Bid documents submitted by Broward Behavioral describe detailed plans to implement “an innovative operating model” intended to save money and improve access to care. The documents also cite Concordia’s role in the new care system and describe the backgrounds of its management team, which includes Saladrigas and his daughter, psychologist Elisa Saladrigas.
The documents offer little detail about Concordia’s owners: “Concordia is well capitalized from private investors to fund its operations.’
But it is the financial muscle of those investors who are making DCF’s contract with Broward Behavioral possible.
BID INITIALLY REJECTED
In January, Broward Behavioral’s original bid was deemed “nonresponsive” because it did not include information the state requires to demonstrate financial stability.
To make up for that, Concordia’s owners offered to provide personal guarantees and/or a letter of credit to the state worth $750,000, according to records obtained by BrowardBulldog.org.
DCF negotiator Lewis endorsed the idea in a Feb. 23 email to Siedlecki and department General Counsel Marion Drew Parker that was not among the documents made public.
“Concordia’s three major shareholders are well known, financially substantial and respected investors with significant expertise in managed health care,” Lewis wrote. I “would intend to sit down and review the financial statements of the three guarantors to be sure the guarantee has substance.”
Lewis does not identify the shareholders in the memo, and apparently never reviewed their financial statements before forgetting their names.
Saladrigas said Monday he expects those guarantees to be signed upon his return to Florida this week.
Fernandez did not respond to a request for comment. Perez declined comment.
INSIDER AND PHILANTHROPIST
Fernandez, whose MBF Healthcare boasts in excess of $500 million in capital to invest in healthcare businesses, is a major philanthropist who has built and sold a number of South Florida businesses and given millions away to charity.
Recipients of his largesse include the University of Miami’s business school, St. Thomas University and Miami Children’s Hospital.
Fernandez is also among South Florida’s most active political donors – mostly to Republican candidates and causes.
Besides the money he sent Gov. Scott’s way, state records show that since 2010 Fernandez has personally contributed $540,000 to the Republican Party of Florida. His MBF Family of companies kicked in thousands more.
The Florida Democratic Party received $25,000 from Fernandez in the same period.
Fernandez is also a strong supporter of Republican Mitt Romney’s presidential bid. He and MFB Family have contributed $1 million to Restore Our Future, a Super PAC supporting Romney.
Another $100,000 spent during the current election cycle went mostly to the Republican National Committee.
Aside from Concordia, Fernandez and Saladrigas are business associates in MBF.
Saladrigas is on a three-person advisory committee at MBF Healthcare Partners that helps Fernandez vet investment opportunities. Both men are on the board of directors of MBF Healthcare Acquisition Corp.
In 2010-2011, another MBF company run by Fernandez and incorporated only in Delaware, was registered as the owner of short-lived Concordia Healthcare Ventures.
CHV was voluntarily dissolved on Aug. 19, 2011 – two months before the October public announcement of the Broward managing entity procurement.
Four days later, on Aug. 23, another ownership group – Concordia Healthcare Limited Partnership – was formed. Its general partner was another company, Concordia Healthcare Management.
Concordia Healthcare Management lists a single officer and director, Carlos Saladrigas.
Miguel Fernandez’s name is nowhere to be found.
By Dan Christensen, BrowardBulldog.org
Ex-Department of Children and Families Secretary Bob Butterworth lobbied heavily this year to convince his former agency to award his nonprofit company – and its for profit partner – a $44 million-a-year state management contract.
Butterworth, however, is not registered in Tallahassee to lobby state officials.
The Broward Behavioral Health Coalition, Butterworth’s group, won the competition in March to become Broward’s new “managing entity for substance abuse and mental health services.”
Today, after months of delay caused by an unsuccessful bid protest, Butterworth is negotiating final contract terms with DCF. A signed deal is expected by Nov. 1.
As president of Broward Behavioral, Butterworth led the company’s campaign to secure the lucrative, multi-year contract. Their bid was chosen over one made by Partnership for Community Health, a group of established Broward healthcare providers.
State procurement records obtained by BrowardBulldog.org show Butterworth assembled, signed and submitted a lengthy bid proposal on behalf of Broward Behavioral and its partner, Miami-based Concordia Behavioral Health.
Butterworth, a former Florida Attorney General and Broward County Sheriff, later participated in pre-award negotiations that included direct correspondence with DCF’s lead negotiator in which Butterworth advocated the merits of “BBHC/Concordia team’s” cost savings proposal.
HOLE IN THE LAW
One state ethics expert said Democrat Butterworth – also a former judge and prosecutor – may have taken advantage of holes in the lobbyist law.
“It’s like Swiss Cheese,” said Philip Claypool, the retired executive director and general counsel for the Florida ethics commission.
Florida law broadly defines lobbying as “seeking, on behalf of another person, to influence an agency with respect to a decision of the agency in the area of policy or procurement.”
But its definition of lobbyist is narrower, turning on questions of a person’s employment, pay and job description.
“I think there is an argument on both sides,” said Claypool. “The question would have to be determined by knowing who paid whom, for what, and when, as well as what communications were made, when and under what circumstances.”
The Florida ethics commission can investigate alleged failures to register or to submit a required compensation report. It does not initiate probes, but responds to sworn complaints.
Violators may be reprimanded, censured or prohibited from lobbying for up to two years. They can also be fined up to $5,000.
Butterworth declined several requests to discuss his push to obtain the DCF contract and explain why he is not registered to lobby executive branch agencies.
Butterworth, who also serves as Broward Behavioral’s chairman, told Sun-Sentinelcolumnist Michael Mayo in June that Concordia – owned by Miami businessman Carlos Saladrigas – was paying him as both a lawyer and a lobbyist.
That potentially conflicting relationship is not disclosed in Broward Behavioral’s proposal submitted to DCF, an agency that he ran from January 2007 to August 2008.
Butterworth’s financial arrangement with Broward Behavioral also is not discussed in the proposal documents. Company bylaws allow officers to be paid “reasonable compensation for their services.”
Nova Southeastern University law and legal ethics professor Robert Jarvis said Butterworth should have registered.
“We say we take seriously government in the sunshine. So having to register as a lobbyist is just part and parcel of that effort to make government as transparent as possible,” Jarvis said.
Carla Miller, a former federal prosecutor who now heads Jacksonville’s ethics office, said Florida’s lax lobbying requirements have allowed many to skate through without registering, including presidents of companies.
“There is an appearance that we are doing something to protect citizens when we aren’t, and that’s the bottom line,” said Miller, who founded CityEthics.org a dozen years ago to promote ethics in government. “Bob Butterworth has probably figured out the lobbying law. “
The idea of using managing entities to privatize oversight of state substance abuse and mental health services was a DCF initiative under Butterworth, according to department documents.
The idea: to save millions of dollars in expenses that can be redirected to improving care in a state where such government-funded services have long lagged the rest of the nation.
In 2007, DCF held a public meeting to hear comment on “the role and functions of a managing entity” in advance of a planned procurement in southeast Florida, records say.
Last fall, DCF Secretary David Wilkins announced an “intent to negotiate” for the job of managing entity for Broward.
DCF Secretary David Wilkins
He said he expected “a significant number” of qualified nonprofits to submit sealed bids.
But there were only two bidders: Broward Behavioral and the Partnership for Community Health.
The Partnership was ranked higher by six of the state’s eight evaluators. It also had the highest score.
Broward Behavioral was deemed to be “nonresponsive” because it did not include required paperwork to demonstrate its financial stability.
Nevertheless, as DCF’s general counsel Marion Drew Parker has put it, a “wrinkle” in the competitive process allowed DCF to scrap the idea of sealed bids.
Negotiations started over, now with just a single DCF employee – instead of a committee – charged with recommending a winner, and Broward Behavioral came out on top.
The deal was delayed when the Partnership filed a 22-page bid protest alleging, among other things, that the contract award was illegally steered to Butterworth’s group.
DCF quickly denied the protest. The Partnership sued, but an appeals panel dismissed the case in August because it had neglected to post a required protest bond
The underlying corruption allegations were not addressed. A DCF spokesman has denied any impropriety.
Broward Bulldog reported last week that DCF awarded the contract to Butterworth’s group without required rules in place to promote public scrutiny.