Broward County

Questions arise over scholarship ties to blood donations

Last year, high school students in Broward, Miami-Dade and Palm Beach counties freely donated 53,998 pints of blood that were processed as red cells, platelets and plasma, repackaged and then sold by Community Blood Centers to hospitals for more than $16 million.

In exchange for their blood, the students got T-shirts, slices of pizza or perhaps nothing more than a sense of satisfaction that will lead them to be regular blood donors for the rest of their lives.

To CBC President Charles Rouault, the partnerships the Lauderhill-based company has with South Florida's schools are the best in the nation.

"The advantage is that we get 40 percent of our donors relatively inexpensively," he said.

Indeed, those coveted teenage donors account for more than a sixth of the 300,000 pints of blood CBC collects each year as the state's third-largest blood bank and supplier of about 90 percent of the blood used in South Florida.

But CBC's long-standing and profitable relationship with the schools is facing scrutiny after last month's arrest of Broward School Board member Beverly Gallagher, accused of steering school construction work to undercover FBI agents posing as contractors.

Gallagher was paid by the CBC to run the program that this year should provide about $1 million in college scholarships in return for the blood.

Her legal problems do not stem from her work with CBC. But news reports, including those in the Sun Sentinel, about her role with the blood bank, along with an Orlando Sentinel series detailing questionable financial dealings in the blood industry, have prompted an investigation into blood banking practices by the Florida Senate's Health Regulation Committee.

"An individual being paid by the blood bank had direct jurisdiction over students, getting blood that it then sells for a price," said Sen. Don Gaetz, R-Niceville, the committee chairman. "That offends my sense of right and wrong."

A report due in December could lead to a hearing and new regulations, Gaetz said.

The blood of young men and women is prized by all nine of Florida's major blood banks. And all run school-based drives, which are highly productive. In a workplace blood drive, or in a day's outing by one of the CBC's 40 bloodmobiles, the average number of pints collected is 13.5. The average take for one day at a high school: up to 250 pints of blood.

Fawaz Shihadeh, 17, a senior at Spanish River High School in Boca Raton, donates several times a year. On Thursday, he sat in an icy bloodmobile in the school parking lot as a plastic bag filled with his blood. "I hope it ends up in a person who needs it," he said.

Like many donors, Shihadeh has no idea how valuable blood is. When asked what he thought CBC charges hospitals for a pint of blood, his first guess was $5. In fact, CBC charges hospitals $237 a pint for red cells. "That's a lot," Shihadeh said.

Scholarships in question

Few blood banks, in Florida or the United States, link the monetary value of scholarships directly to the number of pints donated, as CBC does. For every pint donated in Broward, Miami-Dade and Palm Beach counties, CBC pays $20 into a scholarship fund. Miami-Dade schools run their own scholarship program and award the funds.

But students at all 29 Broward high schools, as well as students at Spanish River and about 15 other Palm Beach County schools where CBC regularly holds drives, can apply to the scholarship foundation controlled by the CBC's board of directors. Awards are based on leadership qualities and are not tied to participation in blood drives. Scholarship recipients receive certificates for the amount, which they present to college bursars, who in turn get the money from CBC.

"No money passes through the hands of the students," said Rouault, 64.

Indeed, more than $400,000 earmarked for scholarships in past years was never paid out at all, according to CBC records. Those funds have been rolled over into the current scholarship fund, Rouault said.

J.P. Gaskins, a vice president of Florida Blood Services in St. Petersburg, the state's largest blood bank, said he thinks a scholarship program funded directly from donations is a bad idea.

"We believe you have to be extremely careful about the line between paid-for and donated blood," said Gaskins. "This comes up to the line."

Under Food and Drug Administration regulations, blood for which donors are paid must be labeled as such. That's because those who donate blood for money often have higher rates of disease and drug use.

But Rouault, as well as Broward school officials, say their decades-old scholarships-for-blood agreement is well-known to regulators at the U.S. Food and Drug Administration, which polices blood collectors.

The blood bank has had an unofficial agreement with the board to conduct in-school drives since 1977. In 2003, Gallagher was hired with instructions to set up the foundation, which is controlled by the CBC, to run the program because the schools no longer wanted to do it, said Rouault.

"I think it works perfectly," he said.

For his part, Gaetz has expressed concerns about the CBC scholarship program administered by a School Board member. Speaking as a former school board member in Okaloosa County, he said, "That is certainly something I never would have done or approved."

Rouault said he welcomes any inquiries, including Gaetz's.

"Once we have a chance to explain the [scholarship] program to him, I think he'll be very happy with it," Rouault said.

Gallagher delivered

The fraud, extortion and bribery charges Gallagher faces are not related to her $53,000-a-year position as director of the Scholarship Assistance Foundation.

Still, after Gov. Charlie Crist suspended her from the School Board, Rouault said he had no choice but to fire her.

"Clearly, her usefulness to us was at an end," he said.

And Gallagher was useful, Rouault said. In the five years she headed the foundation, donations from high school students in South Florida increased by 40 percent. And revenues soared, from $63 million in 2005 to $100 million last year.

Although rarely seen in the office, Gallagher used her clout and her cell phone to facilitate school blood drives.

"She would resolve problems; she fielded 1,000 to 2,000 little incidents," Rouault said.

Since Gallagher's fall, CBC board member Abe Fischler, a former Broward School Board member, has been named acting director of the scholarship foundation.

Rouault said he would like to have another sitting board member as Gallagher's permanent replacement, but he has not yet broached the subject with the School Board.

"It's too hot a potato right now," he said.