Broward County

Broward Health’s $70 million settlement leaves risk of criminal charges

Assistant U.S. Attorney Mark Lavine
Assistant U.S. Attorney Mark Lavine

Court documents describe the massive healthcare fraud that led Broward Health to pay $69.5 million to settle a whistleblower’s lawsuit last week as an illegal “scheme of mutual enrichment” between the hospital system and its physicians.

Was it a criminal scheme?

Justice Department attorneys who handled the case aren’t talking. “As a general policy, the Justice Department does not confirm or deny the existence of an investigation,” said Nicole A. Navas, a department spokeswoman in Washington.

Still, the settlement agreement between the North Broward Hospital District, Broward Health’s legal name, and the government leaves open the possibility that the district and some of its past and present officers, commissioners, attorneys and physicians are the focus of a behind-the-scenes criminal probe.

For example, after releasing them all from civil liability the Justice Department specifically reserved its right to prosecute “any criminal liability” arising from the case. And Broward Health and its affiliates agreed to waive “any defenses they may have to any criminal prosecution” under the double jeopardy clause or the excessive fines clause” in the Constitution’s Bill of Rights.

Similarly, the settlement agreement left Broward Health on the hook for any tax liability under the Internal Revenue Service code. That could be a considerable sum given both the large dollar amounts involved and the duration of the fraud scheme, 14 years.

The chairman of Broward Health’s governing board, David Di Pietro, and the whistleblower’s Atlanta attorney, Bryan Vroon, both said they don’t if a criminal investigation is underway. Vroon added that such a probe would be “rare, historically.”

New rules

Earlier this month, however, the Justice Department announced new rules for fighting corporate wrongdoing that emphasize holding individuals, not just companies, criminally accountable.

“One of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing,” says a Sept. 9 memo to top-level prosecutors by Deputy Attorney General Sally Quillian Yates.

Should a criminal investigation be initiated, court records reveal an abundance of evidence describing how Broward Health and its individual administrators and physicians profited personally from the enormous fraud.

The $69.5 million settlement ended a five-year-old federal investigation that began with a 2010 federal False Claims Act lawsuit filed by whistleblower Dr. Michael Reilly, a Fort Lauderdale orthopedic surgeon. The government paid Reilly $12 million as a reward, or a bit more than 17 percent of the settlement amount.

Broward Health must pay Reilly an additional $860,000 for his attorney’s fees and costs, bringing the district’s immediate outlay in the deal to $70.4 million. That doesn’t include more than $10 million the district has already paid to an out-of-state law firm for legal advice in the matter.

Broward Health Chairman Di Pietro said the payout, while huge, wouldn’t require the district to cut services or hike taxes. He said that’s because the money will come from the district’s approximately $800 million in reserve funds.

Nevertheless, Broward Health’s proposed operating budget expenditures for 2015-2016 are 6.8 percent more than last year, or $1.27 billion.

In addition to the penalties, Broward Health Chief Executive Dr. Nabil El Sanadi signed a 46-page Corporate Integrity Agreement with the Department of Health and Human Services (HHS) that requires the district to establish a compliance program. Among other things, the agreement imposes new duties on both commissioners and staff to monitor, report and certify that its financial arrangements with physicians and vendors meet federal requirements.

Dr. Reilly, who court papers say rejected an employment offer that would have required him to join Broward Health’s illegal scheme, blew the whistle in April 2010 when he sued the district on behalf of the U.S. alleging fraud under the False Claims Act. The case was filed under seal as provided by law.

Two years later, Reilly filed a third, highly detailed complaint under seal that was the basis for last week’s settlement.

The 118-page complaint contends that numerous doctors were paid in excess of $1 million even though collections for their personal work were much less. It also says Reilly alerted Broward Health’s leadership to the law breaking in 2003, 2004 and 2009, but was ignored.

U.S. District Judge Jose E. Martinez unsealed the complaint on Sept. 15.

The government’s investigation of Reilly’s claims, led by HHS agents, focused on what turned out to be numerous apparent violations of federal laws enacted to address abuses that occur when doctors have financial relationships with entities to which they refer patients.

The Stark Law

The federal Stark Law, for example, generally bars physicians employed by hospitals from referring patients to their employers and prevents hospitals from presenting healthcare claims that flow from prohibited referrals. Exceptions exist for “bona fide employment relationships” in which a doctor’s remuneration takes no account of referrals, is “commercially reasonable” and consistent with fair market value.

Another law, the Anti-Kickback Statute, prohibits hospitals from paying and doctors from accepting “anything of value” as a reward for referrals. The law includes civil assessments of up to three times the amount of the kickbacks.

Violators can also be barred from participation in federal healthcare programs and face up to five years in prison per violation.

Reilly’s third complaint says that instead of complying with the law “Broward Health has done the exact opposite.”

“In compensating its employed physicians from 2004 through the present, Broward Health has deliberately and repeatedly violated all three of these requirements,” the complaint says.

While Broward Health admitted no wrongdoing, it settled without challenge serious and embarrassing allegations about a long-hidden scheme involving the payment of kickbacks to doctors who referred their patients to Broward Health’s four hospitals and other facilities for expensive testing and treatment.

“I think paying $70 million without litigation says something,” said attorney Vroon.

Representing the government were Justice Department Senior Trial Counsel David T. Cohen and West Palm Beach Assistant U.S. Attorney Mark Lavine.

The settlement agreement, signed by Dr. El Sanadi and lawyers for the district, says the illegal scheme went on from 2000 until last year.

Nine staff doctors are identified in the settlement as having had “improper” contracts that the government contends violated the federal Physician Self-Referral Law. Specifically, it was alleged that Broward Health grossly overpaid those doctors to obtain larger referral profits in return.

The physician who benefited the longest from such overcompensation was cardiologist Michael Chizner, medical director of Broward Health’s Heart Center of Excellence. His contract was in effect from April 1, 2000 until May 31, 2014, the settlement says. reported in January that Chizner accepted a pay cut from $1.2 million to a maximum of $867,000, and a requirement that he treat poor people after the district threatened him with termination. Broward Health acted to impose those terms after declaring Chizner’s contract illegal in the wake of pressure from federal authorities.

Many other doctors also accepted pay cuts and contracts modified to comply with federal law.

The other Broward Health physicians on the list are cardiologists Violeta McCormack, John Rozanski and Ashok Sharma; orthopedic surgeons George Caldwell and Erol Yoldas, team physicians for the Florida Marlins; Rudolph Roskos, chairman of the department of pediatrics at Chris Evert Children’s Hospital, and pediatrician Hector Rodriguez-Cortes; and Shazia Zafar, a hematologist now with Memorial Healthcare.

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