Before deaths, Gov. Rick Scott and Hollywood nursing home owner were chummy

By Dan Christensen, FloridaBulldog.org 

Before Gov. Rick Scott and South Florida healthcare mogul Dr. Jack Michel began pointing fingers at each other after elderly patients baked to death in Michel’s now-closed Hollywood nursing home, the two men were pals of a sort.

At least twice, the governor’s office tapped Michel to publicly endorse his budget and healthcare proposals. And since 2013, records show, Michel’s Larkin Community Hospital in South Miami has received more than $23 million from a Scott-recommended program that uses Medicaid tax dollars to train future doctors.

But that’s not the only largesse the state has lavished on Dr. Michel, who in addition to being president and chairman of Larkin is its 100 percent owner. Michel also owns 100 percent of the notorious Rehabilitation Center at Hollywood Hills, state records show.

The Naples Daily News reported last month that Larkin “has received $48 million in taxpayer money since 2006 to treat state prisoners” under “no-bid agreements.”

The most recent five-year contract was to run until Dec. 20, 2017, but in June of this year the Department of Corrections extended it until June 30, 2018 and can be renewed for an additional three years. Under its terms, Larkin subcontracts with prison healthcare vendors to treat state inmates in “a secure hospital unit” at Larkin Community Hospital.

Larkin also receives state payments to develop a university campus and create jobs under a Qualified Brownfield Redevelopment Bonus Tax Refund Agreement signed in 2013 by Michel and Jesse Panuccio, the governor’s appointee as executive director with the Florida Department of Economic Opportunity.

The deal calls for Florida to refund to Larkin hospital $300,000 in corporate income, property and other taxes paid between now and 2025. The project is for a “university campus that includes a school of osteopathic medicine, a school of nursing, a college of pharmacy and a school of dentistry.”

Larkin University

The location and nature of the contamination at the brownfields site is not identified in the agreement. As recently as 2015, however, Larkin described ambitious plans to invest $68 million over 10 years to develop a 48-acre campus in Naranja Lakes. Larkin did not respond to requests for comment about those plans, but “Larkin University” is in a building at 18301 N. Miami Ave. in Miami Gardens.

Florida Bulldog also reported last week that twice in the last five years the Florida Department of Health awarded Larkin contracts worth $79,000 to review disaster planning. A spokeswoman said the department “had no role in selecting” Larkin and acted only as a conduit to pass through federal money.

Meanwhile, Larkin has retained Fort Lauderdale lobbyist William “Billy” Rubin, a longtime confidant and occasional business partner of Gov. Scott. Rubin’s website says The Rubin Group represents Hollywood Property Investments LLC, the Larkin-owned entity that records show in 2015 bought the property that housed both the Rehabilitation Center of Hollywood Hills and Larkin Behavioral Health Services, a private psychiatric facility. The purchase price: $16.1 million.

Email and voicemail messages left at Dr. Michel’s office and with a Larkin spokesman seeking comment did not receive a response. But John Tupps, the governor’s communications director, said, “Governor Scott does not believe he’s met this person and is unaware of any contact with any registered lobbyist or representative Dr. Michel may have had.”

It was Scott who directed Florida’s Agency for Healthcare Administration (AHCA) to shut down the Rehabilitation Center in mid-September amid a crush of national publicity about the deaths of elderly residents amid sweltering heat after Hurricane Irma knocked out power to the facility’s air conditioning system. The death toll now stands at 14.

The move touched off a feud with Larkin. Days later, the hospital issued a time line that accused FPL and Scott’s administration of failing to respond to the Rehabilitation Center’s calls for help. In turn, Scott’s press office responded with a statement accusing the center of “failing to preserve life.”

Four years earlier, however, Larkin’s plans to become a medical education powerhouse and a fully integrated hospital system got a huge shot in the arm when Gov. Scott signed into law changes that used $80 million a year in state Medicaid dollars to fund the new Statewide Residency Program. The program, which supplements federal funding, was created to help hospitals expand their residency training programs for new doctors.

Larkin’s share for training doctors

In the first year of the program in 2013, 15 hospitals in South Florida received $33 million, including $3.4 million to Larkin – an allocation second only to Jackson Memorial.

The residency program, administered by AHCA, is funded with money carved out of hospitals’ annual Medicaid payments.

“For the first time, hospitals are receiving a supplemental payment specifically for graduate medical education, which was made possible by the $80 million appropriation recommended by Governor Scott in the Florida Families First Budget,” the governor’s office said a 2013 press release.

AHCA records show that in 2013 and every year since, the state program paid Larkin more than $3.3 million, plus a one-time bonus of $6.8 million in 2017. Total to date: $23.3 million. Larkin is set to receive another $3.8 million this year.

Larkin Community Hospital Palm Springs in Hialeah, the former Palm Springs General Hospital that was acquired in early 2016, received another $1.6 million.

Dr. Michel was among several hospital executives who assisted Gov. Scott’s October 2013 rollout of the Statewide Residency Program, expressing his gratitude while plugging Scott’s budget.

“We applaud Governor Scott for his commitment to Graduate Medical Education and health care in Florida. The additional funding recommended by our governor under the Florida Families First budget will go a long way in ensuring that Florida Teaching Hospitals will have the resources required to operate quality programs to train the new generation of physicians,” Michel said, according to the governor’s press release.

Said Tupps, the governor’s spokesman, “Our office reached out to many hospitals across the state involved in this statewide graduate medical education program.”

Scott’s healthcare agency used Michel again the following year to endorse the governor’s “It’s Your Money Tax Cut Budget” and its $80 million in continuation funding for the doctors’ residency program.

“The additional funding recommended by our Governor will go a long way in ensuring that Florida Teaching Hospitals will have the resources required,” said Michel, as quoted in a January 2014 AHCA press release. “Our hospital will continue to allocate these funds for the direct funding and expansion of our residency programs and hiring new faculty to support the residents.”

Allegations of Medicare and Medicaid fraud

The governor’s office reached out to Michel for his endorsement despite Michel’s involvement as the lead defendant in a disturbing federal civil Medicare and Medicaid fraud lawsuit that in 2006 cost Larkin, Michel and several of Larkin’s former owners $15.4 million to settle.

The False Claims Act lawsuit specifically accused Michel and Michel’s practice group, Oracle Health Systems, of taking kickbacks in return for Michel and his brother, Dr. George Michel, referring patients to Larkin in 1997. Jack Michel purchased Larkin in 1998.

The U.S. also alleged in that case that from 1998 to 1999 Michel and others “conspired to admit patients to Larkin for medically unnecessary treatment. The government asserted that some of these patients came from assisted living facilities owned and operated by Jack Michel” and his alleged co-conspirators, said a Justice Department press release.

One of Michel’s fellow defendants and alleged co-conspirators was Philip Esformes, who owned and operated assisted living facilities the government said shipped patients to Larkin for unnecessary treatment in a scheme to bilk Medicaid and Medicare.

Esformes was indicted last year in a $1 billion Medicare fraud and money laundering scheme involving Larkin that federal officials have touted as the biggest of its kind ever prosecuted. The alleged conspiracy went on from 1998 until last year and includes a politically explosive corruption charge – added earlier this year –  that Esformes bribed an AHCA regulator to obtain state information about patient complaints and non-public schedules for unannounced inspection schedules. The purpose: “to evade detection” of administrative violations that would have gotten his chain of nursing and assisted living facilities kicked out of Medicare and Medicaid.

Also charged and awaiting trial is Odette Barcha, identified in the indictment as a former Director of Outreach Programs at “Hospital 1.” State records identify Barcha’s employer – Hospital 1 –  as Larkin.

“Odette Barcha did corruptly influence, obstruct and impede and endeavor to influence, obstruct and impede the due administration of justice by creating sham medical director contracts for Hospital 1, to conceal the fact that Odette Barcha paid physicians kickbacks for referrals to Hospital 1, and providing those sham medical director contracts to the Department of Justice in response to a grand jury subpoena,” the indictment says.