Broward Health fires general counsel amid alleged compliance violations

The Broward Health board fired its general counsel Lynn Barrett as the taxpayer-supported health system continues to struggle after a series of state and federal investigations related to alleged overspending, kickbacks and open-government law violations.

Broward Health doctors alleged during Wednesday's board meeting that Barrett helped cultivate a hostile culture at the South Florida health system, which led to a "mass exodus" of doctors that crippled the organization.

Barrett's firing occurred amid controversy surrounding an independent review process spurred by a $69.5 million healthcare fraud settlement agreement reached in September 2015. The review process, spearheaded by law firm Baker Donelson, is part of a five-year deal with the federal government to settle allegations of physician kickbacks and Stark violations.

The latest independent review organization report filed July 23 took issue with some of Broward's executive and senior staff compensation contracts and corresponding consulting arrangements. Broward Health did not immediately reply to requests for comment.

The report accused Broward Commissioner and Chairman of the Board Andrew Klein, one of seven commissioners that oversee the system, of failing to negotiate the contract of Beverly Capasso, who took the role of president and CEO in February and abruptly resigned on Oct. 3.

The report also claimed that Klein didn't share a third-party compensation report regarding CEO pay with other commissioners. Klein knew or should have known that the compensation report was not an accurate representation of "fair market value," according to the independent review report. The "fair market value" was $850,000 and Capasso accepted $750,000, although there was never a formal negotiation process, the report found.

Broward contracted with consultancy Aon Rx Coalition Services to produce the compensation report, which was expected to be in the range of $15,000 to $20,000. Aon ended up sending the organization an invoice for $116,054.88. The independent review organization found it "stunning" that Aon was never mentioned in the March 28 board meeting where Capasso's contract was approved.

When Commissioner Steven Wellins asked for a copy of the draft consultant contract prior to the board meeting, Capasso allegedly told him over the phone that the "board was not involved in the contract process—so she does not feel it was necessary for (him) to see it." She had the authority to do it without the board's approval, Capasso said, according to the report.

Following the independent review organization's July 23 report, Barrett enlisted the law firm McGuire Woods to conduct an investigation related to the findings. Klein then wrote an email to Barrett telling her that "no such investigation has been authorized by the Board of Commissioners and therefore should cease immediately," describing the report as "flawed," according to a letter that Modern Healthcare obtained sent by the Office of Inspector General to Broward Health on Oct. 19.

"My concern is heightened because the IRO's report mentioned Commissioner Klein individually in a discussion of what information about the proposed CEO contract for Beverly Capasso was and was not made available to the Board as a whole," OIG senior counsel Laura Ellis wrote to Nicholas Hartfield, vice president and chief compliance officer of North Broward Hospital District.

The OIG said it had nothing more to add.

In a letter Modern Healthcare obtained that Baker Donelson's Scott Newton sent to Commissioner Nancy Gregoire on Oct. 17, Newton wrote that Klein has not only attempted to obstruct and discredit the work of the IRO, but restricted the ability of Broward Health to investigate and take mandatory corrective action.

"The matters being reviewed by the outside counsel presumably includes Commissioner Klein's conduct, which would raise the issue of whether Commissioner Klein has and continues to act to protect his personal interests, rather than in accordance with his fiduciary duties," the letter reads.

Even Broward Health's outside counsel wrote a letter to Klein warning him of potential violations of Florida law where Klein acted individually and without the authority of the board, Newton added.

Circling back to Barrett's firing, Klein was the one who led the charge. The board also accepted Capasso's resignation at this week's meeting. Gino Santorio, the system's executive vice president and chief operating officer, will replace Capasso.

Barrett and Capasso are two of five current and former Broward Health officials named in a December 2017 Broward County grand jury indictment for allegedly holding private meetings to discuss kickback accusations against former interim president and CEO Pauline Grant. Grant was ultimately fired on Dec. 1, 2016. Capasso faces second-degree misdemeanor charges for violating and conspiring to violate Florida's Sunshine Law.

Broward called that investigation "predetermined, biased and manipulated from the start."

The health system reported a $149.2 million operating loss on operating revenue of $1.03 billion in 2017, which aligned with its 2016 operating loss of $152.1 million on $1.02 billion of operating revenue, according to its year-end financial statement. But the system was buoyed by its property tax and non-operating revenue. It received $137.9 million in property tax revenue in 2017 as well as $44.6 million in net non-operating revenue. Broward only received $2.2 million in non-operating revenue in 2016.

Broward has several projects in the works including the Broward Health North emergency room, Broward Health Medical Center neonatal intensive care unit and Broward Health Coral Springs tower. Its construction costs totaled about $557 million in 2017.