By Terrence McCoy
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By Deirdra Funcheon
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The chief battle between the two businesses has been waged by their surgery centers, which are both large, for-profit facilities owned jointly with shareholding doctors. Famiglietti says the district immediately tried to persuade his doctor-partners to move across the street.
Then, in the beginning of 2003, NBHD began trying to snare more physicians by offering dividends to investors. "We are excited and pleased by the continued development and progress of the Surgery Center of Weston and the payout of dividends in the last two quarters," a district official wrote to potential investors this past August.
That is an exciting development to be sure, especially since the surgery center was losing money. How could the district pay out dividends when there were no profits?
"The surgery center is a separate entity from the HealthPark," district spokeswoman Sara Howley explained in an e-mail. "Volume for the Surgery Center is up 30 percent and is making money. Therefore, we were able to give dividends to the investors due to the profit."
Although it sounds like a good explanation, district records contradict Howley. Seven months after the dividends were first dispersed, an NBHD private offering memorandum to physicians stated, "The Company has not operated profitably since opening in July 2000 and may continue to operate at a loss for the foreseeable future."
In fact, the surgery center lost $424,393 in 2001, another $300,000 in 2002 and was projected to lose $200,000 in 2003, according to NBHD records. When Howley was confronted with these facts, she adjusted her story. Surgery volume, she wrote, is up 23 percent -- rather than 30 -- during the "current period" and has recently "generated a positive cash flow."
Whatever the truth, it's clear that the place wasn't running in the black in early 2003. And Famiglietti charges that dividends paid on phantom profits violate state and federal antikickback laws that forbid remuneration to be paid doctors for referrals of patients and medical services. In other words, he's alleging that the district was paying physicians a little extra to bring in more business.
The district's most egregious act was to try to steal the doctors who rent offices in a small building that Famiglietti owns nearby. District employees solicited those physicians by offering them cheaper rents at HealthPark. "At least half a dozen tenants I had -- doctors I struggled to bring into Weston -- went to the district because they offered lower rents," he complained. "They called my doctors and stole them."
How could NBHD offer lower rents? First, administrators have shown no qualms about losing millions of dollars. Second, they, unlike Famiglietti, don't pay property taxes on either the office space or the surgery center.
The district, however, is supposed to pay the county on property that is used by private physicians or businesses. For instance, the South Broward Hospital District shelled out $685,000 in property taxes last year. And every year, it sends the appraiser's office a detailed report on its nonexempt real estate, even including names of doctors who rent space. No such report comes from the North District, which paid only about $5,000 in property taxes last year, according to county records.
It pays nothing on the HealthPark.
I questioned Ron Gunzburger, a spokesman for the property appraiser's office, about the matter last week. "It piques our interest that the numbers are so divergent between the North and South districts," Gunzburger said. "We're going to ask [NBHD] to give us documentation on all its facilities, and we will send appraisers out to look at all of its facilities. We need to find out why there is such a difference. If they are leasing out space to businesses or private doctors, that square footage is taxable. Everyone needs to pay their fair share."
The district might legitimately have to pay fewer taxes than its southern counterpart since it has contractual agreements with many more doctors, who can use NBHD space on a tax-exempt basis. But it also rents space to numerous private physicians who have no such contracts. The portion of the surgery center owned by doctors also appears to be an obvious nonexempt property.
The appraiser's probe could also affect an already controversial plan to build a $30 million medical office building near Broward General Medical Center. That project, which is under investigation by a federal grand jury for possible insider dealing, hinges on the idea that the district won't have to pay property taxes. According to the law, in the case of outside doctors, that's not so.
One wonders if district administrators -- who wouldn't respond to my questions on the issue -- willfully neglected to pay taxes. We may never know that answer, but one thing is certain: The district must be forced to pay up on its private ventures, if for no other reason than to help curb its already abusive business practices. And when the appraiser requires the district to sign a check, the burden shouldn't be placed on Broward's taxpayers but rather on the private entities that have benefited for so long from the district's wrongdoing.
Then Famiglietti, along with other business owners and doctors who must compete on NBHD's lopsided playing field, might finally get a fair shake.