by Arnaud and Naja Girard…….
“He put some superglue on the wound, a piece of gauze and taped it,” says Dan Schramm, who went to the ER at Lower Keys Medical Center last year for a deep gash above his eye. “The doctor didn’t even clean up the wound at all and later it got infected.” The whole thing took about “two minutes.” He says the hospital charged him $4,000 for the ER and he was billed another $800 for the doctor.
Over the past year, animated by former City Commissioner Harry Bethel, angry Key Westers have shared a seemingly endless supply of stories of extravagant billing at the local hospital. Complaints were to be expected explained hospital community liason Bryan Green: Profit margins at LKMC have been as high as 32 percent of its revenue when the average profit margin in hospitals in the U.S. is only 7 percent.
In the midst of accusations of fraud and price gouging came this surprising news: The hospital was once publicly owned. It might have been unlawfully transferred to a for-profit company and Key West wants it back! Could it happen? Commissioner Sam Kaufman, who is a lawyer, argues it’s worth pursuing.
It was August 11th 2016. With mounting complaints from a watchdog group, The Committee to Rescue Our Hospital, Key West’s City Commission decided to hold a public workshop for all interested parties. Many people were stunned to learn that night that the Stock Island hospital had been built on city owned land. As it turns out we also learned that the town has such a thing as a “hospital district board.” Its members are appointed by the Governor of Florida. It’s been around since 1967. Under the laws of Florida, the district board has the power to oversee the rates, policies and budgets at its local hospitals. Its mission is to protect the interests of the public when it comes to healthcare.
So, what have all those people been doing for the past 50 years?
Well, in 1968 the City deeded its land on College Road to the Lower Florida Keys Hospital District which opened a hospital there in 1971. In 1999 the District leased the hospital to HMA [Health Management Associates] for 30 years. The rent was a lump sum $20 million that the District would slowly give back to HMA as yearly payments for free “indigent care.” Those payments are now $500,000 a year. In the meantime, according to Bryan Green, LKMC has been operating with one of the top profit margins in the country.
A month after the City’s workshop the same angry crowd met again, this time in front of their newly discovered hospital district board. Now that the light was turned on above the kitchen sink, people including former Judge Payne, now a City Commissioner and Commissioner Sam Kaufman had questions about …well everything.
Had the hospital district board failed to exercise its statutory powers and duties to oversee the hospital’s rates? Did the board members unlawfully delegate their powers to a for-profit company? Did they have the right to lease the hospital to a third party? Have they abandoned the citizens to the jaws of extortionists while our elderly have no choice but to leave town to seek more affordable healthcare?
That night the Board promised to seek an “independent legal opinion” as to its current powers and duties. It hired Maria Currier from the law firm of Holland & Knight to answer those specific questions. This week, while delivering her $25,000 opinion, she reassured the board that it had absolutely no powers and nothing to do.
And that’s where the conspiracy theory begins.
“They didn’t ask about the “reverter clause,” Commissioner Kaufman told The Blue Paper, “Why was the deed from the City not part of the inquiry?” Apparently a “reverter clause” in the deed transferring the land beneath the hospital to the District has been a sour spot ever since the hospital district decided to take HMA’s $20 million.
According to Judge Payne, “the deed does not allow the district to use the land through a third party.” Payne claims the deed explicitly requires that the district use the land itself for hospital purposes or the land would revert back to the City.
Both lawyers on the Commission believe that the Hospital District violated the deed when it leased the hospital to HMA. The City deeded the land to the hospital district with full consideration of the District’s commitment and duty to serve the best interests of the public under the law, argues Commissioner Kaufman. He claims, the City did not give the land to a private company that answers only to shareholders.
“If I give you a property and expressly state that when you stop using the property it reverts back to me, how is that not clear?” says Commissioner Kaufman, “There would otherwise need to be an assignment clause.”
However, the list of questions prepared by the District Board as a basis of the legal opinion did not mention the reverter clause controversy. “Not to even address or analyze this deed provision is very strange and speaks volumes,” says Commissioner Kaufman, “Did the District Board not listen to Judge Payne or the City? Did they not try to figure what we were saying? Or is there a purposeful reason not addressed?”
Finally, when one reads the $25,000 ten-page legal opinion it seems that one question is answered to the board’s satisfaction with very little legal support:
Question 2: [Does the District Board have any residual responsibilities left?]
Does the district board still have power to oversee LKMC rates? Currier concluded that the district is precluded from interfering with setting rates under the state’s “hospital licensing law,” but the argument is as obscure as it appears unsupported.
The District entered into a real estate agreement with HMA. They signed a lease that does not specify that the board relinquishes any of its statutory powers or duties. Why would anyone assume that the power to oversee rates would be automatically canceled by a lease agreement?
The answer could lie in these three scary words: grand jury investigation. Until now State Attorney Catherine Vogel has declined to convene a grand jury absent positive proof of criminal activity at the hospital. However, Dennis Ward, the newly elected state attorney, argues that a grand jury can be convened even in the absence of the suspicion of criminal activity in cases where the investigation involves a public agency. Mr. Ward publicly criticized Catherine Vogel for not investigating the hospital through the hospital district whose board members are appointed by the governor of Florida. So the question is: are the Hospital District Board members trying to dodge a grand jury investigation by claiming that according to the latest “independent legal opinion” they have absolutely no powers over the setting of rates and no knowledge about anything going on at LKMC?
Karen W says she was scheduled at LKMC for a scan before surgery after a cancer diagnosis. She had to cancel the surgery because she didn’t have $4,500 up front to pay for the scan. She found a place in Kendall to do the same scan for $200.
Carol N tells a similar story. She was billed $8,839.20 for a cat scan at LKMC and found out later she could have had the same cat scan done locally for approximately $325.
Note: This piece was amended at 9:00 am Friday December 16, 2016
At this time, Blue Paper reporter, Dr. Martha Huggins, is continuing her research of the individual players involved in the privatization of Key West’s hospital as well as the tens of millions being spent by the District for “free indigent care.”
Enabling Legislation: click here
Original Lease with HMA: click here
See the legal opinion below. [Attorneys please comment.]