Pubdate: Sat, 2 Apr 2011
Source: St. Petersburg Times (FL)
Page: Front Page, A1
Copyright: 2011 St. Petersburg Times
Contact: http://www.sptimes.com/letters/
Website: http://www.tampabay.com/
Details: http://www.mapinc.org/media/419
Author: Kris Hundley, Times Staff Writer

SCOTT'S CLINICS STAND TO GAIN

If you have a $62 million investment, representing the biggest single 
chunk of your $218 million in wealth, and you put it in a trust under 
your wife's name, does that mean you're no longer involved in the company?

Florida Gov. Rick Scott says it does.

Scott has aggressively pursued policies like testing state workers 
and welfare recipients for drugs, switching Medicaid patients to 
private HMOs and shrinking public health clinics. All these changes 
could benefit that $62 million investment, but Scott sees no legal 
conflict between his public role and private investments.

And, experts say, under Florida law he is correct.

A few days before he took office in January, Scott moved his shares 
in Solantic Corp., a chain of 32 urgent care centers, to the Frances 
Annette Scott Revocable Trust. Scott co-founded Solantic in 2001 and 
was involved in its operation until last year. His wife's trust now 
holds enough stock in the private company to control it.

Solantic's walk-in clinics, clustered in mid-Florida and along the 
east coast, handle everything from stitches and sprains to school 
physicals and immunizations. Charges are posted like fast-food prices 
and there's a three-day feel-better guarantee - if you're not feeling 
better after three days, your follow-up visit is free. The company 
partners with hospitals in several markets, including Shands 
HealthCare in Gainesville.

By transferring the Solantic shares to his wife's trust, which is 
represented on the Solantic board by one of his former business 
associates, Scott maintains he is free from any possible conflicts.

"As I've told you, I'm not involved in that company," he said this 
week when asked why he didn't sell his shares.

Unless Solantic does business directly with the governor's office, 
there are no conflicts, says Tallahassee lawyer Mark Herron, an 
expert on Florida's ethics laws. Most states, as well as the federal 
government, forbid the kind of share shuffle Scott used.

But in Florida, nothing bars Scott from promoting policies that could 
benefit a company from which his family benefits financially.

Scott supports bills that would move nearly 3 million Medicaid 
recipients into private managed care plans. Solantic accepts 
traditional Medicaid at only one location but it contracts chainwide 
with several private Medicaid plans. If passed, the law would 
dramatically increase Solantic's potential patient base.

Would the company seek contracts with new Medicaid HMOs? "We don't 
have enough information at this time," said chief executive Karen Bowling.

Scott favors legislation that would require all adult welfare 
recipients - about 58,000 people - to have drug tests at their own 
expense. About 100,000 more would be affected by his plan to do 
random drug screenings of all state employees at a maximum cost of 
$3.5 million to the state. Bowling said Solantic would not bid on 
that job as long as Scott's shares remain in the trust.

"We don't have centers in Tallahassee and don't have plans to open 
one," she said. "I would think most of the state volume would be there."

Scott's budget slashes funding to public health departments, which 
handle checkups, immunizations and travel shots for many people who 
don't have private physicians. Solantic, which charges $50 for a 
basic physical and recently started catering to international 
travelers, could pick up some of this business.

Bowling said physicals and shots are a very small percent of 
Solantic's revenues; more than half its business is nights, weekends 
and holidays when most other providers (including health departments) 
are closed.

Scott appoints the heads of the Agency for Health Care Administration 
and Department of Health, which license, inspect and investigate 
complaints against providers such as Solantic. Herron, the ethics 
lawyer, said it's legal.

"It's counterintuitive to our understanding of how the world works, 
but that's the law, strictly construed," he said.

Bowling dismissed worries that state regulators would be influenced 
by Scott, saying both inspections and complaints are handled under a 
formal process, with inspection reports publicly available. In 60 
inspections at Solantic clinics since 2005, Bowling said, the state 
found only seven deficiencies, all of which were quickly corrected.

Solantic has built a successful business without state help, relying 
on patients who have commercial insurance, Medicare or cash. Medicaid 
accounts for only 3.1 percent of all patient visits. (The company 
declined to reveal revenues but said it plans to open eight new 
locations this year.)

Payments by state agencies to the company have been limited mostly to 
payments from the health department for disability determinations. 
Solantic's return: $14 per patient.

Bowling said the disability work is subcontracted through a company 
that handles workers' compensation cases. "It's the smallest 
percentage of our revenues," she said.

But as Solantic has grown, so too have the number of state agencies 
using its services. And in the urgent care business, high volume, 
along with low overhead, is crucial to profits.

Bowling said Solantic billed state agencies $110,657 for services in 
2010 and $20,061 so far in 2011.

Scott worked with Bowling when he was chief executive of the 
Columbia/HCA hospital chain and she was a marketing executive there. 
In 1997, Scott was forced out amid a federal billing fraud 
investigation that resulted in the company paying a $1.7 billion 
penalty. Scott, who left with $10 million in severance and $300 
million worth of stock and options, was never charged with any wrongdoing.

Four years later, Scott used part of that wealth to start Solantic 
with Bowling. Scott was active in the company and on its board until 
January 2010, when he began his run for governor.

Charles R. Evans, a retired HCA executive who worked with Scott, now 
represents Scott's wife's trust. He also is chairman of the Solantic board.

Said Bowling, "I have not discussed Solantic with Gov. Scott or his 
wife since he became governor."

Scott's ownership of Solantic, particularly his refusal to release 
depositions taken in a lawsuit involving the company, were heated 
issues during his gubernatorial campaign. But apparently it wasn't 
until after his election that Scott began tackling the question of 
how he was going to handle his biggest investment - and the one with 
the greatest potential for conflict - while in office.

In December, Scott's lawyers consulted informally on three occasions 
with representatives of the Florida Commission on Ethics about 
applicable laws and how public officials have dealt with their 
investments in the past, according to the commission. Philip 
Claypool, executive director and general counsel of the commission, 
was present at two of those meetings, one of which took place in his 
mother's living room during an unrelated trip Claypool made to 
Washington, D.C., on Dec. 10.

Claypool described the meetings as "attorney-to-attorney 
discussions," resulting in no public record. "Scott's lawyer (James 
Fuller from Williams and Connolly) had a stack of sheets of legal 
paper that apparently contained lists and lists of his investments, 
which he referred to occasionally," Claypool said of the meeting at 
his mother's. "I'm sure Solantic came up generally."

Scott's lawyers did not request a formal advisory opinion, which 
would have triggered a vetting of potential conflicts by the 
eight-member ethics commission and resulted in a recommendation that 
would be binding on Scott. Instead, Claypool and his staff only made 
suggestions.

"They asked us about precedents and basically there has not been much 
in the way of precedent," Claypool said. "That's been the extent of 
our interaction to date."

Florida's ethics commission is not allowed to initiate 
investigations, but it can respond if a citizen files a complaint.

"I can't tell you why or whether what Gov. Scott did was legal; only 
the ethics commission could make that determination," Claypool said. 
"So far he appears to be relying on the advice of his attorneys to 
comply with the law."

Kenneth Gross, a Washington lawyer and a nationally recognized expert 
on ethics laws, said Florida is one of the few states where a 
spouse's investments don't "tag the public official with conflict."

"It's an area that's crying out for attention," he said.

Gross said Scott retains interest in Solantic despite putting it in 
his wife's revocable trust, where it can be withdrawn at will. He 
said Scott should have sold his interest in Solantic.

"He may not be in on the day-to-day running of the company and that's 
nice," Gross said. "But if he has ownership interest by virtue of a 
revocable trust, he maintains an interest in the welfare of the company."

By continuing to hold it, Scott shows "he thinks it's a viable, 
thriving business that will continue to make money for himself or his 
spouse," Gross said.

Brian Burgess, the governor's spokesman, said it's not simple to sell 
stock in a company that's not publicly traded. "It's not like going 
onto E-trade and pushing a button," he said.

Scott was well aware that Solantic was unique among his assets in 
that it was the only one, Burgess said, which was directly regulated 
by the state. By putting it in Scott's wife's trust, the investment 
is "publicly visible," he said.

"All of Florida knows where Solantic is parked and how it's being 
treated right now," Burgess said. "He expects taxpayers to hold him 
accountable and do the right thing."

Mike Fasano, the Republican state senator from Pasco County, recently 
refiled a bill he has proposed for years that would require the 
governor and certain other elected officials to put their investments 
in a blind trust. He said Scott should have chosen that option for 
his Solantic shares.

Alex Sink, Florida's former chief financial officer who lost the 
governor's race to Scott, was heavily criticized for setting up what 
she called a blind trust, but she knew which assets were in it. And 
she used her husband's law partner as administrator. Fasano's bill 
would establish guidelines for blind trusts similar to federal standards.

"A true blind trust is to turn everything over to an independent 
trustee, without knowing whether the assets have been sold or where 
the dollars have been invested," Fasano said. "With all great respect 
to the governor, turning it over to your wife is nice, but it is your wife."

[sidebar]

SOLANTIC CORP.

Headquarters: Jacksonville

What it does: Operates chain of 32 walk-in clinics treating minor 
medical emergencies, as well as offering physicals, immunizations and 
drug screening

Locations: In Central Florida and along Florida's east coast, in 
high-traffic retail areas

Most unusual location: Orlando airport

Failed locations: two clinics inside central Florida Walmarts

Biggest draw: urgent medical services

CEO and co-founder: Karen Bowling

Major investors: Gov. Rick Scott (co-founder), New York private 
equity firm Welsh, Carson Anderson & Stowe

Goal: In 2006, Scott said Solantic would grow to at least 1,000 
locations and become a publicly traded company

Clinic partners: 16 of 32 clinics are hospital partnerships; partners 
include Shands HealthCare, Baptist Health Jacksonville, Tenet, 
Bethesda Memorial and HMA
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MAP posted-by: Richard Lake