Jeb Bush Fundraiser Gets Special Tax Exemption

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Jeb Bush Fundraiser Gets Special Tax Exemption.
7/1 Until recently, the GOP supporter was the only cardiologist who didn't pay into a fund to assist indigent patients.

By KRIS HUNDLEY, Times Staff Writer
St. Petersburg Times
published June 29, 2002

Dr. Zachariah P. Zachariah is a high-profile Fort Lauderdale cardiologist, chairman of the Florida Board of Medicine and mega-bucks fundraiser for the Republican Party For three years, he also was the only cardiologist in Florida exempted from a special state tax on health care providers that is used to fund indigent care.

"I really don't know why he's been the only doctor in the state able to get an exemption," said Wil Mick, executive director of the Florida chapter of the American College of Cardiology, which represents 1,200 cardiologists in the state. "Probably because of his connections. At least that would be my guess."

There's no question Zachariah has pull. Since 1996, he has personally contributed more than $100,000 to candidates, most of them Republicans, including $25,000 at an Orlando fundraiser earlier this month. As Florida campaign finance chairman for the first President Bush in 1992, Zachariah enjoyed rides on Air Force One, invitations to White House dinners and Barbara Bush as a house guest.

But Zachariah did not want to contribute to the Public Medical Assistance Trust Fund. Three years ago, he asked the state Agency for Health Care Administration to reconsider the assessment, and in September 1999 he was granted an exemption, a savings of thousands of dollars a year.

Zachariah was the only Florida doctor to receive such special treatment until recently.

On Friday, in response to questions from the St. Petersburg Times, an Agency for Heath Care Administration spokesman said Dr. David Mokotoff, a St. Petersburg cardiologist, has been granted a similar exemption.

Spokesman Pat Glynn could not say when Mokotoff's request was approved.

The approval came as a surprise to Mokotoff, who filed his request to be treated like Zachariah nearly a year ago.

"It's news to me, and they haven't put it in writing," said Mokotoff, who originally applied for the exemption in August. "The last I heard they said they lost that affidavit. And in March they told me I was in violation for not making payments."

By granting Mokotoff an exemption, the health care agency may open the floodgates for hundreds of other doctors to drop out of the trust fund, used to pay inpatient hospital costs for Medicaid patients. There is currently about $160-million in the fund, an estimated $10-million from doctors whose practices are similar to Zachariah's and Mokotoff's.

"Those that meet the requirements would be exempt," Glynn said.

Zachariah, who is in his second term on the state Board of Medicine, did not return several phone calls to his office about the matter. A spokesman for Gov. Jeb Bush referred a reporter's call to the state Health Department, which referred the call to the agency.

Mokotoff would not speculate on how much the exemption may have saved Zachariah's practice. But he offered an example of the substantial funds involved: Since 1995, Mokotoff has refused to pay the trust fund tax, putting what he would have owed into an escrow account. It now totals $90,000.

The trust fund, created in 1984 as a hospital tax, was expanded in 1993 to include ambulatory surgical centers, clinical labs and diagnostic imaging centers. Hospitals pay a 1.5 percent tax on their net inpatient operating revenues; the other providers pay 1 percent.

In 1992, the health care administration agency ruled that physicians were liable for the tax if they performed any of 11 sophisticated diagnostic services. Among them are: MRIs, nuclear stress tests, angiograms or vascular images. The specialties most affected were cardiology and radiology.

Physicians, led by St. Petersburg radiologist Nathan Hameroff, filed a lawsuit challenging the constitutionality of the tax in 1995. The trial was held in Leon County Circuit Court in October 2000, and Judge L. Ralph Smith ruled in the doctors' favor.

But in April, the 1st District Court of Appeal reversed the judge's decision.

The doctors, represented by St. Petersburg lawyer Murray Silverstein, are appealing to the Florida Supreme Court.

During the discovery process, Silverstein said he uncovered the letter granting Zachariah an exemption from the tax.

"Amazingly, Dr. Zachariah wrote the same letters we wrote to AHCA in 1995, asking for reconsideration, but only Zachariah got it," Silverstein said. "We cried foul because AHCA is inconsistently applying statutes. We've got hundreds of doctors just like Zachariah."

According to an August 1999 letter to Zachariah from Julie Gallagher, then the health care agency's general counsel, "Doctors who perform diagnostic imaging services for their own patients, and who do not accept outside referrals of patients, will no longer be subject to the PMATF assessment."

The catch is that most specialists provide tests only for their own patients.

Gallagher told Zachariah if he completed an affidavit that his practice fit this description, he would be exempt from the tax. Zachariah submitted a notarized statement in September 1999.

Mokotoff, who is a plaintiff in the class-action lawsuit, filed a similar affidavit in August. Until Friday afternoon, he was not aware it had been approved.

Mokotoff makes no excuses for avoiding paying into the indigent fund. "If you look at my books, we probably write off 30 to 40 percent of our bills," he said. "Many of our patients simply don't pay."

Still pending, according to Silverstein, are affidavits from more than 20 other physicians who meet the same criteria as Zachariah and Mokotoff.

"This isn't just about a couple of doctors having a fight with the state," Silverstein said. "It's a class-action lawsuit representing thousands of taxpayers involved in the health delivery process who never should have been taxed in the first place.

"AHCA made a mistake and when we brought it to their attention, they were reluctant or refused to admit it," he said. "They're afraid they'll have to make refunds."

-- Information from Times files and Times researcher Kitty Bennett was used in this report.

-- Cherri (whatever@who.cares), June 30, 2002


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