Thursday’s Broward Circuit Court verdict on economic damages, one of the largest verdicts in Broward history, capped a 14-week trial. Jurors were scheduled to decide on punitive damages after a hearing late Thursday afternoon.

The case was a stunning victory for Dr. Steven Scott, a controversial health care entrepreneur who bought HIP of Florida, now Vista Health Plans of Florida, five years ago. The Hollywood-based, for-profit health maintenance organization is the fifthlargest in Florida, with 220,000 members, the bulk of them in South Florida.

Lead plaintiff attorney Ken McNeil, a partner at Susman Godfrey in Houston, and his co-counsel, Fort Lauderdale lawyer William R. Scherer Jr. of Conrad & Scherer, declined to comment on the suit until after the jury decided on punitives. Paul Regensdorf of Stearns Weaver Miller Weissler Alhadeff & Sitterson in Fort Lauderdale, who defended HIP of New York, did not return calls for comment.

Thursday’s verdict included an award of $22 million and erasure of a $16 million promissory note to the defendant. The jury found for the plaintiff on allegations of negligent misrepresentation, breach of contract, unjust enrichment and breach of good faith and fair dealing.

In a statement, HIP of New York, one of the largest HMOs in New York, said it will appeal the verdict and accused Scott of filing suit to avoid paying his note. “We see this as a profound miscarriage of justice and will seek redress in a rehearing or, if necessary, in an appellate court,” said Michael D. Fullwood, executive vice president of HIP of New York. “We believe that we will ultimately prevail in this matter.”

“We are extremely disappointed that Scott’s pre-emptive tactic of filing a lawsuit instead of paying his debts worked in this case,” Fullwood continued. “We have maintained all along that he filed suit to keep from paying us and rushed to the courthouse in an attempt to make himself the aggrieved party.”

Hidden costs

Scott sued HIP of New York in August 2001, shortly after purchasing HIP of Florida for $40 million. Scott alleged that HIP of Florida’s unpaid claims at the time of purchase were $16 million higher than HIP New York represented. He also accused the buyer of misrepresenting that 5,000 New York City retirees in Florida were members of the city’s employee pension fund.

HIP countersued, seeking $16.5 million for breach of contract after Scott failed to pay a $5.5 million installment payment.

According to Belinda Miller, deputy general counsel of the Florida Department of Insurance Regulation, who was the plaintiff’s first witness, HIP of Florida nearly went out of business after the 2000 sale when the hidden costs started appearing.

Scott is also president and chief executive officer of Coastal Physician Group, which contracts out physicians to hospitals and clinics.

In addition, he heads Fort Lauderdale-based Phoenix Physicians, which holds lucrative, no-bid contracts to provide physician services to the publicly run North Broward Hospital District, for which Scherer is the longtime general counsel.

Center of controversy

Scott has been at the center of a controversy over his business deals with the hospital district, which operates five hospitals and 34 ambulatory care centers. Scott is a major campaign contributor to President Bush and Gov. Jeb Bush. All seven members of the hospital district were appointed by Gov. Bush, while Scherer is a major GOP fund-raiser and power broker.

Scott is facing lawsuits in U.S. Bankruptcy Court in Baltimore, alleging that he illegally shifted millions of dollars to himself from several health care companies he once controlled that now are in Chapter 11 bankruptcy. Creditors of the bankrupt companies sued last year, claiming that Scott stripped assets from the companies for his personal gain. He also was accused of conspiring with North Broward Hospital District officials to grab the physician contracts from PhyAmerica, one of the companies he led into bankruptcy.

Late last year, the hospital district’s board renewed three contracts with Phoenix Physicians without taking bids, despite requests from two companies to bid on the contracts, and despite the outgoing board chairman’s call for seeking bids. One of the potential bidders, Miami-based Sterling Healthcare, said it could have handled the work for $2 million less, using the same physicians.