The following information taken from the public record is provided for informational purposes only. HPA leaves the determination of the facts in the case to the court. This is a copy of the brief filed February 25th, 2003 against Hospice of the Florida Suncoast containing allegations about the conduct of the hospice, the foundation and a for-profit subsidiary. This complaint is public record. For more information about the facts of this case, contact the hospice itself or the attorney of record listed at the bottom of this brief.


 

 

IN THE CIRCUIT COURT OF THE SIXTH JUDICIAL CIRCUIT

IN AND FOR PINELLAS COUNTY, FLORIDA

CIVIL DIVISION

 

 

FLUFFY CAZALAS Individually, and on Behalf of
All Others Similarly Situated,
                                                                CLASS ACTION COMPLAINT
                        Plaintiffs,

 

                                                

 

                 v.               Jury Trial Demanded

 

                                                

 

HOSPICE SYSTEMS, INC. Case No.
d/b/a SUNCOAST SOLUTIONS, a Florida-
for-profit corporation, THE HOSPICE OF Division:
THE FLORIDA SUNCOAST, INC., a
not-for-profit Florida corporation and THE
HOSPICE FOUNDATION OF THE FLORIDA
SUNCOAST, INC., a Florida not-for-profit
corporation,

                        Defendants.

 

_______________________________________/

 

        CLASS ACTION COMPLAINT FOR DAMAGES,

 

INJUNCTIVE RELIEF AND ELECTION OF JURY TRIAL

 

I.  INTRODUCTION

 

 

 

        The Plaintiff, Fluffy Cazalas is a resident of South Pasadena, Pinellas County, Florida, and a former employee of the Defendants, as well as a contributor/donor.  The Defendants, although engaged in good and laudatory work and endeavors, have unfortunately violated Florida law by funneling contributions intended for charitable and eleemosynary purposes into a for-profit software company, Suncoast Solutions, without disclosing to contributors and donors the diversion of funds to the software company.  In addition, the fact that the software company is and has been operating at a loss and will continue operating at a loss in the foreseeable future, has not been disclosed to the contributors or donors either.  Also, unfortunately, the software company has disseminated private and confidential patient and employee data, including information regarding patients with HIV, employee names and identifiers and other confidential and private data.

 

        Further,  in-kind donations to Hospice at least on some occasions have been diverted and/or utilized by certain individuals for their own personal gain.  Hospice does not presently have in place appropriate procedures and controls to assure that in-kind donations are properly received and accounted for and sold or utilized in a proper arms-length manner.

 

        Although this lawsuit seeks substantial damages on a class-wide basis so that the contributors and donors to Hospice are made whole and so that Florida law is followed, nothing in this lawsuit is a criticism of the Hospice concept, the excellent care given by many, many Hospice employees and the need for such Hospice care in Pinellas County and elsewhere.  In addition, many fine volunteers and others have donated time and energy to the Hospice concept and the fine work of these individuals is not an issue in this lawsuit.

 

II. VENUE AND JURISDICTION

 

 

 

1. Venue of this cause is properly in Pinellas County, Florida as certain of the injury and damage occurred within this county and as the Defendants are located within this county and jurisdiction of the court is under and pursuant to F.S. 496.416, 496.415(16), 501.204, 501.2105, 501.211 et seq; damages are in excess of $15,000.00; and, equitable relief is also sought.

 

III. FACTS

 

1. Plaintiff, Fluffy Cazalas, is a resident of South Pasadena, Pinellas County, Florida.

 

2. Ms. Cazalas is a former employee of Hospice of the Florida Suncoast, Inc. and is a donor/contributor to Hospice of the Florida Suncoast, Inc. and she files this action on her own behalf as a donor/contributor and on behalf of all others similarly situated who have made donations to Hospice of the Florida Suncoast, Inc. or the Hospice Foundation of the Florida Suncoast, Inc.

 

3. Hospice failed to disclose to Ms. Cazalas and others that part of their donations would go towards financing the development of software, rather than the caring for terminally ill people.

 

4. Defendant The Hospice of the Florida Suncoast, Inc. is a Florida not-for-profit corporation.

 

5. Defendant The Hospice Foundation of the Florida Suncoast, Inc. is a Florida  not-for-profit corporation.

 

6. Defendant Hospice Systems, Inc. d/b/a Suncoast Solutions is a Florida for-profit corporation, and a wholly-owned subsidiary of Defendant Hospice of the Florida Suncoast.

 

7. The internet web pages, as well as solicitation "brochure" attached hereto and by reference incorporated herein, for the Hospice of the Florida Suncoast and its related entities, including the software company, Hospice Systems, Inc., do not disclose the "for profit" nature of Suncoast Solutions or the fact that it has suffered and continues to suffer substantial losses.  See Exhibit 1.

 

8. Checks specifically made out to The Hospice of the Florida Suncoast or the Institute (not a party hereto) are deposited in accounts for those entities.  All other donations go to the Foundation based upon a written agreement between the entities.  See Exhibit No. 2, Response to Frazier and Company Management Letter dated April 20, 2000, dated September 8, 2000.

 

9. The Hospice of the Florida Suncoast, which is a charitable organization receiving donations and contributions, has spent a total of $7.6 million on its Suncoast Solutions software "subsidiary" as of September 30, 2001, and on information and belief, has expended more funds since that date to meet the cash flow needs of Suncoast Solutions.  Attached as Exhibit No. 3 is Pie Chart with related documentation showing the expenditure of funds for Suncoast Solutions.  Also attached as part of Exhibit No. 3 is Hospice Systems, Inc. Balance Sheet as of December 31, 2002, along with "Statements of Revenues and Expenses for the three months ending December 30, 2002" showing continued substantial losses by Suncoast Solutions and sums due to Hospice of the Florida Suncoast.

 

10. As an example of the unfortunate misappropriation of funds, The Hospice Foundation of the Florida Suncoast on Wednesday, May 30, 2001, approved a loan of $1.9 million (which is included in the $7.6 million previously referenced) to The Hospice of the Florida Suncoast, Inc. to cover cash flow needs.  At the time, the Board of The Hospice Foundation was advised that the software company "now has a positive cashflow and long-term projections of financial performance."  That representation to the Board was inaccurate as Suncoast Solutions did not have a positive cash flow and does not have a positive cash flow at this time.  See Exhibit No. 4, The Board Minutes of The Hospice Foundation of Wednesday, May 30, 2001.

 

11. Minutes of the meeting of the Board of Directors of Hospice Systems, Inc. on May 31, 2001 and September 25, 2001, establish that the funds obtained from The Hospice Foundation were in fact utilized to purchase the software business, which was in fact done.  See Exhibit No. 5.

 

12. In point of fact, as of March 31, 2002, the Suncoast Solutions net loss from operations for the six months which ended March 31, 2002 was $249,000.  See Exhibit No. 6, Hospice Systems Inc. Financial Statement Review dated March 31, 2002.

 

13. A pro forma generated for Hospice Systems, Inc. (apparently in 2000) indicates an out-of-pocket negative cashflow through the year 2004, and projects "income" over "expenses" which has not yet been realized or achieved.  See Exhibit No. 7.  For the ten (10) months ending July 31, 2002, Hospice Systems, Inc. was budgeted to suffer a loss of "only" $64,000.  It suffered an actual loss, however, of $611,000.

 

14. As explained in marketing slides prepared by KPMG to assist in marketing the software product, Suncoast Solutions is a start-up software organization with only nominal assets, equity and historical activity.  Prior to the purchase of the 40% interest of Benedict Kerns (a purchase "financed" by the $1.9 million "loan" from the Foundation to Hospice of the Florida Suncoast in 2001), Suncoast Solutions had only nominal assets, equity and historical activity and was (and still is) "dependent on the Hospice of the Florida Suncoast to meet any short-term cash flow needs and for financial resources to further develop the software product."  See Exhibit No. 9 being slides 1-20, with slide 10 being blank.

 

15. Hospice Systems, Inc. has also utilized laptops, facilities and personnel of The Hospice of the Florida Suncoast and has not actually paid for much of the in-kind and other services received from Hospice of the Florida Suncoast.  See Exhibit No. 10.

 

16. Hospice Systems, Inc. has entered into various licensure and software agreements with various Hospices around the country per its summary of initial sales and software support by fiscal year through 7/31/2002 attached hereto as Exhibit No. 11.

 

17. There has not been a disclosure to donors, contributors or others of the nature and extent of the financial resources which have been dissipated on the software company.  In point of fact, in the report of the President of Hospice of the Florida Suncoast, Mary Labyak, of June 12, 2002, Ms. Labyak stated, "the technology company continues to stabilize and grow.  We currently have 75 clients and 1.8 million in verbally agreed upon contracts.  Payback to Hospice will begin in the next fiscal year."  See Exhibit No. 12, President's Report of June 12, 2002.  In fact, "payback to Hospice" has not yet begun as the software company continues to experience issues and problems in its software, finances, development and expenses.

 

18. Suncoast Solutions has also released confidential patient information without authorization.  As of November 27, 2001, per Suncoast Solutions' "Release Notes, Documentation And Presentation Of Data" attached hereto as Exhibit No. 13 from Suncoast Solutions CEO Teresa Craig, the decision was made "to change our current practice.  From this date forward, all employee names, identifiers, patient names and identifiers and Hospice names and identifiers including provider numbers, phone numbers and social security numbers will be created and not real names."  Unfortunately, Suncoast Solutions continues to use patient names and identifiers in various aspects of its work and patient identifiers including diagnoses and the like have and are being routinely released.

 

19. In addition, at various times, items donated to The Hospice of the Florida Suncoast have disappeared or been purchased by insiders, per Exhibit No. 14.

 

VIOLATIONS OF LAW

 

1. All matters and facts heretofore alleged are hereby realleged and reincorporated as if fully set forth herein.

 

2. Among other things, the Defendants, jointly and/or severally have solicited charitable contributions purportedly to benefit end-of-life care and therapy, care of the terminally ill and for other eleemosynary and charitable purposes, when in fact such charitable contributions have been diverted by these Defendants without disclosure of the true circumstances to a profit making subsidiary, Suncoast Solutions, which among other things, has engaged in the unlawful and illegal activity of releasing private and confidential employee records as well as patient medical records on the internet among other places.

 

3. The specific prohibited acts, which are unfair and deceptive as a matter of law and violate the Deceptive and Unfair Trade Practices Act pursuant to F.S. §496.416 are as follows:

 

        F.S. §496.415 Prohibited acts.-- It is unlawful for any person in connection with the planning, conduct, or execution of any solicitation or charitable or sponsor sales promotion to:

 

        (1) Operate in violation of, or fail to comply with, the requirements of ss. 496.401-496.424....

 

* * * * * * *

 

(7) Misrepresent or mislead anyone by any manner, means, practice or device whatsoever to believe that the person or organization on whose behalf the solicitation or sale is being conducted is a charitable organization or sponsor, or that any of the proceeds of the solicitation or sale will be used for charitable or sponsor purposes, if that is not the fact.

 

* * * * * * *

 

(13) Employ in any solicitation any device, scheme, or artifice to defraud or to obtain a contribution by means of any deception, false pretense, misrepresentation, or false promise....

 

* * * * * * *

 

(16) Fail to apply contributions in a manner substantially consistent with the solicitation....

 

* * * * * * *

 

[Emphasis added]

 

1. The Hospice of the Florida Suncoast in addition to not disclosing the losses sustained by Suncoast Solutions, has not revealed that patient records, including invoices and diagnosis, have been distributed in the course of the business of Suncoast Solutions, the "profit-making" subsidiary, in violation of F.S. §§400.611 and 381.004, among others..

 

2. Hospice Systems, Inc. makes up its revenue shortfalls by utilization of funds and  donations from Hospice of the Florida Suncoast and/or The Foundation, which is not disclosed to donors such as Plaintiff Cazalas in the solicitations for funds. See Exhibit 1.

 

3. The fact that sums and funds solicited, donated and contributed for charitable purposes were diverted was not disclosed to donors such as Plaintiff Cazalas.

 

4. Further and additionally, The Hospice of the Florida Suncoast has insufficient and inappropriate controls for items and things donated to it, including both realty and personalty, and valuable items donated by individuals on behalf of their loved ones and dearly departed are and have been misappropriated per Exhibit 14, being an interoffice memorandum dated in August, 2001.

 

5. Pursuant to Rule 1.220 Fla R. Civ. P., Plaintiff brings this cause as a class action, seeking class wide relief on behalf of all donors who contributed to Defendants Hospice of the Florida Suncoast and Hospice Foundation and disgorgement from Hospice Systems, Inc. in an amount to be determined and for other class-wide relief.

 

6. There has been significant and systematic diversion of funds, equipment, donations and other inappropriate utilizations of charitable contributions.  Plaintiff Cazalas on behalf of herself and of the class is entitled to the following relief:

 

                (i) return or refund of monies donated to The Hospice Foundation and/or The Hospice of the Florida Suncoast for a period of at least five years preceding the date of the filing of this lawsuit;

 

                (ii) the appointment by this Court of a receiver to take charge of the affairs of The Hospice of the Florida Suncoast to assure that the misappropriation of funds, as well as personalty and realty, does not continue and to further assure that current funds available to The Hospice are conserved for the benefit of the class, the patients and the employees of Defendants;

 

                (iii) a permanent and mandatory injunction requiring Defendants to cease diverting funds without disclosure to "profit-making" subsidiaries and to cease releasing confidential medical and employee records.

 

        (iv) statutory attorney fees pursuant to 501.2105 for bringing this action.

 

(v) trial by jury of all issues so triable as a matter of right.

 

        RESPECTFULLY SUBMITTED this 25th day of   February , 2003.

 

                                                                                                            

 

                                                Jonathan L. Alpert, Esquire
                                                Florida Bar No.: 121970
                                                THE ALPERT LAW FIRM
                                                100 South Ashley Drive. Suite 2000
                                                Post Office Box 3270
                                                Tampa, Florida  33601-3270
                                                (813) 223-4131 - Tel.
                                                (813) 228-9612 - Fax
                        
                                ELECTION OF JURY TRIAL
                                                                                
        Mr. Clerk: Plaintiffs elect trial by jury of the issues in this cause.

 

 

 

                                                Jonathan L. Alpert, Esquire
                                                Florida Bar No.: 121970
                                                THE ALPERT LAW FIRM
                                                100 South Ashley Drive. Suite 2000
                                                Post Office Box 3270
                                                Tampa, Florida  33601-3270
                                                (813) 223-4131 - Tel.
                                                (813) 228-9612 - Fax

 


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