Six months after Universal Health Care Group declared bankruptcy, authorities are piecing together how extravagant spending and possible criminal conduct led to the demise of the once-thriving Medicare insurer.
A bankruptcy trustee alleges that Dr. Akshay "Doc" Desai, founder of the St. Petersburg company, and two of his top lieutenants took kickbacks from vendors seeking to do business with Universal.
A major bank alleges Desai might have had an insider stake in an Indian outsourcing company that collected millions of dollars from a Universal affiliate.
And the court official charged with liquidating Universal's assets and paying creditors has hired a top Miami law firm for a specific mission: to coordinate with federal prosecutors "in connection with any criminal related matters."
Desai and at least two of his former executives have hired well-known criminal defense attorneys, who insist their clients have done nothing wrong.
But interviews and recently filed court records show that even as Universal spiraled toward collapse, its leaders lived large at company expense. Desai and his wife, Seema, enjoyed weekends at a sumptuous corporate condo decorated with at least $115,000 in furnishings, including original artwork. Top executives drove luxury BMWs and joined dozens of other employees on a company-paid Mediterranean cruise. At the time, Medicare officials derided Universal for having among the worst customer service in the country with frequent complaints from members denied services and health care providers denied timely reimbursement.
Universal's finances have been under intense scrutiny since its parent company filed for bankruptcy Feb. 6.
Less than two months later, federal agents swarmed the company's downtown headquarters, seizing boxes of documents.
Universal's collapse left more than 800 employees out of work and wondering how a company that appeared to be rolling in profits could so abruptly find itself broke.
Kickbacks, alleged in court records, could be part of the answer.
At a bankruptcy court hearing, attorney Denise Barnett of the U.S. trustee's office described what she called "the kickbacks" and "the side deals" involving Desai, Jeff Ludy, Universal's sales and marketing chief, and Sandip Patel, the former chief counsel.
"They would reach out to certain vendors and say, 'In order for you to do business with Universal, you need to have me be … a member of your board or provide me with a certain stock option,' " Barnett told Judge K. Rodney May. "And those agreements were not between (Universal) and those vendors. Those agreements were with these particular officers."
Barnett added that she had copies of the agreements, including ones "that are signed by Mr. Patel, Dr. Desai.''
The trustee's office declined a Tampa Bay Times request to see the agreements, saying they were part of an investigation. The office has not publicly said which vendors allegedly were involved.
Federal law prohibits anyone from making or accepting payments for "referring, recommending or arranging" for the purchase of items being paid for by federally funded programs. The 1977 law stemmed from congressional concern that payoffs could influence decisions and result in unnecessary, inappropriate or poor-quality health care.
As a company annually receiving millions of federal Medicare dollars, Universal would have been bound by anti-kickback legislation.
"I did not sign any agreements and I am not aware of any agreements," Desai said in an emailed response to questions from the Times.
Patel's attorney, John Fitzgibbons of Tampa, said: "Mr. Patel did not receive one single penny from any so-called kickback or side deal." Ludy has declined comment.
Universal's largest lender, BankUnited, has also alleged possible wrongdoing.
In a motion filed in bankruptcy court, BankUnited said it had "reason to believe'' Desai was an "insider'' of Indus BPO Services, an Indian company that received millions of dollars from a Universal affiliate for processing claims and other back-office services.
"Over the course of negotiations with Indus," the motion states, "several representatives of BankUnited learned that Dr. Desai held substantial control over the decision-making process of Indus."
The court documents did not elaborate.
In a 2009 audit, Florida insurance regulators singled out Universal's relationship with Indus as a problem because Universal did not have the required state or federal approval to use the company. Universal continued to do business with Indus, however, and there was no follow-up to the 2009 audit.
Desai denied he was an insider or owner of Indus, calling the allegations "totally baseless."
In a phone interview from Chennai, India, Amish Dalal, an Indus executive, also said Desai was "in no way connected" to the company. He added, though, that Universal was by far Indus' biggest customer and that his company laid off two-thirds of its 300 employees after Universal declared bankruptcy.
"We never got any hint of it," Dalal said of the bankruptcy filing. "It was a bombshell."
More details have emerged, as well, of the prodigious spending that helped doom Universal.
In 2011, dozens of Universal executives, sales reps and other employees joined Desai and his wife on a cruise from Barcelona, Spain, to other Mediterranean ports to celebrate what Desai called "an outstanding selling season for 2010."
It wasn't the first cruise, former employees say. In addition to sales staff, invitees included other favored employees dubbed FOD's — Friends of "Doc."
Asked to estimate the total cost of the Barcelona trip, Desai said only that it paid for itself "many times over" in terms of boosting employee morale and productivity.
Three years ago, Universal paid $9.5 million cash for its downtown St. Petersburg headquarters and a two-bedroom condo on the 28th floor of the nearby Signature Place. The insurer spent another $596,500 on office renovations and more than $600,000 on interior decorating by the Tampa firm Studio M, recently released records show.
Reflecting Desai's taste in sleek modern design, the condo's furnishings included six Knoll Platner chairs valued at $17,095, a $3,733 low-slung white leather sofa and a $3,410 king-sized Tribeca bed with custom Euro shams and a $735 quilted coverlet.
In an interview published in Vertical Tampa Bay magazine in January — shortly before Universal declared bankruptcy — Desai said he used the condo to entertain clients and as a weekend retreat for him and his wife, even though his own $3.5 million waterfront home is only a few miles away.
"We enjoy the location right in the heart of downtown's many amenities," Desai told the magazine. "We like to leave the car behind and just walk around; it's a very attractive feature of being here."
Now, barely a decade after it started, little is left of Universal and its chic trappings.
The Florida Department of Financial Services, as receiver for Universal, let go the last of the company's skeleton crew by June and has agreed to sell the condo for $795,000. Universal's headquarters, where about 1,000 people used to work, is under contract for $10.25 million.
A Sarasota car dealership is seeking to repossess three luxury BMW sedans leased by a Universal sister company in 2011 and 2012 for a total of $140,000.
Soon after Universal's bankruptcy filing, the 55-year-old Desai resigned as a member of the state Board of Education and as finance chairman of Florida's Republican Party.
Not long ago, Desai was one of the most prominent Indian-Americans in Florida. But when members of that community recently held a press conference to cheer news that the Bollywood Oscars are coming to Tampa next June, Desai was noticeably absent.
Susan Taylor Martin can be contacted at email@example.com. Jeff Harrington can be contacted at firstname.lastname@example.org.