Doctors fight over control of HMO
Two doctors who are among Florida’s most aggressive fund-raisers for the Republican Party have had a nasty falling-out over control of an HMO.
Dr. Zachariah P. Zachariah, a prominent Broward cardiologist, has filed suit against Dr. Akshay Desai, the chairman and CEO of Universal Health Care. Universal, founded in 2002, is a fast-growing Medicare HMO based in St. Petersburg.
Desai was recently named finance chairman for the Republican Party of Florida. Zachariah is raising money for a Senate candidate and for the presidential campaign.
Zachariah’s suit says Desai cheated him out of a seat on the Universal board and diluted the value of his holdings by issuing 57 million additional shares of common stock without his knowledge or consent.
Zachariah said the sale of those shares reduced his holdings from 20 percent of the company to about 14 percent, costing him “tens of millions of dollars.” He’s been trying to get an appointment with Desai since August, Zachariah said, but Desai keeps saying he’s too busy.
“He just threw me out,” Zachariah told Health News Florida. “He just can’t do that.”
Desai said Monday that he had not received the complaint but that the allegations as described “are unfounded.” He said that after reviewing them with an attorney, “we will defend vigorously.”
Zachariah says he not only put in millions of dollars of his own, but helped round up two dozen or so other investors who put in about $35 million in 2006. It seemed like a sure-fire investment.
Desai had to raise money because State Insurance Commissioner Kevin McCarty was threatening to have the state take over the company, saying it had inadequate cash reserves to meet statutory requirements.
Dr. Raj Gupta, a gastroenterologist in Fort Lauderdale, says he and his wife put their savings for retirement and their children’s education -- $4 million – into Universal. The idea was that when the HMO went public or was sold to a larger company, the investors would make a profit.
There have been no dividends, he said, and since Zachariah was removed from the board the others have no information about what’s going on. Gupta said he doesn’t know what the shares are worth or when he’ll see a return on his investment.
Two other South Florida investors, bioengineer Abhi Pandya and family doctor Bachoo Singh, expressed the same worries. Singh said a group of investors went to Desai’s office in St. Petersburg a few months ago to demand a representative slot on the board so that they could be kept informed.
“We didn’t get straight answers,” Singh said.
Zachariah said he has no worries about the prosperity of Universal, which has annual revenue of about $1.7 billion. Most of that money comes from the federal government as monthly premiums for Medicare patients who enroll in a Universal plan.
“It’s a good company, well-run, very profitable,” Zachariah said.
Zachariah’s complaint says he received a letter from Desai in January 2009 that said the board had voted to remove him. The complaint says there had been no board of directors meeting called for that date.
At the time, Zachariah faced charges of insider trading by the Securities and Exchange Commission in connection with another company for which he was a director. In December 2010, he was exonerated at trial, but his efforts to resume his directorship of Universal has been rebuffed.
He remains the director of the Fort Lauderdale Heart Institute and is serving on the Florida Board of Medicine.