While the Republican senator Rick Scott was governor of Florida, his administration presided over the effective blocking of $70m in federal funds available for fighting the state’s HIV crisis.

Coupled with the fact that Scott refused to expand Medicaid in Florida, this new revelation – the product of an extensive Guardian investigation – helps explain why the state’s HIV epidemic became almost peerlessly severe during Scott’s time in office.

From 2015 to 2017, Florida was forced to return to the federal government $54m in unspent grants for combating HIV – due to an apparently deliberate failure on the part of state health bosses to secure legislative permission to spend such desperately needed funds.

Furthermore, in 2015 Scott’s administration directly blocked two US Centers for Disease Control and Prevention (CDC) grant applications that would probably have won Miami and Broward counties, which have HIV diagnosis rates among the highest in the US, approximately $16m.

For Scott, refusing federal money was a bedrock principle. Fierce opposition to the Affordable Care Act (ACA) was a signature issue of his 2010 campaign. In one of his first acts in office, he rejected more than $2bn for high-speed rail. He would turn away scores of millions of dollars in ACA grants.

By early 2013, Scott softened his stance and proposed a three-year Medicaid expansion test run. But he never made any attempts to get the legislature on board and after securing a second term in 2014 the former healthcare executive with a net worth exceeding $230m retreated, opposing what in other states has amounted to a massive infusion of federal funds to provide healthcare to those living in poverty.

This about-face coincided with the start of Florida’s rejection of the federal HIV funding in question.

“I think Rick Scott fueled the epidemic in Florida,” said Marlene LaLota, a 28-year veteran of the Florida department of health who was the administrator of its HIV/Aids section from 2014 to 2016.

“How many infections could have been prevented with that money? How many lives could have been saved? Shame on them.”

‘We were stopped at every turn’

According to the CDC, in 2017 Florida saw the highest number of new HIV diagnoses in the US: 4,783 cases, or 13% of the national total. This meant the state, which had an estimated HIV population of 135,000, had an annual diagnosis rate per 100,000 residents of 27, second only to Georgia’s 30 and nearly double New York’s 16.

Of 10 states that currently see the most annual HIV diagnoses and which together account for 65% of new cases nationally, Florida was alone in experiencing an increase, of nearly 3%, between 2010 and 2017. New York, which has spent aggressively on HIV and expanded Medicaid, saw a decrease of 30%.

New York’s governor, Andrew Cuomo, announces a new plan to tackle his state’s HIV epidemic in April 2015. Photograph: Benjamin Ryan

HIV diagnoses actually declined in Florida for at least five years through 2013, when they hit 4,315, only to increase by nearly 11% through 2017: the very period when the state missed out on tens of millions of dollars in federal funds.

The fact that a financial scandal of this magnitude has remained out of the headlines is testament to the Florida health department’s strict management structure: the governor at the top followed by the surgeon general, who is secretary of the department, on down through state and county health departments.

Employees from the HIV section said that in the latter years of the Scott administration they worked under intense pressure to meet the hierarchy’s wishes, which were often guided by the governor’s political priorities.

How many infections could have been prevented with that money? How many lives could have been saved? Shame on them Marlene LaLota

In blocking the federal funds for the epidemic, a health department administrator with close ties to Scott’s office effectively leaned on state budget rules that for the HIV bureau meant receipt of these funds would be considered a state budget increase, requiring legislative approval.

The financial morass in the HIV bureau began in 2012, after it began reporting to the US Health Resources and Services Administration (HRSA) the receipt of rebates – effectively drug discounts, governed by a federal law called 340B – from pharmaceutical companies for the purchase of medications for lower-income people with HIV, under the state’s Aids Drug Assistance Program (Adap).

According to budget documents obtained through a freedom-of-information request to HRSA, which oversees Adap, Florida received $6.2m in 340B rebates under the program during the 2012 to 2013 fiscal year. As the state department of health began implementing legislation that required the reduction and reorganization of the department, the annual 340B rebate tally rose unabated, doubling each of the subsequent two years, hitting $33.6m in 2015 and peaking at $86.4m in 2017.

HRSA accounting rules helped tee up the loss of a considerable chunk of those funds.

Adap spending in Florida derives primarily from the HRSA-directed Ryan White program, specifically its Part B funding stream, which has granted the state between $117m and $128m annually since 2012. HRSA requires that during each fiscal year, states must first spend all of their Adap-related 340B rebate funds – which by law must go to Ryan White programming – before dipping into that year’s Part B grant.

Both LaLota’s predecessors as head of Florida’s HIV bureau, Sherry Riley and Tom Liberti, who spanned 1996 to 2014, said they were always able to secure necessary budget authority increases and never received pushback against related requests from upper management.

In 2014, the year LaLota took the helm, the department submitted what according to publicly available state documents would be the last request for an increase in budget authority for three fiscal years.

Multiple legislators who during that period sat on the legislative budget commission, which in many cases processes agency requests for budget authority increases, said they never heard a word about the brewing financial catastrophe within the HIV department.

According to HRSA, during the 2014 and 2015 fiscal years the health department did not engage in the routine practice of asking the federal agency for permission to carry over unspent Part B funds.

Consequently, the department was forced to return to HRSA $23.9m in unspent part B grants for HIV in 2015, then $29.2m in 2016 and $767,364 in 2017.

In 2017, Scott shifted focus to a Senate race in which he appealed to centrist or populist interests. Refusing federal funds became less of a priority for his administration.

All told, the Florida health department lost out on $53,837,844 – funding that could have had a profound impact on a growing HIV crisis but went to other states instead.

HRSA’s discussions with the Florida health department, the federal agency reported, indicated that budget authority matters were greatest obstacle to the state’s ability to spend these funds.

Marlene LaLota, a 28-year veteran of the Florida department of health. ‘I think Rick Scott fueled the epidemic in Florida.’ Photograph: Ben Ryan

LaLota reported that the Scott administration forbade anyone on her team from discussing budget concerns directly with legislators.

“Rick Scott had us all on lockdown,” LaLota said. “It didn’t used to be like that with previous governors.”

In a statement, a Scott spokeswoman said the overall assertions of this article were inaccurate.

“The state could only spend the money that it had the budget authority to spend,” the spokeswoman said, indicating that the legislature was responsible for such matters.

The Florida health department did not respond to multiple requests for comment.

Kellie Wilcox, who handled budgets for Florida’s HIV program under LaLota, said when she came on board in 2014, the director of the health department’s office of budget and revenue management, Michele Tallent, who assumed that title in March that year, was the sole official with the authority to send budget-authority requests up the chain of command.

According to Wilcox and LaLota, Tallent stonewalled their increasingly desperate requests to release surplus HRSA funds. They speculated Tallent was following orders from the governor’s office.

Tallent, a Republican who was previously budget chief for the health and human services unit with the governor’s office of policy and budget, was also responsible for requesting carryover from HRSA.

My sense is frankly that [the HIV crisis] just wasn’t a priority for Scott William McColl, Aids United

LaLota said: “I wrote a plan to end the epidemic. But we were stopped at every turn. I could not give that money away to save my life. It was so criminal and so egregious.”

LaLota is now a senior regional director at Aids Healthcare Foundation in New York. The global non-profit is in a legal battle with Florida over a cancelled Medicaid contract – a dispute in which LaLota said she had no professional stake.

In 2016, Tallent was promoted to deputy secretary for operations in the health department. Wilcox said her replacement, Ty Gentle, was much more sympathetic. But his hands were apparently tied. Tallent still held ultimate control over the forwarding of budget-authority increase requests.

On 16 July 2019, the health department placed Tallent on paid administrative leave, pending an internal investigation. The department has not said why. Attempts to reach Tallent were not successful.

‘More ideological than considerate’

In 2015, the Scott administration blocked another huge chunk of federal money, this time from the CDC.

The agency offered health departments in cities with the most intense epidemics the chance to apply for a pair of grants to support HIV prevention, including pre-exposure prophylaxis (PrEP), and improved care and treatment for those with the virus.

Miami was poised to receive about $7.6m over four years while Broward would probably have received some $8.7m over three. New York City applied for the same two grants and received $16.9m.

Stephen Fallon, executive director of the Aids service organization Latinos Salud, wrote the majority of Miami’s grant application and routed it through the state health department, as required.

Hours before the 1 June 2015 deadline, LaLota said, she got word from her superior that the governor’s office had denied both counties permission to apply. The grounds: a lack of budget authority to spend such new money.

Broward was forced to rescind the application it had sent to the CDC. A CDC representative confirmed its August 2015 request to do so.

“I was perhaps naive,” Fallon recalled. “I knew that policies can be more ideological than considerate of the constituents in the state of Florida. But I didn’t assume the Scott administration would be anti–HIV funding in any way.”

The following year, Scott’s office boasted that the state had “invested a record $34m in HIV/Aids prevention” in 2015, despite the fact almost the entire referenced sum came from existing CDC grants, and that the main reason the figure had risen was because so had HIV diagnoses.

The statement from Senator Scott’s representative repeated this refrain, claiming that as governor he “invested record funding in HIV/Aids prevention”.

“My sense is frankly that [the HIV crisis] just wasn’t a priority for Scott,” said William McColl, vice-president for policy and advocacy at Aids United. “He clearly thinks of healthcare as a profit source.”

McColl was alluding to the governor’s former role as chief executive and co-founder of the healthcare conglomerate Columbia/HCA. Between 2000 and 2002, that company reached a $1.7bn fraud settlement with the US justice department – a record for a hospital corporation – while pleading guilty to 14 criminal counts over accusations of defrauding Medicaid, Medicare and other government programs.

Scott resigned from Columbia/HCA in 1997, four months after the federal inquiry came to light, and has denied any knowledge of wrongdoing. In a deposition in 2000 for a civil suit, he pleaded the fifth 75 times to refrain from incriminating himself, compelled to do so, his lawyer said, by the criminal case.

Today in Washington, Scott sits on the Senate committee on the budget.

This fall, he will be in a position to cast a floor vote on the Senate’s proposal for the first year of a Trump–backed plan calling for $291m to battle the national epidemic.

“Senator Scott supports efforts by the administration to make sure everyone is getting the care they need,” his spokesperson said.

The national plan will target 48 hard-hit counties in particular.

Seven are in Scott’s home state.