Albany

When Gov. Andrew Cuomo announced $1.5 billion in grants last March to fund health care capital and infrastructure improvement projects, only eight of the 162 grants went to private businesses.

By far the biggest winner of the private firms was Crystal Run Healthcare LLP, a rapidly expanding company based in the Hudson Valley that seemed flush with cash even before $25.4 million in state subsidies arrived.

An April 2015 article based on an interview with the company's CEO Hal Teitelbaum — published a month before applications for the $1.5 billion were first due — stated that Crystal Run was planning on imminently breaking ground on two 70,000-square-foot facilities.

Both did break ground in the fall of 2015. Six months later, the Cuomo administration announced Crystal Run would receive $12.3 million to build the Monroe Integrated Medical Office Building in Monroe, Orange County, and $13.1 million to build the Rockland Integrated Medical Office Building in West Nyack, Rockland County, the two projects that were already under way.

That suggests that either Crystal Run executives had a strong idea that they were going to win the competitive state bidding, or the state gave $25 million to private projects that were already being built without the taxpayer subsidies.

"They're good doctors with a nice setup, but I don't know that they really need the money," said Dr. Eric Roffman, president of the Rockland Medical Society.

The affluent doctors who own the company, which already had $141 million in cash from the sale of properties in 2013, have been generous political contributors to Cuomo.

Crystal Run Healthcare LLP, its top executives and Teitelbaum's wife have given at least $400,000 to Cuomo's campaign committee since 2011, according to campaign finance records. That includes a flurry of 10 $25,000 donations between Oct. 29 and 30, 2013.

The contributions were made two months before Cuomo announced a plan to use more than $1 billion in state funds for capital projects, including the ones built by Crystal Run.

Of the donors who gave over the two-day period, seven of the Crystal Run executives or doctors had not given a campaign donation in a New York election for at least a decade.

Basil Smikle, executive director of the state Democratic Party, said the October 2013 donations came from a fundraiser.

The most recent Cuomo donation from a company executive was $20,000 given last month by Teitelbaum, who is a longtime donor to the governor.

A Crystal Run spokesman said the company "supports Gov. Cuomo's progressive health care agenda, which it believes serves the best interests of New Yorkers."

In a statement, Cuomo spokesman Rich Azzopardi said, "No donation of any size impacts a government action, period, and it is both irresponsible and a disservice to the Times Union's readers to imply otherwise."

Of the $1.5 billion in taxpayer-funded grants announced last March, the vast majority went to nonprofits — most of them hospitals — that unlike the private firms must accept patients regardless of their ability to pay for care. (Crystal Run does provide services to more than 16,000 Medicaid recipients, according to the Department of Health.) Of the firms outside New York City that competed for money, only one private company received state support: Crystal Run.

The program was administered jointly by the state Department of Health and the state Dormitory Authority.

"Crystal Run Health Care was awarded Capital Restructuring and Financing Program funding through an open and competitive procurement process aimed at expanding primary care services to reduce avoidable hospital and emergency room visits, improve population health, and transform New York's healthcare system," Department of Health spokesman Ben Rosen said in a statement. "Funding of all awards was based on an objective evaluation. To suggest that funding may have been improperly awarded outside of this procurement process is completely false."

The applications were scored on 12 benchmarks, the agency said, with funding awarded in the exact order of the applicant's total score. All evaluators signed conflict of interest disclosure agreements, and were prohibited from providing information to applicants.

The primary goal was that projects enhance the state's health care system, and "demonstration of financial need" was just one of many factors, according to the Department of Health. The state did not ask applicants if they were planning to build a project regardless of whether they landed funding from New York's government.

Founded in 1995, Crystal Run is one of the largest multi-specialty physician group practices in the state. The company has 2,300 employees and 25 offices, the Times Herald-Record reported in October, labeling the company an "expanding empire."

An April 2015 article in the Times Herald-Record said Crystal Run was "looking to break ground early in the summer on a 70,000-square-foot-building in Monroe. At the same time, it plans to start construction on a second office of the same size in West Nyack in Rockland County."

Almost a year later, the Cuomo administration announced the $25 million in funding.

Both projects were completed and opened in the latter half of 2016. State Comptroller Tom DiNapoli's office, however, did not actually approve the contracts allowing Crystal Run to claim up to $25 million in reimbursement for building expenses until December 2016.

The state has not yet reimbursed Crystal Run for its expenses, according to the Department of Health. The contracts state Crystal Run is eligible for building expenses dating back to October 2015.

The practice in 2013 completed a $141 million sale and lease-back of six buildings to Griffin-American, a real estate investment trust. (A lease-back is a financial transaction where a company sells a property and then signs a long-term lease with the new owner.)

The Rockland County Times — which raised questions last June about the $25 million — reported that Griffin-American paid Crystal Run $68 million cash for one building alone.

In the state scoring for giving out grants, one criteria cited was a bidder's "demonstration of significant financial need."

The contracts for both Crystal Run projects have a stipulation — agreed to by the company — "that Grant funds are intended to finance the Project only to the extent that other funding is unavailable."

A Crystal Run spokesman declined to say if the company had other funds available. He did say the "vast majority" of the proceeds of the lease-back paid off real estate-related mortgages, and helped finance the startup of Crystal Run's insurance company and managed care company.

The origins of the state funding came in 2011, when the Cuomo administration pushed through changes to reduce health care costs in New York by $17 billion.

In December 2013, the Cuomo administration removed $2 billion from its $10 billion waiver application with the federal government, which would allow the state to reinvest a portion of its savings. That came after the federal government decided capital construction costs for health care facilities — such as those built by Crystal Run — would not be eligible for federal funds.

Using state money, Cuomo first proposed what became the Capital Restructuring Finance Program as part of his executive budget in January 2014. The measure passed.

Bidding for the funds was initially set to begin in late 2014, but the deadline was eventually moved to September 2015 — only weeks before Crystal Run broke ground on its two projects.

The state received 396 applications and made 63 awards totaling $547 million for the Capital Restructuring and Financing Program projects outside of New York City. (Projects in New York City and outside the five boroughs competed separately.)

Of the 60 applicants outside New York City that won funding, the Crystal Run projects ranked 22nd and 23rd, according to the scoring documents provided by the Department of Health.

Crystal Run has had other interactions with state government, including winning a $132 million no-bid contract from the Department of Health at the end of 2015 to offer services related to Medicaid enrollees.

Separately in 2014, Cuomo announced a $1 million grant for Crystal Run to fund land acquisition, machinery and equipment, along with $3.2 million in tax credits for an expansion of operations in the town of Wallkill.

The Cuomo news release noted that the company's "continued and consistent growth" resulted in a need to expand its "back office" space to centralize its business and administrative operations.

The company had considered moving its Hudson Valley back office operations to North Carolina. To convince the company to build the $14 million project in New York, the state offered the grant and tax credit through the Excelsior Jobs Program.