International SOS: Aeromedical Discounts Withheld From TRICARE

In the 2019 International SOS settlement over TRICARE aeromedical discounts, the company agreed to pay $940,000 to resolve allegations that it concealed air-ambulance savings and billed the higher, undiscounted amounts. If you arranged evacuations or handled vendor pricing, the case turns on a familiar comparison: what the air-ambulance provider agreed to charge and what the government was told the flight would cost.

The Justice Department announced the settlement on August 29, 2019. A former regional flight desk manager brought the whistleblower case under the False Claims Act. The alleged retained discounts sat between the evacuation provider’s price and International SOS’s bill to TRICARE.

What International SOS Allegedly Billed TRICARE

The government alleged that International SOS concealed negotiated air-ambulance discounts during the quoting process, then submitted claims using the higher prices. The allegations covered overseas aeromedical evacuations between 2013 and 2017. International SOS provided overseas healthcare services for the government, while third-party air-ambulance providers supplied the evacuation services behind the disputed charges.

TRICARE is the military health care insurance system for service members and their families. According to the Justice Department, International SOS was required to pass the providers’ discounts along to that program. The government alleged that it instead received payment for inflated costs after withholding the actual cost from the quote.

International SOS contended that the difference it retained was a fee. We see an upside-down bargain in the government’s allegations: taxpayers paid for the evacuation, but the contractor kept their discount.

Why the Evacuation Quote Matters

The quote matters because the government alleged that the actual provider cost disappeared before the TRICARE bill arrived. A review confined to the final claim would miss the earlier comparison between the vendor’s negotiated price and the cost presented to the government.

In defense contracting, the prime contracts directly with the government, while subcontractors and vendors supply work behind that contract. The contract’s payment terms establish how that work is priced and what supports payment. Here, the trail runs from the provider’s agreement through the evacuation quote to the TRICARE claim. The terms governing discounts and fees explain what the contractor was supposed to pass along.

That gives different insiders different parts of the same transaction. Someone working with an air-ambulance provider may know the agreed rate. Someone preparing an evacuation quote may know which amount was passed forward. A billing employee may see the claim sent to TRICARE. We work with the person who can explain how those amounts connect, including who knew about the discount and how the retained amount was described inside the business.

Defense Auditors Had Already Asked About Aeromedical Prices

Defense Department oversight had already identified the need to compare overseas evacuation costs with commercial prices. In its Semiannual Report to the Congress covering April through September 2018, the Defense Department’s Office of Inspector General revisited an April 2014 report titled DoD Did Not Negotiate Rates With Overseas Health Care Providers and Generally Paid Claims as Billed. The follow-up called for a study under the successor TRICARE Overseas Program contract.

For aeromedical evacuations, the proposed test was concrete: compare mission costs with what three commercial air-ambulance companies would have charged for a similar mission. The semiannual report said a retrospective review of all claims submitted by the TRICARE Overseas Program contractor was being conducted.

That comparison asks what a similar flight should cost in the market. The International SOS allegations ask what the contractor already knew its own provider would charge. Both comparisons look behind the total presented to the government. The second asks about a price already negotiated for the service being billed.

Lower Provider Rates and Missing Shipping Rebates

The closest parallel is another TRICARE administrator’s negotiated-rate case. TriWest Healthcare Alliance agreed to a $10 million settlement announced in September 2011. The Justice Department alleged that TriWest submitted claims at provider-billed rates while failing to pass through lower rates negotiated in binding letters of agreement. Those allegations covered 2004 through 2010.

In TriWest, the government challenged the use of the provider’s higher billed rate despite the agreement. In International SOS, it challenged the alleged concealment of the discounted evacuation cost during quoting. In each account, knowing the provider’s agreed price changes what the government-facing charge means.

The same question can arise outside health care. In the military shipping case against Maersk Line Limited, the government’s allegations included a failure to pass through storage rebates. A rebate and a negotiated discount leave different accounting trails, but both can place the relevant saving behind the contractor’s bill. Someone familiar with the supplier’s side may know why the government should have paid less.

The Flight Desk Manager’s Whistleblower Case

The former regional flight desk manager brought a qui tam case under the False Claims Act, seeking recovery on the government’s behalf. The Justice Department announcement also said the manager would receive a share of the recovery.

The U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Defense Criminal Investigative Service worked together on the case. The Justice Department credited the whistleblower’s information and assistance as critical to its investigative efforts.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our work on defense contractor whistleblower claims begins with the connection you can explain between the supplier’s terms, the company’s decisions and the amount presented for payment. In an evacuation business, that may be the discount you negotiated, the quote you prepared or the reason a lower provider price never changed the government’s charge.

You Know the Price Behind the Flight

If you know the evacuation provider’s rate and the amount quoted to TRICARE, speak to one of our whistleblower experts about the discount that never reached TRICARE. We build your strongest case with you around those transactions and bring in defense contractor whistleblower lawyers who understand healthcare purchasing and contract pricing. We stay beside you as that inside knowledge becomes a case for recovering the government’s money.