Paramedics Plus: The Profit Cap Missing From the Contract

In the Paramedics Plus settlement, the company and two East Texas Medical Center entities agreed to pay $20.649 million to resolve allegations of municipal ambulance contract kickbacks. A chief operating officer who oversaw the company’s Oklahoma contract brought the whistleblower case. The government’s complaint followed the alleged bargain through renewal proposals, check requests and a contract file that acquired an explanation just before an audit. Those are records a contract administrator or finance employee would recognize.

The Justice Department’s August 27, 2018 announcement covered seven settling defendants and more than $21 million altogether. Municipal recipients and an ambulance authority’s former president agreed to separate payments. The government alleged that the arrangements violated the Anti-Kickback Statute and produced false claims to Medicare and Medicaid.

Paramedics Plus was a for-profit ambulance company based in Tyler, Texas, within the East Texas Medical Center business. A&M Capital Partners acquired it in March 2018, and the business was rebranded as PatientCare Logistics Solutions. The allegations here concern its earlier municipal ambulance contracts.

EMSA Controlled the Contract and Billed the Programs

Emergency Medical Services Authority, the Oklahoma public trust known as EMSA, selected the private company that supplied its ambulance crews. In the government’s complaint, EMSA owned or leased the ambulances serving Tulsa and Oklahoma City, while its contractor supplied drivers, emergency medical technicians, paramedics and other personnel. EMSA billed Medicare, Oklahoma Medicaid, private insurers and patients for those services.

That division of work put EMSA on both sides of the money flow. It received the program payments and paid Paramedics Plus to staff the service. The government alleged that Paramedics Plus and East Texas Medical Center then returned money and benefits to EMSA to obtain and retain the contract.

The complaint said approximately half of EMSA’s billing revenue came from Medicare and Oklahoma Medicaid. It alleged that the kickbacks made the resulting ambulance claims false and ineligible for payment. The government’s case connected a local purchasing decision to federal health care money through the authority’s healthcare billing and contractor payments.

A Lower Profit Cap Bought a Larger Return

The government alleged that the original bargain promised EMSA profits above a 12% cap. It said the parties deliberately left that arrangement out of their written contract. When EMSA prepared to seek competing bids in 2007, Paramedics Plus allegedly offered lower contract rates and a reduced cap of 10.5%, leaving more money for EMSA in exchange for keeping the business.

The complaint describes a confidential company presentation offering a menu of pricing and payment options. It quotes the company’s proposed exchange:

The government alleged that the presentation omitted response times and other measures of care quality. It also alleged that EMSA’s president presented the extension to the board in terms of clinical performance and cost savings, while the meeting minutes omitted the profit cap. According to the complaint, the prepared solicitation never went out for public bid. We see the problem in the proposed exchange: the contractor offered better cash flow to the customer that could keep competitors out.

From 2006 through 2013, the government alleged, the companies made approximately $45 million in profit under the EMSA contract and returned nearly half to EMSA. The payments allegedly went to the organization deciding whether Paramedics Plus kept the contract.

The Benefits Reached the President and the Vendors

The alleged benefits included paying EMSA’s bills directly. The complaint described construction, paving, data systems, consulting, marketing and technology services bought for the authority by Paramedics Plus and East Texas Medical Center. It alleged that direct vendor payments bypassed EMSA’s public-bidding and board-approval requirements and did not appear as itemized payments in its audited financial records.

EMSA’s former president and CEO allegedly received travel benefits and gifts, including steaks, while spa visits and party expenses also went back to the contractor. The complaint said some of those charges were booked against the rebate. A finance employee could encounter the benefit as a vendor invoice or expense charge, with the connection to the ambulance contract sitting in the correspondence behind it.

The Justice Department also alleged that the president directed Paramedics Plus to make political contributions to local Oklahoma politicians, something EMSA could not do itself. The complaint described checks sent to EMSA for its employees to deliver and a contribution charged against the rebate. On the government’s account, money Paramedics Plus marketed as giving back to communities also paid for political influence and personal benefits. Quite a definition of giving back.

The Contract File Caught up Just Before the Audit

The government alleged that contract modifications denied the existence of unwritten oral agreements while omitting the profit-sharing terms. EMSA’s accounting allegedly concealed the incoming payments too: it subtracted them from its expense for Paramedics Plus and recorded the smaller net amount as cost savings. On the company side, the complaint said some payments were booked as public-relations expenses.

When the Oklahoma State Auditor and Inspector examined the relationship in 2012, the government alleged, EMSA employees put an undated letter on Paramedics Plus letterhead into the contract file. The letter purported to confirm existing terms for calculating and paying the rebate. According to the complaint, it misstated when the lower cap began and claimed an annual audit determined the payments, although no such annual audit existed.

The placement of the letter was part of the allegation. EMSA allegedly inserted it among older contract documents before the auditor arrived:

For someone who maintained that file, when the letter appeared could matter as much as what it said. The government connected the audit copy with internal emails, earlier contract terms and the actual start of the changed payments. According to the government, those records told different stories about when the arrangement had been documented.

What the Alleged Rebate Cost the Crews

The government alleged that preserving payments to EMSA affected spending on the people operating the ambulances. The complaint said that in 2009, Oklahoma executives recommended retention bonuses for field personnel after problems with paramedic turnover. According to the complaint, the executive controlling the money refused because he wanted enough excess profit to satisfy the arrangement with EMSA’s president.

The complaint described scheduler training and other spending halted the following year while the company worked toward a promised payment. It also said an independent consultant warned that money going to EMSA could address Paramedics Plus’s operational problems. The government alleged that the company ignored that advice. We find the alleged priorities hard to defend: retention and training waited while the contract source got paid.

The Settlement Payments Went Beyond Paramedics Plus

The joint company settlement covered Paramedics Plus, East Texas Medical Center Regional Healthcare System, Inc., and East Texas Medical Center Regional Health Services, Inc. The Justice Department announced one amount for those three companies together, alongside separate settlements with the recipients. It joined the whistleblower’s case in part and pursued the Oklahoma arrangement against the companies, EMSA and its former president.

The U.S. Attorney’s Office for the Eastern District of Texas, the Justice Department’s Civil Division and the U.S. Department of Health and Human Services Office of Inspector General investigated the allegations. California, Florida, Indiana and Oklahoma also participated in the investigation.

EMSA and Its Former President

EMSA agreed to pay $300,000, and its former president and CEO agreed to pay $80,000 to the United States and Oklahoma. The Justice Department said both settlements reflected the defendants’ ability to pay. We see a striking gap between EMSA’s settlement and the more than $20 million the government alleged it received.

Alameda County

Alameda County, California, agreed to pay $50,000 to the government. The whistleblower’s allegations included the county among municipal entities offered kickbacks to secure ambulance business.

Pinellas County Emergency Medical Services Authority

Pinellas County Emergency Medical Services Authority in Florida agreed to pay $66,000 to the United States and an additional $5,200 to Florida. The settlement resolved its part of the whistleblower’s allegations about inducements for municipal ambulance business. Paramedics Plus operated in Pinellas County under the Sunstar Paramedics name.

What Evidence Is Needed to Report Fraud?

For a municipal ambulance contract case, the useful evidence connects the promised benefit, the contract decision and the government-funded business. Here, the government’s complaint identified private presentations, check requisitions, vendor payments, board minutes and correspondence about the rebate. The whistleblower’s chief operating officer role overseeing the EMSA contract put the operation and the commercial relationship within the same field of view.

A crew member may recognize changes to a patient’s run report, while facility staff may know what a transport certification was based on. Contract and finance employees can see another part of the business: who authorized a payment, what it bought and how it reached the accounts. We work with you to connect the part you know to the claims and the decisions behind them.

The Justice Department announced that the whistleblower would receive over $4.9 million as his share of these settlements. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Our whistleblower experts help you assess the arrangement you saw and bring in ambulance fraud whistleblower lawyers who understand public contracts and referral payments.

You Know What the Payment Bought

If you handled the renewal proposal, approved the vendor bill or watched a new letter enter an old contract file, talk with our whistleblower experts about the bargain behind the payment. We help build your strongest ambulance kickback case around that inside knowledge, find whistleblower counsel experienced in municipal ambulance arrangements, and stay with you as the case develops.