Spread throughout most towns and municipalities across the country are your local ambulance services. They can serve as a safety net provider with highly skilled emergency medical technicians, even if a hospital is nowhere to be found. Above all, they strive to provide safe transportation for everyone during an emergent time. Unbeknownst to most consumers, the ambulance industry is quite large and profitable. $48.9 billion worldwide to be exact. In addition, companies offering such services often maintain lucrative long term and exclusive contracts for geographic areas making this industry all more ripe for possible abuse.
The story today begins in a small Texas town of about 100,000 and ends with $45 million in profit and half allegedly paid in kickbacks to maintain the lucrative business.
The Eastern District of Texas announced an agreed upon settlement of $21 million by several defendants including a health system, paramedics company, and municipal authorities. In a unique set of allegations, it was alleged that East Texas Medical Center Regional Healthcare System, Inc. and East Texas Medical Center Regional Health Services, Inc. , and their affiliated ambulance company, Paramedics Plus, LLC , offered kickbacks to several municipal entities to secure their lucrative ambulance business, including Emergency Medical Services Authority, Alameda County, California, and Pinellas County Emergency Medical Services Authority in Florida.
The Anti-Kickback Statute is a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an effort to induce (or reward) the referral of federal health care program business. In this case, Stephen Dean, the whistle blower, alerted authorities of the supposed activities. These activities allegedly reached as far back as 1998.
As stated in the complaint, the Emergency Medical Services Authority (“EMSA”), a public utility, contracts with private companies for EMT services. EMSA then bills Medicare, Medicaid, and other commercial insurers for their services. In short, EMSA has absolute control over who those contractors are. Prior to 1998, EMSA’s contractor was a large for-profit ambulance company. According to the complaint, in 1997 the president of EMSA met an executive from Tyler, Texas. This executive was a part of East Texas Medical Center (“ETMC”). The supposed next step was the both of them developing a new for-profit company to displace the current contractor with Paramedics Plus, LLC (“Paramedics Plus”).
Paramedics Plus did not have a specific history in the ambulance business; however, managers of the original LLC allegedly included the president of EMSA and an executive from ETMC. Shortly thereafter the contract with the large national company and EMSA was replaced with Paramedics Plus. For the next 15 years the allegations are nothing short of astonishing. It was alleged that political contributions had been made, bribes were given to multiple individuals and entities, and expensive gifts. All of this occurred to maintain the contract in which Paramedics Plus furnished the services in and around Oklahoma City and Tulsa. To make matters worse, the complaint stated similar deals were offered in California, Florida, and Indiana to grow the business.
Most of the payments to maintain the contracts allegedly were made to EMSA, the public utility. However, according to the complaint although large sums of money were being paid from EMTC and Paramedics Plus, most of it was hidden from the Board of Trustees of EMSA. News stories broke in 2012 highlighting the relationship between EMSA and Paramedics Plus. This prompted the Board of Trustees to investigate and allegedly some form of cover up was attempted by individuals involved. According to the complaint, from 2006 to 2013, ETMC and Paramedics Plus received $45 million in profit and kicked back nearly half of it to EMSA.
The Acting Assistant Attorney General for the Justice Department’s Civil Division stated “[t]he United States’ efforts in this case ended abusive practices in the ambulance industry” and “[t]hese settlements demonstrate our commitment to ensuring that health care decisions are made based on patient needs, not a health care provider’s financial interests.”
* The case is United States ex rel. Dean v. Paramedics Plus, LLC, et al., 4:14-CV-203. The False Claims Act claims resolved by this settlement are allegations only and there has been no determination of liability.