The ambulance company Paramedics Plus and its previous owner, East Texas Medical Center, among others, have agreed to pay $21 million to settle a False Claims Act whistleblower lawsuit over a financial scheme in which they allegedly paid millions of dollars from Medicare and Medicaid to state and local officials in Oklahoma, in a bid to keep its first-ever contract in Oklahoma.
Violation of the Anti-Kickback Statute
According to their emailed announcement earlier this month, the U.S. Department of Justice (DOJ) alleged that Paramedics Plus “violated the Anti-Kickback Statute by creating an unwritten profit cap agreement to ensure Paramedics Plus obtained and then retained the contract to provide ambulance services for Oklahoma’s EMSA (Emergency Medical Services Authority).” These payments apparently continued for years in an unwritten agreement. Paramedics Plus provided drivers, paramedics and emergency medical technicians to EMSA from 1998 through 2013.
The whistleblower lawsuit, which was first brought by Dr. Stephen Dean in 2014 and was picked up by the Department of Justice in 2017, alleged that Paramedics Plus was involved in an illegal kickback scheme. More specifically, they alleged that the parties created a slush fund that was being controlled by East Texas Medical Center and which was used to pay more than $20 million in kickbacks of various types. In addition to cash payments, the money was used to pay political contributions, as well as marketing expenses and contractor payments. Paramedics Plus “violated the Anti-Kickback statutes when they created an unwritten profit cap agreement,” according to DOJ, as a way to ensure they “continued to retain the ambulance services contract with the EMSA. In addition, the company also made political contributions to local politicians in Oklahoma to whom EMSA could not contribute on their own.”
The DOJ also noted that, without whistleblower Dr. Dean, the government would have been completely unaware that all of this was going on. According to their statement, all defendants in the suit will pay a total of $21 million to the United States, as well as the states of Oklahoma and Florida. As the whistleblower, Dr. Stephen Dean will receive $4.9 million as his reward for bringing this fraud to light. The bulk of the amount, $20,649,000 will come from Paramedics Plus and the East Texas Medical Center, while $300,000 will be paid by EMSA. In addition, the former president and CEO of EMSA, Herbert Williamson, will pay $80,000. According to the DOJ, Williamson allegedly accepted expensive gifts from Paramedics Plus and also asked for and received political donations to preferred candidates who supported Paramedics Plus’ contract. Those last two awards were based on the defendants’ ability to pay. The U.S. Attorney for the Eastern District of Texas, Joseph Brown, said in a news called the unwritten deal a “quid pro quo” from Williamson’s perspective. “Quid pro quo arrangements for the referral of healthcare businesses are illegal.
Repercussions Are Already Being Felt
East Texas Medical Center, the parent company of Paramedics Plus, recently sold its assets to the University of Texas Health Sciences Center at Tyler and the Tennessee-based company Ardent Health Services. Paramedics Plus was recently sold to a private equity firm and, since the beginning of the trial the company has gone through several name changes. Currently, it is known as PatientCare Logistics Solutions.
In addition to the federal False Claims Act, the state of Texas has its own version, although it is remarkably similar to the federal version. The primary difference is, the Texas False Claims Act can carry both civil and criminal penalties, and there are larger civil penalties when the fraudulent act results in injury to a child, or an elderly or disabled person, or if it involves presenting a fraudulent claim under Medicaid, which is actually a Texas state-administered program.
The purpose of the False Claims Act is to protect taxpayers from those who defraud the government for their personal gain. As one can see from the huge reward received by whistleblower Dr. Stephen Dean, it can certainly worthwhile for citizens who are aware of practices they believe to be fraudulent, to come forward and file a lawsuit. According to the False Claims Act state. The whistleblower who files suit on behalf of the government can receive up to 30 percent of the amount that is recovered. In Dr. Dean’s case, that amount is $4.9 million, which certainly makes it worthwhile to do something.