Profit cap no longer a 'side deal' at EMSA

A whistleblower's assessment of past misdeeds could be worth more than $16 million to EMSA, Oklahoma City's public ambulance service.

Stephen Dean filed a lawsuit in 2014 alleging kickbacks were paid by an east Texas company, Paramedics Plus, to retain its EMSA contract for ambulance drivers, paramedics and emergency medical technicians.

Paramedics Plus held the contract between 1998 and 2013. Dean was the former chief operating officer for Paramedics Plus.

After federal prosecutors intervened and the case was settled in 2018, Dean said he believed the settlement ensured that contracts between EMSA and its vendors would "no longer include verbal 'side deals' between agency administrators and contracted companies."

Fast forward to last week, when EMSA filed suit in federal court in Tulsa seeking more than $16 million from Paramedics Plus' successor in the contract, American Medical Response. EMSA awarded the contract to AMR in 2013 and renewed it two years ago.

According to the lawsuit, this time there were no "verbal side deals" like the slush fund engineered by former EMSA President and CEO H. Stephen Williamson, who resigned under a cloud in 2017 and died a little more than a year later.

EMSA's attorney writes that AMR's annual profit, by contract, is capped at 10%. Proceeds beyond AMR's costs and profit must be returned to EMSA for ambulances and medical equipment, and to keep costs down for patients and taxpayers.

Practices that led to the Paramedics Plus litigation included diversion of excess profits for cash payments and political contributions. Federal authorities said Medicare and Medicaid funds were misappropriated, while Williamson denied wrongdoing.

No detailed accounting of the $20 million allegedly diverted has ever come to light.

One of the only documented instances of misdeeds came from former Oklahoma City Councilman Ed Shadid, who said he tore up a $1,000 check after it was handed to him by an EMSA spokeswoman, Lara O'Leary.

The latest litigation reveals sharp differences between EMSA and AMR over the sequence of events and meaning of the previous litigation.

AMR has refrained from returning profits above the cap, said Steve Dralle, an AMR regional president, "until it could receive assurance from the federal government or a federal judge that it was being asked to do something that was lawful and appropriate."

"Only after settling with the federal government did EMSA begin demanding that AMR make similar payments, which had been considered unlawful by the federal government," Dralle said last week in a written statement.

EMSA's attorney, Kris Koepsel of Riggs Abney in Tulsa, says "the profit-cap model in question was never found to be unlawful."

That contract provision, he said in a written response to Dralle's statement, "does not run afoul of any federal or state statutes."

AMR included the profit cap in its original proposal to provide services to EMSA, and it remained in the contract during negotiations for the 2018 renewal, he said.

Koepsel writes in EMSA's lawsuit that AMR's profit exceeded 10% in the contract year that ended Oct. 31, 2016, and in 2017, 2018 and 2019.

In his written statement, Koepsel says EMSA delivered a notice of default to AMR on Oct. 23, 2019.

With AMR continuing to refuse to pay, EMSA began withholding payments due the contractor. So far, those amount to $16,039,895.80, he said.

Dralle, AMR's regional president, said a court will sort it out.

"AMR will now either get comfort from a federal judge that the payments are lawful," he said, "or the court will let EMSA know that taking $16 million from AMR was wrong."

Formally the Emergency Medical Services Authority, EMSA is a public trust serving about 750,000 Oklahoma City-area residents and about 1.1 million residents altogether in Oklahoma City and Tulsa.

EMSA agreed in 2018 to pay $300,000 to settle its share of the Paramedics Plus litigation, based on its ability to pay.

Williamson agreed to pay $80,000. Despite his receiving total compensation of more than $300,000 annually, his share also was based on his ability to pay, the government said.

East Texas Medical Center and its subsidiary, Paramedics Plus, agreed to pay $20.6 million. ETMC's assets were sold before the final settlement was announced, the Tyler Morning Telegraph reported.