Stephen Williamson, CEO for EMSA, at today's meeting. EMSA board met Wednesday afternoon, Jan. 23, 2013, in Oklahoma City to discuss findings released in a performance audit report by state officials. Photo by Jim Beckel, The Oklahoman

1. Complaint document
2. U.S. Attorney’s Office news release

East Texas Medical Center and its division Paramedics Plus have been named in a lawsuit that alleges kickbacks and false claims totaling tens of millions of dollars.

That suit was brought by a whistleblower, but now the U.S. Attorney’s Office for the Eastern District of Texas has joined in, filing a complaint Monday.

“The United States alleges the defendants created a slush fund controlled by ETMC and Paramedics Plus that was used to pay over $20 million in kickbacks,” the Department of Justice said in a news release issued Monday.

The kickbacks, it said, went to officials with Oklahoma’s Emergency Medical Services Authority, a public entity that handles ambulance services for Tulsa and Oklahoma City.

The lawsuit said that additionally, “Paramedics Plus and ETMC also paid bribes and kickbacks to EMSA employees in the form of cash and gifts. Defendants purposefully omitted the terms of the kickback arrangement from all written contracts between EMSA and Paramedics Plus, and concealed the kickbacks from the public.”

Late Monday, ETMC issued the following statement, quoting Paramedics Plus President Ron Schwartz.

“One of our most precious freedoms is the right to defend ourselves against false accusations, even when brought by the federal government,” he said. “We intend to vigorously exercise that right and expect to be vindicated.”

He said the payments were merely the company returning a portion of profits to the communities it served.

“These claims involve one provision of a contractual relationship made in 1998 to provide EMS staffing for an Oklahoma public trust called EMSA,” the statement reads. “Under that relationship, we at Paramedics Plus helped EMSA provide emergency medical services, which were independently judged to be among the best in the country. We also agreed to return a share of our profit to EMSA – a standard and legal practice in this industry – which was publicly disclosed. The whistleblower and the federal government now say that limiting our profit and returning a portion of it back to these communities somehow violated federal law.”

Paramedics Plus is a “wholly owned indirect subsidiary of the East Texas Medical Center Regional Healthcare System (ETMC),” according to the company.

Elmer Ellis, CEO of ETMC, is also an officer with Paramedics Plus. ETMC spokesperson Rebecca Berkley said Ellis will have no comment, but that he stands behind Schwartz’s response.

Oklahoma’s EMSA responded with a statement reading: “This case is in no way related to the high quality care that the EMSA system provides to all patients. EMSA makes every effort to adhere to applicable rules, regulations and laws.”

LAWSUIT

“Beginning in 1998 and ending in 2013, Defendants engaged in a kickback scheme designed to control the award of a lucrative public ambulance contract in the State of Oklahoma,” the lawsuit reads. “Paramedics Plus and its parent company ETMC – both Texas entities – offered and paid EMSA, a public organization established by a trust indenture under Oklahoma law, over $20 million to obtain, and then retain, an ambulance services contract with EMSA.”

EMSA operates in Oklahoma as a public utility.

“EMSA owns or leases ambulances, but does not employ drivers, emergency medical technicians (EMTs) or paramedics. Instead, EMSA contracts with a private contractor for drivers, EMTs, paramedics and other personnel that actually perform health care services. EMSA then bills Medicare, Oklahoma Medicaid, private payers and patients for the services provided by its contractor’s personnel,” the lawsuit explains.

EMSA bills the state and federal government tens of millions of dollars per year, the lawsuit notes.

In 1997, it explains, EMSA President H. Stephen Williamson met Anthony “Tony” Myers, a vice president with ETMC.

“Myers and Williamson devised a scheme by which ETMC would create a new, for-profit company to displace AMR (American Medical Response) as EMSA’s ambulance services contractor in Oklahoma,” the lawsuit says. “In exchange, the new ETMC-created company would kick back part of its proceeds to EMSA and Williamson.”

On June 22, 1998, Paramedics Plus LLC was formed, though it had “no history of providing ambulance services in Oklahoma or anywhere else,” as the lawsuit points out. And then, on Sept. 23, 1998, “EMSA announced that it was dropping AMR and awarding its multimillion-dollar ambulance services contract to Paramedics Plus, the brand-new company from Tyler, Texas.”

In the years following, the lawsuit says, “ETMC and Paramedics Plus continued to pay kickbacks and engaged in other illegal activity at the request of EMSA officials, paid for certain costs incurred by EMSA, made political contributions to Oklahoma politicians at Williamson’s behest, paid millions of dollars in bribes to EMSA and Williamson at key moments, including leading up to and on the date of a critical contract extension in 2008, gave EMSA interest-free cash payments and loans, and showered EMSA employees, including Williamson, with expensive gifts.”

Over the years, the lawsuit says, ETMC and Paramedics Plus earned a total of $45 million in profit under the EMSA contract, and “kicked back nearly half” to EMSA.

Myers died in 2012 at the age of 73.

WHISTLEBLOWER

The lawsuit began as a whistleblower complaint brought by Stephen Dean, who was chief operating officer of Paramedics Plus. His complaint includes allegations against others, including some cities in California, Florida and Indiana.

“The law prohibits paying kickbacks, such as those alleged in this lawsuit, in order to gain access to Medicare and Medicaid funds,” said Acting U.S. Attorney Brit Featherston in Monday’s news release. “Kickback schemes are anti-competitive, undermine the integrity of our nation’s health care programs, and wrongly prioritize profits over patient care.”

The lawsuit asks for financial compensation for the alleged malfeasance, and specifies triple damages, citing the False Claims Act.

The suit will be prosecuted by Assistant U.S. Attorney Josh Russ, before U.S. District Judge Amos Mazzant in Sherman. A jury trial has been requested.

Paramedics Plus’ Ron Schwartz says the company denies all allegations.

Twitter: @tmt_roy

ORIGINAL DOCUMENTS:

U.S. Attorney’s Office

SHERMAN, Texas – The United States has filed a complaint intervening in an alleged kickback scheme in the Eastern District of Texas, announced Acting U.S. Attorney Brit Featherston today.

The United States filed a complaint today in partial intervention against East Texas Medical Center Regional Healthcare System, Inc., East Texas Medical Center Regional Health Services, Inc. (together, “ETMC”), Paramedics Plus, LLC, Emergency Medical Services Authority (“EMSA”), and EMSA’s President, Herbert Stephen Williamson (“Williamson”) alleging, among other things, violations of the False Claims Act and the Anti-Kickback Statute. A copy of the United States’ complaint can be found attached.

ETMC, one of East Texas’ largest health care systems, provides ambulance services outside of Texas through its for-profit subsidiary, Paramedics Plus. The United States’ complaint alleges that ETMC and Paramedics Plus entered into an illegal kickback scheme to obtain and retain a lucrative public ambulance services contract awarded by Williamson and EMSA, a public trust entity established under Oklahoma law. The United States alleges the defendants created a slush fund controlled by ETMC and Paramedics Plus that was used to pay over $20 million in kickbacks. The United States alleges the kickbacks and bribes ranged from cash payments (including at least $50,000 for Williamson’s personal benefit), political contributions, marketing expenses, and direct payments to EMSA’s contractors.

The lawsuit, United States ex rel. Dean v. Paramedics Plus, LLC, et al., 4:14-CV-203, was originally filed in 2014 in the U.S. District Court for the Eastern District of Texas by relator Stephen Dean. Dean was employed by Paramedics Plus as Chief Operating Officer overseeing the EMSA contract. Dean filed the action under the qui tam provisions of the False Claims Act, which permit private parties known as “relators” to sue on behalf of the United States and to receive a share of any recovery. Dean’s lawsuit includes allegations against additional defendants, including other municipal entities doing business with Paramedics Plus in California, Florida, and Indiana. The False Claims Act permits the Government to intervene in such a lawsuit, as it has done in a portion of Dean’s case.

“The law prohibits paying kickbacks, such as those alleged in this lawsuit, in order to gain access to Medicare and Medicaid funds,” said Acting U.S. Attorney Featherston. “Kickback schemes are anti-competitive, undermine the integrity of our nation’s health care programs, and wrongly prioritize profits over patient care.”

These matters were investigated by the U.S. Attorney’s Office for the Eastern District of Texas, the U.S. Department of Justice Civil Division’s Commercial Litigation Branch, the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), and the states of California, Florida, Indiana, and Oklahoma.

Tips and complaints about potential fraud, waste, abuse, and mismanagement, including the conduct described in the United States’ complaint, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477) or to the United States Attorney’s Office for the Eastern District of Texas, at (972) 509-1201.

The claims asserted against the defendants are allegations only, and there has been no determination of liability.