A sprawling whistleblower lawsuit implicating an ambulance company, its affiliated companies, and several municipal clients in an illegal kickback scheme has been settled, federal prosecutors announced.
East Texas Medical Center Regional Healthcare System and East Texas Medical Center Regional Health Services (“the ETMC defendants”) their affiliated ambulance company, Paramedics Plus, and other defendants agreed to pay the U.S. more than $21 million to resolve the allegations, according to the U.S. Department of Justice.
The government’s case against the ambulance industry defendants stems from a complaint filed by Dr. Stephen Dean under the whistleblower provisions of the False Claims Act. The government investigated Dr. Dean’s whistleblower allegations and chose to intervene in the case in January 2017, effectively taking over the litigation.
The complaint alleged the defendants created a slush fund controlled by ETMC and Paramedics Plus that paid more than $20 million in kickbacks in the form of cash payments, political contributions, marketing expenses, and direct payments to contractors. This arrangement allowed ETMC and Paramedics Plus to obtain and retain lucrative ambulance contracts with various municipalities, including Pinellas County, Florida, and Alameda County, Florida. Both counties previously settled with the U.S. by paying $71,200 and $50,000 respectively.
The $21 million settlement includes $20,649,000 from the ETMC defendants and Paramedics Plus, $300,000 from Oklahoma’s Emergency Medical Services Authority (EMSA), and $80,000 from EMSA’s former president and CEO, Herbert Stephen Williamson, among others.
The Anti-Kickback Statute prohibits health care providers from offering, paying, soliciting, or receiving other incentives to induce referrals of goods and services covered by Medicare, Medicaid and other federally funded programs. The intent of the statute is to ensure that medical providers’ judgments are not jaded by improper financial incentives but based solely on the patients’ best interests.
“Sophisticated health care companies do not simply give away millions of dollars to referral sources without expecting something in exchange,” said U.S. Attorney Joseph D. Brown. “Quid pro quo arrangements for the referral of health care business are illegal.”
Whistleblowers who initiate a False Claims Act case that leads to a recovery for the U.S. government receive 15-30 percent of the total settlement or judgment. Dr. Dean will receive $4.9 million of the total settlement as a whistleblower award, the Justice Department said.