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Federal courts enter into lawsuit against ETMC

Updated: Jan. 23, 2017 at 9:57 PM CST
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TYLER, TX (KLTV) - The federal government legally requested to join a lawsuit against East Texas Medical Center Regional Healthcare System Monday.

The lawsuit alleges that the hospital system entered into contracts and then renewed those contracts with the Emergency Medical Services Authority ("EMSA") through the illegal means of bribery.

According to EMSA's website, the company owns ambulances that service Oklahoma City and Tulsa. The company does not directly employ the emergency response personnel who operate the ambulances and provide medical treatment, so it enters into contracts with companies that can provide those medical services.

According to the lawsuit, EMSA worked with American Medical Response ("AMR") to fill its ambulances with emergency personnel between 1994 and 1998. Then in 1998, EMSA switched to a different company: Paramedics Plus, which was then a new company created and owned by ETMC.

The suit says this relationship between ETMC and EMSA began at a meeting in 1997. That's when Herbert Stephen Williamson, President and CEO of EMSA, met with Anthony Myers, an executive with ETMC, and "devised a scheme by which ETMC would create a new, for-profit company to displace AMR as EMSA's ambulance services contractor in Oklahoma. In exchange, the new ETMC-created company would kick back part of its proceeds to EMSA and Williamson." That for-profit company noted in the lawsuit is what became Paramedics Plus.

The lawsuit, filed by former ETMC employee in charge of Paramedics Plus, Stephen Dean, claims that over the course of the contractual relationship between the companies, Paramedics Plus returned more than $20 million to EMSA in exchange for keeping the contract. The federal government and Dean claim these payouts are illegal kickbacks in exchange for continued business. ETMC says this is an act of profit sharing, not bribery.

Ron Scwartz, President of Paramedics Plus, said in a statement Monday afternoon: "Paramedics Plus helped EMSA provide emergency medical services ... We also agreed to return a share of our profit to EMSA: a standard and legal practice in the industry, which was publicly disclosed."

The lawsuit is filed with the United States District Court's Eastern District of Texas. It is an action under the False Claims Act and its aim is to "recover millions of dollars in damages and civil penalties from Defendants for knowingly submitting, or causing to be submitted, false claims to Medicare and the Oklahoma Medicaid Program."

In the lawsuit, the plaintiff claims "the United States paid EMSA far in excess of $100 million for false Medicare and Medicaid claims submitted for services provided by Paramedics Plus under the EMSA contract," claiming "EMSA used those public funds to pay Paramedics Plus millions of dollars under the ambulance services contract."

It states that between 2009 and 2013, Medicare paid EMSA over $70 million for ambulance services provided by Paramedics Plus.

Paramedics Plus currently operates in California, South Dakota, Indiana and Florida. In response to the lawsuit, Schwartz says "one of our most precious freedoms is the right to defend ourselves against false accusations, even when brought by the federal government. We intend to vigorously exercise that right and expect to be vindicated."

A jury trial is requested.

You can read the entire statement from ETMC here.

You can read the entire statement from the plaintiff as well as the lawsuit here.

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