Feds accuse Texas health system of engaging in $20M kickback scheme

The federal government has intervened in a whistle-blower lawsuit alleging East Texas Medical Center Regional Healthcare System, an 11-hospital nonprofit system based in Tyler, participated in a kickback scheme, according to the Department of Justice.

ETMC provides ambulance services outside of Texas through its for-profit subsidiary Paramedics Plus. The federal government alleges ETMC and Paramedics Plus paid kickbacks to retain a public ambulance services contract awarded by Herbert Stephen Williamson, president of Emergency Medical Services Authority, an ambulance provider in Oklahoma.

The government alleges ETMC and Paramedics Plus paid more than $20 million in kickbacks through the scheme, including cash payments of at least $50,000 to Mr. Williamson.

Stephen Dean, former COO of Paramedics Plus, originally brought the claims in a lawsuit filed under the qui tam provision of the False Claims Act.

In a statement to Becker's, Ron Schwartz, president of Paramedics Plus, said the claims "involve one provision of a contractual relationship made in 1998 to provide EMS staffing" for EMSA. "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 whistle-blower and the federal government now say that limiting our profit and returning a portion of it back to these communities somehow violated federal law." 

Mr. Schwartz said the company will defend itself in the case. "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," he said. 

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Editor's Note: This story was updated Jan. 24 to include Mr. Schwartz's statement. 

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