A privately owned ambulance service that serves as the contracted emergency responder for rural areas of Jefferson County is facing an investigation by the FBI and other federal agencies over allegations of improper billing, improper patient transports and possible Medicare fraud, according to information obtained by The Examiner.
Cindy and Sean Fitzgerald, the owners of Southeast Texas EMS, say they are aware they are being looked at and have known their employees were questioned by the feds as far back as Sept. 27. They say they have done nothing wrong and believe the outcome of the investigation will reveal that.
“We heard through ex-employees that they have been interviewed by the FBI and questioned,” Sean Fitzgerald said. “But they haven’t come and talked to us yet. … We are not out of bounds with anything. Some of the issues that were brought up, I hope the investigators do their jobs to the fullest of their capabilities, because there has been no wrongdoing.”
The investigation, which was disclosed to the newspaper by multiple sources, is said to center around billing for dialysis patients that are transported in an ambulance when they are not medically qualified for that mode of transportation. According to Medicare rules, if a patient is ambulatory – meaning they can walk and are not bed-ridden – they are not to be transported in an ambulance for dialysis care. Those patients are to be transported in wheelchair vans operated by the ambulance company or by other means.
“The reason they put ambulatory patients in EMS units is because the difference in billing extreme,” said a source. “You can charge around $700 for a transport in an EMS unit but you only get about $75 for patient transports in a wheelchair van. This is a huge problem in the industry, and Medicare has been cracking down all over the country. The government recently raided several places in Dallas and Houston and now they are focusing on Beaumont.”
A 2004 study of dialysis patient transports by the FBI and the Office of Inspector General showed, at that time, Beaumont and Port Arthur accounted for 16 percent of all dialysis transports in the state of Texas. Houston accounted for 38 percent. Since then the numbers have increased. The study outlined issues involving illegal transports, kickbacks and private arrangement made between ambulance companies, health care facilities and patients.
A year ago, the company that handles all of Medicare’s billing contracts, TrailBlazer, issued a report naming the No. 1 issue in EMS patient transport as the unauthorized use of emergency ambulances to transport non-emergency patients. TrailBlazer also reported that Texas ambulance companies were improperly paid more than $38 million for transports that were not authorized.
When asked about the allegations that Southeast Texas EMS was violating the law with its transports, Sean Fitzgerald of Southeast Texas EMS said some people develop a perception that something is wrong or illegal when that isn’t the case.
“Perception becomes one’s reality,” he said. “If someone who is not educated in the true aspects of running an ambulance company then their perspective is something is amiss, and their perception becomes a reality even if they perceive something incorrectly.”
Fitzgerald said the company has had independent audits and been told there is nothing that needs to be changed with how the company operates.
“We didn’t do this to become millionaires,” said Cindy Fitzgerald, “We are doing this because we care about our community. Period. We love what we do.”
The Fitzgeralds say they are limited by federal patient privacy rules and can’t discuss individual patients. They did say that some patients are transported by their ambulances even though they don’t meet Medicare’s criteria – they are just transported for free.
“We are not illegally transporting dialysis patients,” Sean Fitzgerald said. “Do all of them pay? No. Do we still transport? Yes. We don’t discontinue unless they have completely recovered. We are trying to service our clients and continue to meet their needs. Just because Medicare doesn’t pay doesn’t mean we can’t take them. We are meeting the community’s needs.”
Fitzgerald said his company has about a 78 percent collection rate for private transports, and it’s even worse with the 911 calls that Southeast Texas EMS responds to in the county. He said there are some people who fall in the cracks. Those patients may not meet Medicare guidelines but he believes it’s too dangerous to transport them via a wheelchair van. He also said there are patients who are covered one week but become ineligible the next because their conditions have improved.
“There is actually a Medicare GY modifier; it’s kind of a joke – ‘good for you’ – that we put that GY modifier on there, and it tells Medicare right away, ‘Hey, don’t pay us for it. We know it’s not going to qualify,’” he said.
Fitzgerald said the reason he bills Medicare but uses the modifier is so the company can have a paper trail should it be audited or investigated — something Southeast Texas EMS is familiar with.
Fitzgerald confirmed this was not the first time the FBI or Medicare has taken an interest in the company. He said the first time was in 2003 and then again in 2005. He said neither of those incidents resulted in any issues or penalties.
Cutbacks and growth
Fitzgerald said several years ago Medicare drastically cut the rate that it reimbursed ambulance companies from about $688 per round trip to $396 per round trip. He said those cuts made him realize that he needed to expand in order to survive.
“Once I realized the reduction in our industry in reimbursement, we had to get bigger,” Fitzgerald said. “We had to make double the amount of calls to maintain where you are at now. I needed to grow. And in the present marketplace, who could I get with that talent to help me grow?”
So he brought in someone with experience in that area – Jason Boever, a former partner in Goldstar EMS who helped the company become the largest ambulance company in Texas in 2005. Boever now runs an ambulance company called MedQuest that is operating as an assumed name of Southeast Texas EMS.
The growth of Goldstar, coupled with complaints by former employees, caught the attention of the FBI, which raided Goldstar’s Port Arthur offices in April 2005. At the time, the FBI’s 2004 study on patient transport seemed to point directly at Goldstar EMS, which was the primary medical transport company in Port Arthur and other areas of the state – aside from Houston – found to have excessive transports for dialysis patients.
Federal authorities took out thousands of documents, copied computer hard drives and questioned dozens of people as part of their investigation, but charges were never filed and the case was dismissed after several years.
“They notified us to come get our documents, that they found no wrongdoing,” Boever told The Examiner Wednesday night. “We had a zero-error rate, was their wording.
“My opinion is the FBI will say the same thing about Sean and his group. He runs an up-front and honest company, and nothing points to his doing anything improper.”
But Goldstar had been cut off from the TrailBlazer payment system and the investigation brought an end to the company.
Prior to the raid, Goldstar ran into financial problems. Employee’s checks began bouncing and the company had trouble keeping up its employee medical coverage.
Now, similar issues are happening with Southeast Texas EMS. Fitzgerald has confirmed his company has been having financial troubles and blames some of it on the rumors circulating about the FBI investigation.
“We are going through a financial hiccup, if you will,” he said. “The allegations of the FBI investigations aren’t helping.”
He said he uses a company to handle his billing in order to stabilize income from his receivables, and that company became worried about its financial investment when it heard about the FBI investigation.
“They sent auditor over, and he went back to say everything was fine and there was no misconduct,” Fitzgerald said. “It was like a pre-audit until the other guys get here. It put us in a bind, but we are straightening that stuff out. Basically, the complaint has hurt us.“They just came over to check us out and it delayed some of the funding. The employees will be straight in the next day or two.”
When asked about the impact of the investigation and any possible fallout, Jefferson County Judge Jeff Brannick said he had just recently become aware of the situation but he was already taking measures to protect county residents.
“I heard about it last night from (Jefferson County Emergency Services Director) Greg Fountain,” Brannick said. “He has already initiated discussions with other providers, and I was going to research what our responsibilities are under the local government code. We have already begun preliminary discussions in the event there is a disruption. We are going to try to have a contingency plan in place should something happen that we lose them as our provider.”
Fitzgerald said he wasn’t sure what would happen when the FBI eventually comes in to talk with him. He said he is hopeful they will look at his records and see there are no issues.
“I am not really concerned about the FBI or Medicare because I don’t think we have done anything wrong,” he said. “There are other issues out there with Nigerians coming in and setting up fraudulent ambulance companies, and I think that is what they should be looking at.
“We have our response times in the county down to 14 minutes and 58 seconds and we are able to do it for free. If we break even on the 911 side, then we are a success because of what we have on the private sector.”
A Department of Justice spokesperson said it standard procedure for the FBI and Department of Justice to neither confirm nor deny the presence of an investigation.