• Department of Justice settles with Everett Fire for over-billing first uncovered by KIRO 7

    By: Amy Clancy


    The US Department of Justice, the Washington State Attorney General’s Medicaid Fraud Control Unit and the City of Everett Fire Department have reached a settlement for fraudulent overbilling that was first uncovered by KIRO 7.

    In 2015, multiple sources within the department told KIRO 7 they were forced to overcharge patients for ambulance rides.

    At the time, the City of Everett and its fire department leaders denied any wrong-doing and refused on-camera interviews to discuss the allegations.

    On Thursday, after US Attorney Annette Hayes announced a settlement had been reached, the City of Everett is still not admitting any liability but has agreed to pay two federal programs $127,848 and Washington State Medicaid $75,158.

    At the time of KIRO 7’s 2015 investigative report, Pete McFall was the most senior paramedic at the Everett Fire Department. He was also very outspoken about billing practices he claims were forced upon him -- and all other paramedics --- to overcharge the sick and injured taxpayers of Everett.

    KIRO 7’s Amy Clancy interviewed McFall and asked, “if you’re billing at a higher rate for a lower service, what is that?”  

    McFall answered “I think that might likely constitute fraud.”

    McFall spoke on-the-record, on-camera with KIRO 7 because he was months away from retirement at the time. 

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    However, multiple other sources within the Everett Fire Department asked for their identities to be hidden for fear of retaliation.

    All claimed they were ordered to fill out paperwork for each Medicare hospital transport by checking only the box for "Advanced Life Support" or ALS instead of "Basic Life Support" -- even when only the basic services were provided.

    If they didn't, a supervisor would step in.

    “He would change the box,” one source said in a recorded phone interview about his then-supervisor. “He would check them to a higher box if you marked them ‘BLS.’ He would change them to ‘ALS.’”

    Another source told KIRO 7 his supervisor “was very heavy-handed in the billing.”  He believed his supervisor was kept in that position “because he was bringing money to the city.”

    All sources said the department charged Medicare $300 more per trip as a result of the inflated fees.

    An email given to KIRO 7, confirmed that many paramedics raised concerns about the way the department was billing. One even wrote “Are you sure this isn’t some kind of up-charge fraud?”

    US Attorney Hayes Department of Justice gave credit to KIRO 7 for being the first to publicize the "routine up-coding" and "fraudulent billing."  

    KIRO 7’s “reports triggered further examination by federal investigators from the Department of Health and Human Services and the Defense Health Agency which administers the TRICARE program for military retirees,” Hayes said in a statement Thursday.

    The settlement, according to Hayes, "sends a clear message to others who may try to 'fudge' the paperwork to get higher reimbursement rates than allowed.”

    Watch the original KIRO 7 investigation below. The full statement from the City of Everett is below the video.

    City of Everett statement:

    In 2015, the State Attorney General filed with the City a Civil Investigative Demand (CID) under its Medicaid Fraud Control Unit.  This followed a news story alleging that the Everett Fire Department was knowingly engaging in fraudulently “upcharging” Centers for Medicaid and Medicare Services (CMS) for ambulance transports under the direction of a former EMS division chief. The story claimed that the department was billing for transports at a higher Advanced Life Support (ALS) rate rather than the Basic Life Support (BLS) rate. The US Department of Justice monitored the Attorney General’s investigation to determine whether to pursue action against the City as well.

    The City independently hired a forensic specialist with extensive history to review our billing practices. Both the AG investigation and the analysis by our specialist found no evidence of fraud or willful wrongdoing on the City’s part, but did discover some billing errors and that the department’s practices were not in complete compliance with the Medicaid guidelines for transport charges. The Medicaid guidelines for ALS transport are different than the Medicare guidelines, which the City – and our third-party billing agent – were following. 

    As soon as the errors were identified by our forensic specialist in May 2016, we immediately corrected the error and ensured that all EMS staff and our billing agent were aware of the correct guidelines for transport charges.

    The AG investigation was completed in September 2016. The City reached an agreement with the AG and various federal and state agencies. Under the agreement, while the City admits no wrongdoing whatsoever, we will refund $36,579 in overcharges to the state and $63,925 to the federal government. Each entity also assigned a financial penalty, equal to the overcharge amount.  The City’s third-party billing agent, without admitting responsibility, has agreed to offset our payment by contributing $25,000 to our reimbursement, which means the City’s total financial responsibility is $176,007. The City Council approved the agreement, including the refund and penalty amounts, at their Nov. 29 meeting.
    It is important to note that no individuals were overcharged as a result of these errors. The State Attorney General and the United States Office of Investigator General found no evidence of fraud or intent to defraud Medicare or Medicaid. Our internal audits and forensic specialist’s review found no evidence of fraud or intent to charge more than we are allowed. Independent audits during 2011 and 2014 found us to have a 6 percent and 8 percent error rate overall (by the Medicare standard), far lower than the industry average of 20 percent. 
    We will continue to conduct periodic reviews of our billing to ensure compliance with both Medicare and State of Washington Medicaid standards.

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