The prospect that American Medical Response can hang on to the virtual monopoly it has enjoyed as the dominant provider of ambulance service in geographically expansive San Bernardino County over the last two decades has narrowed significantly in the last several months. Indeed, it appears that the company may soon be driven out of business in this neck of the woods entirely.
The powers that be in the regional, county and municipal governmental structure were once so enamored with American Medical Response that they conferred favored status upon the company, which is known by the initialism AMR. Those fickle politicians, however, have now taken up with a consortium of governmental agencies and its selected corporate partner to create a quasi-public, quasi-private emergency medical transportation program that is being touted as the wave of the future.
More than a year-and-a-half ago, the San Bernardino County Board of Supervisors moved vigorously to end AMR’s ambulance service franchise. AMR’s corporate officers felt the county had done so a little too spiritedly and responded by suing San Bernardino County in both state and federal court.
Rulings made this year in the federal court case and the reaction to those rulings by the judge hearing the matter in state court do not bode well for American Medical Response, as those in the know and interested parties now appear to be preparing for AMR’s near-monopoly to be handed over to the consortium.
Somewhat ironically, despite American Medical Response having previously enjoyed a near-monopoly in San Bernardino County by virtue of having secured exclusive operating franchises across a wide swath of the region, its lawyers had argued that the county governmental structure controlling those franchises was illegally endorsing a monopolistic system. Judge Kenly Kato, who is hearing the matter in federal court, ruled the anti-trust principle cited by the law firm representing American Medical Response in the federal suit is inapplicable. Earlier this year a panel of three judges with the U.S, Ninth Circuit Court of Appeals – consisting of Justices Consuelo Callahan, Roopali Desai, and Ana De Alba – upheld Judge Kato. As a result, the legal challenge to San Bernardino County’s December 2023 decision to confer a franchise for emergency medical response throughout most of the county’s desert region on Consolidated Fire Agencies – otherwise known as CONFIRE – resides now in San Bernardino County Superior Court under the scrutiny of Superior Court Judge Jay Robinson.
The matter is fraught with substantial political considerations. It extends even beyond the huge geographical confines of San Bernardino County to cover the entirety of both Inyo and Mono counties and will potentially have a huge impact on the bottom line of two out-of-state corporations, one based in Colorado and another in Arizona.
At the heart of the dispute is the Inland Counties Emergency Management Agency, known by its acronym ICEMA, a joint powers agency formed in 1975 by San Bernardino, Inyo and Mono counties to coordinate emergency medical response by planning, implementing and evaluating an effective emergency medical services (EMS) system including fire departments, public ambulances, prehospital providers, hospitals, and specialty hospitals, such as trauma, stroke and cardiac care providers.
Faced with the logistical difficulty of coordinating various services across a 33,467-square mile area, officials in both Inyo and Mono counties designated the San Bernardino County Board of Supervisors to serve as the governing board for ICEMA.
The Inland Counties Emergency Management Agency oversees issues pertaining to emergency medical response within the 33,464 square mile expanse of 20,105-square mile San Bernardino County, 10,227-square mile Inyo County and 3,132-square mile Mono County, a combined area that is larger than 12 different states, including Maine, South Carolina, West Virginia, Maryland, Vermont, New Hampshire, Massachusetts, New Jersey, Hawaii, Connecticut, Delaware and Rhode Island separately and larger than Vermont, New Hampshire, Massachusetts and New Jersey combined.
There are within all three of those counties extensive areas that are only sparsely populated but still need emergency medical response from time to time. To ensure that the emergency response needs of these areas would be met, ICEMA decreed that each such area would be served by a single ambulance company authorized to be the exclusive provider of emergency medical transportation in that zone, in effect granting the ambulance company a monopoly in the area. The ostensible rationale for granting these monopolies is that operating ambulances is an expensive proposition, not to mention one that is crucial to public health and safety. Competition between ambulance companies has the potential, so the reasoning goes, of driving down the prices those companies charge to the point that their operations would not be profitable enough for them to remain in business. If these ambulance companies were to go out of business, there would be insufficient emergency medical transportation service available to ensure public safety. It was for this reason that those monopolistic arrangements – the exclusive operating zones – were first established.
In years past, prior to the founding of ICEMA in 1975, such exclusive operating zones did not exist in San Bernardino County, and there was widespread, indeed cutthroat, competition between ambulance operators. During the 1960s and early 1970s, in what was then the most heavily populated area of San Bernardino County, the east and west San Bernardino Valleys stretching from Redlands and Mentone in the east to Chino and Montclair in the west, four relatively young men in their late 20s and early 30s – Terry Russ, Homer Aerts, Don Reed and Steve Dickmeyer – each owned and operated his own ambulance company. All four had been granted access to the emergency dispatch center’s radio transmissions, and when a call for an ambulance went out, depending on where their vehicles happened to be at the time, they or the other drivers they employed would rush to the scene, trying to be the first to arrive and get the privilege of – and the money for – transporting the injured party to the hospital. Over the years, all four experienced hundreds of incidents where one would be traveling full tilt in one direction to get to an accident or medical emergency and would pass another going in the opposite direction to get to a different person in need of medical assistance. In the late 1970s, the four got together, smoked a peace pipe, and resolved to stop their blind competition and instead coordinate their responses by apportioning the shared geography they were serving into operating zones. The next step was to merge their separate companies into one – which was called Mercy Ambulance.
Fortified by the increased profits that resulted from their merger, the four directors of Mercy Ambulance were able to make political donations to members of the board of supervisors, to the various city council members in the communities where Mercy was entrenched and to the county sheriff. Within three years of its formation, Mercy Ambulance became a major political donor and player, rivaling developers and other holders of the county’s various service franchises. Using that influence, it began to squeeze smaller ambulance companies out of the San Bernardino County picture entirely, buying them out, forcing them into bankruptcy or driving them out of the area. With or without being granted exclusive operating areas, Mercy claimed a virtual monopoly in San Bernardino County, such that its only competitors were the ones willing to run just one or two ambulances in remote locations where it was not profitable for Mercy to operate.
Mercy’s advantage and profitability had become so overwhelming that it was able to create an air division, consisting of helicopter ambulances which could fly to remote areas of the desert and mountains to retrieve and transport the injured in a fraction of the time it would take to reach them by traditional ground-based ambulances. This put Mercy Ambulance on the cutting edge of the ambulance industry, which over the course of a decade-and-a-half made Russ, Aerts, Reed and Dickmeyer fabulously wealthy. By the late 1990s, the four were in their late 50s and 60s and had grown weary of the bustle and intensity of providing a service with life-or-death implications 24 hours a day and 365 days per year. They sold Mercy Air Ambulance to a Japanese company and headed into comfortable retirement.
That left a vacuum, which a few companies, including some start-ups and a few with existing operations just outside the county’s periphery, sought to fill. Gradually at first and then with greater ruthlessness as it succeeded, Greenwood Village, Colorado-based American Medical Response, Inc. – AMR – took over from Mercy as the county’s preeminent emergency medical transport provider. The company took a leaf out of Mercy’s playbook and began making substantial political contributions, primarily to incumbent politicians, in an effort to ingratiate the company with the powers that be, in essence solidifying its hold on the exclusive operating zones that had by that point become an intrinsic part of the ambulance industry in California and in San Bernardino County. The smaller ambulance companies competing for a piece of the San Bernardino County pie, like those that two and three decades previously had tried to stay in place while Mercy was taking over, could not afford to buy such influence through political donations. Soon, those companies dried up and blew away, at least in San Bernardino County.
For two decades AMR was, within San Bernardino County, the primary corporate beneficiary of the move toward exclusive operating zones. It is noteworthy, however, that the San Bernardino County supervisors who gave AMR the inside track in San Bernardino County did not use their authority as members of the ICEMA board to impose AMR as the sole ambulance service provider in Inyo and Mono counties.
Symons Ambulance was a primary provider of ambulance service in Inyo County from 1989 until 2023, when it thereafter withdrew from the area to cut its losses. Since that time, the fire departments and the hospital districts of the county’s various communities have provided ambulance service in Inyo County. The main ambulance service provider in Mono County is the county’s own Mono County EMS, a government-operated service that provides both prehospital care and inter-facility ambulance transport.
Some critics have long disputed that the exclusive operating zones are necessary, asserting that the zone system is rather a ploy by which county politicians have further inculcated a pay-to-play ethos into the county’s governmental function, with the exclusive operating permits being granted to the companies that are most generous in handing out political donations to incumbent politicians. Among those critics of exclusive operating zones are some who maintain the monopolistic system has long endangered public safety. One of those was San Bernardino County’s firefighters’ union, known as Local 935, which in 2014 suggested the exclusive operating approach has on occasion created critical shortages in the High Desert’s ambulance transport system.
For years, the county’s decision-makers ignored the firefighters’ warnings, allowing the AMR contract to be “rolled over” in what the county referred to as “a grandfathered process.” In late 2022, however, county officials began to consider what action might be taken with regard to the expiration or continuation of the AMR contract. On December 20, 2022, the county issued a request for proposals – a solicitation of bids – inviting prospective providers to provide ground ambulance service in 11 of the county’s 26 exclusive operating areas.
The only two entities responding to the request were AMR and Consolidated Fire Agencies. Known by its acronym CONFIRE, Consolidated Fire Agencies is a joint powers authority that provides communications, dispatch, computer information systems support and geographic location information to its nine founding member agencies – the Apple Valley Fire Protection District, Chino Valley Independent Fire District, the Colton Fire Department, the Loma Linda Fire Department, the Rancho Cucamonga Fire Department, the Redlands Fire Department, the Rialto Fire Department, the San Bernardino County Fire District and the Victorville Fire Department – and four later-joining contract agencies – the Big Bear Fire Department, the Montclair Fire Department, the Running Springs Fire District and the San Manuel Fire Department.
In its response to the request for proposals, AMR stated it could commit 12,889 weekly unit hours to respond to calls and that it had 111 ambulances stationed throughout the service area available during times of peak system demand, with 39 additional ambulances available to meet surges. It emphasized that it was the current provider of the service with vehicle infrastructure in place and that it employed 10 managers and 18 field supervisors and a medical director familiar with the needs of the service area. The company offered rates of $3,958 for both basic life support and advanced life support, $2,834 to carry out an inter-facility transport, and $4,392 for critical care transport.
In its proposal, CONFIRE said it would subcontract with Priority Ambulance, which also serves Maricopa County in Arizona and could devote 10,371 weekly unit hours to respond to calls, that it would have 93 ambulances available at peak demand, with 45 additional ambulances available to meet surges throughout the service area, and that it would establish ambulance staging locations, put on-board personnel in place and acquire vehicles upon receiving the contract. It offered an assurance it had sufficient leadership and management personnel to meet the demands of providing the service, including nine managers and 18 operations supervisors, as well as a medical director, noting it currently controlled the regional emergency services communication system. Its proposed rates for its advanced life support service were $3,547 for non-emergency and inter-facility transfer, $4,053 for emergency transport, $2,533 for non-emergency basic life transport, $3,167 for emergency basic life transport and $5,067 for critical care transport.
To determine which company would be awarded the contract, the county convened an “independent review panel” made up of four evaluators who individually scored each proposal on 14 key areas: system requirements, response time standards, clinical performance, deployment plans, vehicles, medical supplies and equipment, personnel, hospital and community requirements, disaster preparedness/response, quality management, electronic patient care reports, centralized emergency medical dispatching, financial and administrative requirements qualifications, and future system enhancements. The panel gave the AMR proposal a total cumulative score of 1,519 points (out of 1,720 points maximum) and the CONFIRE proposal a total cumulative score of 1,515.
Given what they characterized as the negligible difference between the two scores, county officials invited both AMR and CONFIRE to enter into contract negotiations with the county, indicating that final contract approval rested with the board of supervisors.
At the conclusion of those negotiations in late October of 2023, the board of supervisors decided to offer CONFIRE the contract to provide ambulance service for San Bernardino County from October 2024 through September 2029. AMR was granted a six-month extension of its then-current contract to give CONFIRE time to prepare to assume its new responsibility in San Bernardino County, but the existing franchise holder nevertheless lost its bid for the new contract, despite having submitted a proposal that received a marginally superior score from the county’s evaluators.
AMR lodged a protest, alleging the county had failed to follow the selection procedures, had not adhered to requirements specified in the request for proposal, had awarded the contract to the entity that had lost in the competition, and had otherwise violated state and/or federal law. The county’s purchasing agent, Ariel Gill, after reviewing and considering the protest, notified AMR of its decision to deny it.
At its December 5, 2023 meeting, the board of supervisors unanimously passed a motion to deny AMR’s appeal and to schedule a vote on whether to award the contract to CONFIRE and its private subcontractor, Priority Ambulance. Present at the meeting were an AMR spokesman who did not identify himself and Mike Rice, the company’s vice president of operations, who made no comments. The unidentified spokesman said AMR offered “stability, performance and clinical excellence. AMR is in the best position to take this into the future. We’re fully integrated with the fire departments, public health, behavioral health, the communities we serve.” He emphasized that AMR had a “depth of resources, history of performance, experience and expertise, disaster response capability and represents a lower risk of liability to the cities and county than having public agencies provide ambulance service.” He said that AMR “meets or exceeds all response time standards” and featured as part of its vehicle fleet “all-wheel-drive units in key areas that need that … and a disaster command vehicle.” He said the company had helicopter ambulances and was “financially strong,” with an “established sustainable model.”
CONFIRE was represented at the meeting by Rancho Cucamonga City Councilwoman Lynn Kennedy, the chairwoman of the CONFIRE Board of Directors, as well as Rancho Cucamonga Fire Chief Mike McCliman and CONFIRE Chief Nathan Cook. Lynne Kennedy said what CONFIRE offered was something that “will result in increased resources, decreased response times and a delivery model that includes private/public partnership, a private partnership with Priority Ambulance that has the capacity to serve our county and the public partnership that crosses the continuum of care, making sure that every single resident receives the right care at the right time, on time, every time, without exception.”
CONFIRE, Kennedy said, “is going to improve our service delivery, establish an efficient system and invest both financial and human resources back into the system.”
County officials reasoned that both CONFIRE and AMR performed, for all intents and purposes, equally well during the evaluation of their proposed offerings of service. The deciding factors that tipped the decision in CONFIRE’s favor, according to the county, was a state law that encourages local governmental agencies, through a financial incentive, to develop emergency medical transportation capability taken together with San Bernardino County Policy 1104, which calls for making a determination of “best value” when entering into such contracts. Assembly Bill 1705, passed in 2019, allows an ambulance service provider operated by a governmental entity such as the state, a county, a city or fire protection district to receive a supplemental Medi-Cal reimbursement when the patient being transported is a Medi-Cal recipient, this in addition to the payment the provider would otherwise receive for that service. So, by contracting with a government-operated provider like CONFIRE, the county would be able to capture those supplemental Medi-Cal payments, whereas if the county contracted with a private sector provider such as AMR, it would not be eligible for such reimbursements. Thus, the added “value” of the arrangement involving CONFIRE dictated that the county contract with it rather than AMR, according to county officials.
“Of the two proposers that we heard today, CONFIRE JPA [joint powers authority] may be eligible for this funding, but only CONFIRE JPA,” Chairwoman of the Board of Supervisors Dawn Rowe said at the December 5, 2023 meeting. According to Rowe, the board’s decision in favor of CONFIRE hinged on the additional funding the county would receive by having governmental entities provide the ambulance service.
Mike Rice, who had said nothing during the December 5, 2023 meeting, tore into the board of supervisors after its vote, saying the decision “does not align with the best interests of the community and … puts 29 fewer ambulances a day on the road than what AMR proposed. The community and our hard-working employees will be negatively impacted.” He threatened legal action over the vote.
On April 30, 2024, AMR made good on that threat, filing civil suits in both federal court and San Bernardino County Superior Court.
In the federal suit, AMR’s legal team alleged the county’s action ran afoul of the Sherman Antitrust Act, passed by the U.S. Congress in 1890 to prohibit trusts, monopolies and cartels, promote economic fairness and competition, to regulate interstate commerce and “preserve free and unfettered competition as the rule of trade for the benefit of consumers.”
Judge Kenly Kiya Kato, as the jurist overseeing the federal trial, dismissed the case against the county, ruling that the federal court did not have proper jurisdiction because the “county defendants are immune from liability” under the Sherman Antitrust Act. AMR then appealed to the 9th Circuit Court of Appeals.
In its decision on that case, the 9th Circuit panel, consisting of Justices Callahan, Desai and De Alba, wrote as follows: “In California, prehospital emergency medical services are governed by the Emergency Medical Services System and Prehospital Emergency Medical Care Personnel Act (“EMS Act”) [which] authorizes a county to grant emergency medical service providers the exclusive right to operate within certain geographic areas in the county so long as ‘a competitive process is utilized to select the provider’ pursuant to a State-approved ‘local plan.’ The California Legislature intended such authorization ‘to confer state action immunity from federal antitrust laws for actions taken by local government entities under the EMS Act.’ While the Sherman Act clearly forbids anticompetitive conduct by private market players, the Supreme Court in Parker v. Brown, 317 U.S. 341 (1943), held that the law ‘did not apply to anticompetitive restraints imposed by the States.’ The Supreme Court later explained that a local government is entitled to Parker immunity when its restriction on competition constitutes ‘an authorized implementation of state policy.’ Referred to as the ‘clear articulation test,’ the Supreme Court has held that ‘when a local governmental entity acts pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, it is exempt from scrutiny under the federal antitrust laws.’ AMR does not dispute that the EMS Act ‘clearly articulated and affirmatively expressed’ the California Legislature’s policy to displace competition in the field of emergency medical services but argues that the county defendants did not act ‘pursuant to’ this policy when awarding CONFIRE the exclusive contract. For example, AMR argues that the request for proposals required the county defendants to award the monopoly to the provider that received the ‘highest score,’ and that AMR received a higher score than CONFIRE. According to AMR, this shows that the county defendants awarded the monopoly to their ‘politically preferred provider in complete disregard of the state-mandated competitive process.’ We are unpersuaded [by AMR’s argument].”
Ultimately, the 9th Circuit panel denied AMR’s appeal and upheld Judge Kato’s ruling.
The Sentinel’s efforts to reach Stephen Larson, the attorney representing AMR, were unsuccessful. It is unknown whether Larson and the other attorneys in his firm representing AMR, including Jonathan Phillips, Mehrunisa Ranjha and Benjamin Falstein, plan to appeal the 9th Circuit panel’s ruling to the U.S. Supreme Court.
U.S. Courts of Appeals routinely handle more than 50,000 cases each year. Generally, 7,000 to 8,000 of those decisions are appealed to the U.S. Supreme Court. On a yearly basis, the Supreme Court considers only about 100 of those cases. Historically, the Supreme Court tends to affirm the lower court’s decision in a majority of the cases it chooses to hear, with reversal rates typically in the range of 30 percent to 40 percent.
It thus appears that that AMR’s only realistic hope of preventing CONFIRE from taking over the lion’s share of ambulance service in the county is to win the case being heard before Judge Robinson in San Bernardino Superior Court.
In that case, AMR’s attorneys are seeking to establish that, despite AMR being the “exclusive ‘grandfathered’ ambulance provider to the county,” the “county departed from this practice and for the first time published a state-approved request for proposals” to solicit entities interested in competing for the franchise. According to AMR’s attorneys, the terms of the franchise competition meant the county was “required to award the exclusive contract to the bidder with the highest scoring proposal [in the competition]. Moreover, any provider whose proposal failed to meet the minimum qualifications specified in the request for proposals could not be considered at all.”
Despite what was supposed be a highly regulated and precisely controlled competition, AMR’s legal team asserts, the county cheated its client out of a fair competitive process for the contract.
According to AMR’s legal representatives, “The independent, non-biased review committee administering the request for proposals process gave AMR’s proposal a higher score than CONFIRE’s proposal based on scoring criteria set forth in the request for proposals.” Furthermore, they maintain, “[T]he board of supervisors voted to award the contract to the losing bidder, CONFIRE. By negotiating with and ultimately awarding the contract to an ambulance services provider with an inferior bid, the county and its board of supervisors acted contrary to the request for proposals and state law—and, consequently, outside the narrow confines of their antitrust immunity.”
According to Larson, Phillips, Ranjha and Falstein, “CONFIRE’s proposal should not have been considered to begin with, as it failed to fulfill basic minimum requirements mandated by the request for proposals.”
Among those minimum requirements, according to AMR’s legal team, was that Priority Ambulance meet specified previous experience criteria, including having continuously provided ambulance services for five of the last seven years while serving a population of 1 million.
AMR’s legal representatives maintain that Priority’s contract with the City of Chandler, Arizona commenced in or about January 2022 and thus failed to satisfy the durational requirement in the request for proposals. Moreover, the lawyers argue, the two municipalities in Maricopa County Priority did serve for the requisite amount of time, the City of Glendale, Arizona, and the City of Goodyear, Arizona, have a population that amounts to 338,000 residents – far less than the service area population of 1,000,000 required under the request for proposals.
Larson, Phillips, Ranjha and Falstein observed that the “requirements set forth in the request for proposals were strict,” stipulating that the county had to “award the exclusive contract to the bidder with the highest scoring proposal [in the competition]” and that the county could not consider awarding the contract to “any provider whose proposal failed to meet the minimum qualifications specified in the request for proposals.” But, the attorneys argue, the county was nonetheless “willing to disregard this mandatory process in order to award the contract to its pre-ordained preferred provider – CONFIRE.” In this way, they claim, “the process actually employed by the county was not truly competitive at all.”
In support of this claim, AMR’s attorneys point out that although “[t]he independent, non-biased review committee administering the request for proposals process gave AMR’s proposal a higher score than CONFIRE’s proposal based on scoring criteria set forth in the request for proposals,” the county’s board of supervisors nevertheless “voted to award the contract to the losing bidder, CONFIRE.” By negotiating with and ultimately awarding the contract to an ambulance services provider with an inferior bid, the attorneys say, “the county and its board of supervisors acted contrary to the request for proposals and state law—and, consequently, outside the narrow confines of their antitrust immunity.”
The attorneys further maintain that CONFIRE’s proposal should never have been considered to begin with, since it “failed to fulfill basic minimum requirements mandated by the request for proposals,” including demonstrating it could perform as required by having previously provided service to a sufficiently large population comparable to what it would be called upon to serve in San Bernardino County over an extended period of time.
In its decision in the federal case, the 9th District Court declined to exercise supplemental jurisdiction over AMR’s two state-law claims, leaving them for a state court to decide: “We note that the state court may be a more appropriate forum to litigate AMR’s challenges to the county defendants’ execution and administration of the request for proposals,” the panel wrote. An important consideration in the federal court’s eyes was the precedent set in the Parker v. Brown case which was ruled on by the U. S. Supreme Court in 1943. In that decision, the Supreme Court held that while the Sherman Act clearly forbids anticompetitive conduct by private market players, the law “did not apply to anticompetitive restraints imposed by the states.”
At a September 5 hearing in San Bernardino County Superior Court, Judge Robinson said he was taking the 9th Circuit panel’s ruling under submission. There are passages within that ruling that do not presage well for AMR. For instance, with regard to AMR’s anti-trust claim, the panel wrote: “Even if the county defendants erred in implementing the state-approved request for proposals and awarded the contract ‘in complete disregard of the state-mandated competitive process’ as AMR alleges, the county defendants are still entitled to Parker immunity. The Supreme Court held in Omni [another Sherman Antitrust Act case involving a governmental entity] that a local government was entitled to Parker immunity even when the nature of its regulation was allegedly substantively or procedurally defective. And this court has similarly held that a local government does not ‘forfeit’ Parker immunity merely because it imperfectly exercises its power under state law.”
And with regard to AMR’s claim that its proposal received a superior score, the panel wrote: “While AMR received the highest total score, CONFIRE received the highest median score. The request for proposal does not define what the ‘highest score’ means, and also provides that the county defendants will award the contract to the ‘highest scoring proposer . . . whose proposal presents the greatest value’ and that ‘best meets the needs of the county.’ Accordingly, even if AMR had the ‘highest score,’ the plain language of the state-approved request for proposals gave the county defendants discretion to award the monopoly to the provider whose proposal presented ‘the greatest value’ to the county. Moreover, the county defendants articulated how CONFIRE presented the ‘greatest value’ to the county, namely, by being eligible for supplemental state funding, by improving public safety through closer integration or coordination of services, and by promising faster response times than AMR. The award of the monopoly to CONFIRE was thus the ‘foreseeable result’ of the state’s policy.”
-Mark Gutglueck