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Defending Public Transportation Contractors: The Whistleblower's Song (Part 3)

By: Ned Einstein
Tel: 212-766-1121
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A few months ago, 85% of the nation’s motorcoach fleet lay around collecting dust. As noted in a former installment of National Bus Trader (see https://transalt.com/article/motorcoach-survival-in-the-age-of-covid-19-part-3-the-end-of-charter-and-tour-service-for-now/), the fat charter and tour sectors of yesteryear are gone – at least for some time. If ridership on the mode (transit) transporting our tired, poor and huddled masses has shrunk by 10 percent in each of the two years preceding COVID-19, one can expect far fewer motorcoach joyrides.

As we struggle to bounce back, limited stimulus funds notwithstanding, it would help to know what we are in for. Reducing bloated public sector transportation costs are likely a part of that future. In response, private contracting should explode. But this does not mean the operating environment will be rosy, or even coherent.

Before exploring a vision of the motorcoach industry’s future,  it is illustrative to examine the operating environment and dynamics of the worst sector of public transportation – non-emergency medical transportation (NEMT) service -- a sector slathered in fraud and waste, whose services might operate at 10 percent of their possible efficiency on a good day. Staying afloat as a contractor in this sector is not survival of the fittest. It is survival of the lucky – and of those willing to commit the greatest number of safety compromises (see https://www.safetycompromises.com/). Indemnified by their contractors, why should funding agencies or their brokers care?

In the first two installments of this series, I explained how the NEMT sector is structured and how it got there. Now we shall examine how it works, and the plight of contractors unfortunate enough to be stuck in it. As other sectors are increasingly leaning in this direction, I hope National Bus Traders readers take note.

Piecework and Poverty

Few Americans remember the era of piecework in. In other sectors, some workers (e.g., farmer laborers picking fruit) still operate on this basis. Forget getting paid for one’s time. Forget about fringe benefits. Forget about being treated with decency. Forget about any one’s economic survival, And forget about esoteric annoyances like concerns about safety. NEMT contractors, their  employees and/or their passengers receive none of these things.

As the healthcare agencies and their brokers distribute trips almost at random, forget about making money by grouping trips. As bad as software is at scheduling demand-responsive trips, it is far worse in an environment devoid of any understanding of transportation rudiments like density, location or travel speed. Reflecting a disregard for transportation reality, healthcare agencies and their brokers are paid on a per capita basis – a fixed sum for each certified passenger in the service area, irrespective of how often each one travels, or how far they go when they do. Particularly where brokers are involved, their only meaningful transportation-related costs involve what they pay their service providers. And they are encouraged, as a formal contract requirement with their healthcare agencies, to pay them as little as possible. As a result, what the broker does not spend on the actual provision of service, it gets to keep – which is most of these funds.

Fasting During a Famine

The most mindless transportation operating environments contain at least some notions of time and space. But not NEMT service. Common examples of NEMT operating dynamics include:

  • NEMT providers are paid only when the vehicle is moving, with at least one passenger on board. Unlike taxicabs, NEMT vehicles contain no meters. So when the vehicle is not moving, operators earn nothing.

  • No consideration is given to the number of contractors engaged, much less to where their vehicles are stored, where within the service area they generally operate, where they can operate most efficiently, or even how large and varied their fleets are – or even what percentage are wheelchair-accessible. The fact that not all vehicles are required to be accessible (as they are in transit and motorcoach service) further complicates the chaos in trip assignment, scheduling and dispatching – since all clients do not need accessible vehicles, and many service providers purchase and deploy as few as possible to reduce their costs.

  • Most healthcare agencies (not even transportation bureaucracies) give their brokers a list of service providers to choose from, and instruct them to “negotiate” the lowest rates among them, and engage the cheapest of them consistent with almost no notions of anything else. No thought is ever given to the fact that those charging the lowest rates may need to travel the furthest (because of their general operating locations, fleet size and composition, etc.) This dynamic effectively translates the lowest rates into the highest costs. But such factors are not a concern to brokers. They typically use every service provider on the list.

  • Many service providers engaged have no experience whatsoever providing any type of transportation. They must simply meet the minimal regulatory requirements for licensing, vehicle registration, insurance and a few other administrative formalities. Similarly, no training is often required for their drivers.

  • Encouraged to reduce overall costs by the healthcare agencies that engage them, brokers do the opposite. If they reduced costs, they would receive lower gross revenues the following year. Not inclined to cut their own throats, they never reduce costs. Instead, they increase gross costs. And they increase their share of the net costs by continually finding and refining new ways to bilk their service providers.

  • Brokers are usually asked to evaluate the capabilities of the providers they choose – although never given any meaningful guidance for balancing the quality of these providers with their costs. When “negotiations” even occur, they usually take the form of “take-it-or-leave-it.” Yet so swollen with profits are brokers, and so motivated to increase overall costs from year to year, they often take whatever the service providers offer.

  • Those service providers engaged, who manage to survive, do not reflect the survival of the fittest. They reflect a combination of luck and a willingness to abandon almost every principle of safety in order to comply with the ignorant and random rules under which they are forced to operate – rules which literally punish them for engaging in safety practices. Yet even when committing every safety compromise possible, as often as possible, a service provider still runs the risk of being penalized for late arrivals and other failures (like deploying a non-accessible vehicle to transport a wheelchair user) caused by the broker’s incompetence and/or reckless disregard in the performance of basic operating functions like trip assignment.

  • Compounding this chaos, many service providers are not permitted to decline trips assigned to them – within a trip assignment process that is effectively random to begin with, as noted. So denying the provider the right to decline a trip which its drivers and vehicles cannot possibly provide on time (forget any concern for safety) effectively conditions that provider’s survival on the continual commission of safety compromises, and effectively dooms the provider to confront the risks into which such requirements unavoidably translate.

  • Often, punishment takes the form of giving the offending provider fewer trips – which only makes things worse for that provider as well as fellow providers which are often burdened by these additional trips (which, again, they cannot decline, and which are often randomly distributed to them). Obviously fleets cannot expand and contract quickly enough to accommodate these whims. This imbalance unavoidably has an impact on the on-time performance and ride-times (much less the safety) of those clients shifted around, and others whose schedules become even tighter as a result. Such things are of no concern to a healthcare agency or its broker – or would be even if either of them understood the consequences of these dynamics.

  • With no knowledge of transportation, agencies and brokers have no means of genuinely monitoring the on-time performance of service, much less other elements of service quality (like boarding and alighting assistance, or wheelchair securement). Instead, they employ a net of “liquidated damages” ostensibly designed to deter poor performance (like lateness) -- which is the direct result of the ignorance and disinterest of the agency or broker.

  • Even if or when these “violations” are the fault of a service provider, it would cost that provider far more to investigate and refute the often huge number of minimal charges than to simply pay them. Further, with the impunity which brokers have, a provider would be foolish to refute an “assessment:” The broker could instantly put the provider out of business simply by assigning fewer or more difficult trips to it – like long trips to isolated destinations in different directions with enormous deadhead time, and impossible to group.

  • In many cases, service providers are not even permitted to appeal assessments as a formal condition of their contracts with the broker. So liquidated damages are simply another ruse to bilk the service providers – funds which, again, the broker gets to keep.

  • Other damage assessments can be worse. For example, some agencies or brokers pay their service providers nothing for trips that arrive to their destinations late. Unable to monitor actual pickup and drop-off times compared to scheduled pickup and drop-off times (child’s play with a driver’s log that contains the information to permit such a comparison – which no broker has its providers use), these agencies and brokers often base these penalties on undocumented complaints received from the facilities to which vehicles arrived late. Of course, once again, it is almost always the fault of the agency or broker that trips are late, since these parties assign the trips. So drivers must balance off the potential for speeding tickets and mayhem with the hope of retaining their jobs by arriving on time. The fact that mowing down a pedestrian usually translates into years in prison is an afterthought. In contrast, no one ever spends a night in jail for tipping over a wheelchair, irrespective of the outcome; those genuinely responsible for this carnage (i.e., the healthcare agencies and brokers) lie far beyond the reach of our justice system.

  • In theory, at least, an occasional service provider with some luck might be able to actually prosper in such an environment if it had anyone capable of scheduling intelligibly. Few NEMT providers do. Of course, neither the healthcare agency nor its broker teaches them how to do this, or helps them by assigning them a coherent batch of trips that might match their capability to schedule them efficiently. So even if the service providers could schedule trips efficiently, this ability is squandered by the random nature of trip assignment and the disinterest of the agency or broker in any temporal or spatial variables related to the provider’s fleet, the trip, its origin or destination, or its needed arrival time. In this environment, few trips are actually scheduled at all: Most are simply dispatched. Many drivers rarely transport more than one passenger at a time. Of course, the rate structure imposed on victims is based on an assumption about some percentage of trips provided on a shared-ride basis.

  • Some practices are so stupid that they seem as though they were designed to deliberately make the provision of service impossible. For example, some agencies and brokers “rotate” trip assignments among the service providers – undercutting their ability to familiarize themselves with the shortest routes between origins and destinations, and destroying the providers’ ability to learn how to schedule their trips, much less efficiently. Commonly, the same service providers are not even assigned both the outbound and return segments of a client’s trip. This dynamic also compromises a provider’s ability to learn about the passengers’ needs (which it does not do because the healthcare agency and broker violated the HIPAA Business Associates Amendment). This too is of no interest to the healthcare agency or broker. They do not  carry “passengers;” they simply let their providers move around randomly-assigned profit-making chits, from which the agencies and brokers derive most of their profits.  

  • Many drivers are actually paid by the trip – and often a percentage of what their employer earns from the trip. Often, the liquidated damages assessed to their employers when the trips are late (or otherwise deemed deficient, unilaterally, by the agencies or brokers) are deducted from their salaries.

  • So chaotic is trip assignment, and so unprofitable is service, that owners, dispatchers and other managers are commonly forced to drive – essentially eliminating the skeleton of already-overwhelmed management altogether. (This is known as “scavenging the dispatch office.”) In many systems – particularly small ones – the dispatcher is the owner, who accepts trip assignments and dispatches trips to all the vehicles in the system while driving.

  • The complexity of soliciting, evaluating and hiring a broker is time-consuming – even while fewer and fewer potential brokers bother to respond to the increasingly unintelligible RFPs issued by healthcare agencies – and occasionally other non-transportation bureaucracies. In one state, until recently, MediCare funds were disbursed to its Department of the Treasury. Frankly, few brokers can meet the criteria deliberately designed to limit potential bidders. So the dysfunctional operating contracts are usually just rubberstamped one contract period after the next, often with few of no changes.

  • Every contract requires the service provider to indemnify the lead agency or broker – even when the fault for an incident is entirely the healthcare agency’s or brokers fault. So why should an agency or broker care about any of these things?

  • Finally, neither passengers nor the facilities they attend have any choice of a service provider – so a service provider’s safety and on-time performance has no effect on the number of trips it provides or the money it makes (or loses) – much less anything related to safety. Instead, those who commit the most safety compromises make the most money and have the best chance of pleasing their brokers (which can translate into more trips assigned to them). In simple terms, the best providers make out the worst, and the worst ones make out the best.

Consequences and Carnage

It is hardly a wonder that wheelchair tipovers occur regularly in this mode. For comparison purposes, 73.6 percent of all wheelchair transported on transit buses are either improperly secured or not secured at all1 -- while these service providers and their drivers are paid by the hour. So it is not hard to understand why few wheelchairs are ever secured in NEMT or other non-emergency transportation services (like demand-responsive Medicaid and Veterans Administration services). The reasons they are so rarely held accountable will be covered in the next installment in this series that addresses the extraordinary failure of – ahem -- attorneys to hold these agencies, and particularly their brokers, accountable.

As an expert witness involved in an estimated 150 cases involving wheelchair tipovers, I have examined vehicles in which I was prepared to testify that no wheelchair ever transported in them had ever been secured. In a few cases, I was prepared to testify that no vehicle in the defendant’s entire fleet had ever transported a wheelchair that was secured. Alas, my opportunities for such testimony are rare: I last testified at trial in a wheelchair securement case in 2002 – about 100 such cases ago.

More interestingly, many securement failures are not even the driver’s fault. Much of the missing, broken or mismatched components I find during a vehicle inspection make it impossible for the driver to secure a wheelchair (or its occupant into it) at all, much less according to regulatory requirements. But even when the securement system is completely intact and operable, securement is still rare because the vehicles are almost always running behind schedule. In the estimated 150 wheelchair tipover cases I have been involved in, I do not remember a single case where the vehicle was not running behind schedule. In the middle of one paratransit-related class action lawsuit in which I was involved (related to poor on-time performance), the software developer popped into town and “tweaked” its software’s scheduling algorithm to increase travel times by 30 percent! Imagine what providing service was like before this tweak! And unlike NEMT service, those service providers were paid by the hour – and, thus, paid for the time their drivers did things when the vehicle was not moving. Not paid when the vehicle is not moving, and in an environment where class action lawsuits are rare, the on-time performance of NEMT service is hazy, and often mysterious.

Sabotage and Savagery

Is it easy to see why securing wheelchairs or providing passenger assistance in such an environment is a rarity. What I commonly find are missing parts, mismatched parts, broken parts or components rusted in place in the floor hardware. I commonly find the dimensions of the securement areas too small in which to secure any wheelchair. I commonly find them without lapbelts or shoulder harnesses. In these cases, drivers are not at fault when a wheelchair keels over during a mild turn or when – while speeding and tailgating – the driver must slam on the brakes because the vehicle in front came to an unexpected (or often completely predictable) stop. Understanding the twisted, surrealistic and corrupt operating environment in which these service providers are forced to operate, it is understandable why their owners so often sabotage a driver’s ability to secure a wheelchair. Already being bilked and forced to operate in Wonderland, they cannot realistically be expected to donate still more time for which they are not paid – even while doing so for this purpose is “reasonable and prudent” as a legal matter.

There are also quite a few legal curiosities among this labyrinth of insanity. For starters, few NEMT drivers are employees, but instead, gig workers. Yet how can one be a gig worker when he or she is forced to work because his/her employer cannot decline a trip assignment?  Needless to say, NEMT services experience constant driver shortages. As a result,  many drivers work an unconscionable number of hours (which they must do for other reasons, given how little they are paid). Not only are they not paid for overtime work, they are rarely paid fringe benefits of any kind.

In NEMT-related lawsuits I served on 15 years ago, the brokers in a typical major city raked in about $500M a year. Those companies operating statewide likely captured five to 10 times this total. Keep in mind that most of this income was, and increasingly is, profit. Those companies that actually provide the service are penniless pawns. Most of the exceptions must commit safety compromises as regularly as they breathe. In fact, during my years in the NEMT business in the 1980s, one classic joke was the central hiring question asked of a potential NEMT driver: “Can you breathe?” Otherwise, fast-forwarding this extravaganza of fraud and waste to 2021, it is interesting to conjecture how close the total sum of fraud and waste seems to come to the sum which, until recently, our country was debating as its stimulus bill. And this is for a transportation sector few people beyond its immediate victims (and those associated with their trips) have ever heard of.

If you have no problems with your local transit agency being placed in charge of your community’s ballet, then you should have no problems with the dynamics outlined above. The history of healthcare agencies and brokers is not very different (see https://transalt.com/article/defending-contractors-part-2-the-history-of-contracting-and-brokerage/).

What is to Come

In future installments, I will discuss a major factor that helps to explain the lack of accountabilityining what contractors and their carriers can do to cope with these challenges. And consistent with the title of this series, I will overview some key components for a contractor and its carrier to defend the contractor in a lawsuit where it was victimized by errors and omissions by the tran this sector faces: Lawyers. Then, I will outline the less-challenging (yet still-challenging) operating environments which most operators (and schoolbus companies) face as contractors. Finally, I will devote considerable time – possibly several installments – explasit agencies, school districts and other public agencies which engaged it.

Such advice is at least possible in most transportation modes. In contrast, I usually receive at least one call a month from some poor soul looking for help to enter the NEMT field. My response usually involves a short paragraph, as gentle as it can be:

You will not likely appreciate this advice. And you may disregard it for any number of understandable reasons. But it is the best advice anyone you ever meet will ever give you: Find something else to do for a living.

Truer words were never spoken. Stay tuned, readers. Thank your stars that you are not in the NEMT field. Compared to the challenges of that sector, those challenges you face are like crayon marks or mosquito bites.


1 Fall & Colleagues, in a 2012 study of transit trips from 2007 to 2009.


Ned Einstein is the President of Transportation Alternatives, a passenger transportation and automotive consortium engaged in consulting and forensic accident investigation and analysis (more than 600 cases). Specializes in elderly, disabled, schoolchildren. Mr. Einstein has been qualified as an Expert Witness in accident analysis, testimony and mediation in vehicle and pedestrian accidents involving transit, paratransit, schoolbus, motorcoach, special education, non-emergency medical transportation, taxi, shuttle, child transport systems and services...

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