EMSA audit finds lavish 'unwarranted and extravagant' items
BY ZIVA BRANSTETTER World Enterprise Editor
Wednesday, January 23, 2013
1/23/13 at 7:13 AM
Complete coverage of EMSA’s financial practices: Find all the stories in Enterprise Editor Ziva Branstetter’s investigation
into Tulsa’s ambulance provider.
EMSA spent lavishly on "unwarranted and extravagant" items including $905 for two spa treatments for its CEO, $35,190 for floral arrangements, $23,000 for employee fitness classes and two employee parties costing more than $4,000 each, a state audit finds.
The audit advises EMSA, a government agency, to seek legal advice on two issues: $7 million in purchases made for its contractor, Paramedics Plus, and donations by EMSA to charities and associations, which may not be "permissible under the Constitution."
The audit by the state Auditor and Inspector's Office was released Tuesday and covers activity from Jan. 1, 2009, through June 30, 2012.
It was sparked by a Tulsa World investigation into the agency and confirms the World's findings, including making recommendations for improvements to EMSA's patient billing system.
The audit notes that CEO Steve Williamson's expenses were "indicative of more serious board inadequacies that allow abusive expenditure patterns and negatively impact public confidence in EMSA's performance, such as disregard for the organization's fiduciary responsibilities."
Lillian Perryman, chairwoman of EMSA's board, said the audit "was requested by the EMSA board, as part of our efforts in past months to improve the organization's overall practices and policies." She said the board will discuss the audit at its meeting Wednesday.
"The quality of care delivered by our service to our citizens in the Tulsa and Oklahoma City areas is excellent and has never been called into question," she said.
EMSA's audit request in May followed a resolution by the Tulsa City Council and calls by three state lawmakers urging EMSA to seek an investigative audit.
The Emergency Medical Services Authority is a government agency that oversees a contractor providing ambulance service for more than 1.1 million people in Tulsa, Oklahoma City and surrounding cities. Residents in Tulsa, Oklahoma City and other cities served by EMSA pay a monthly fee on their utility bills designed to defray costs for emergency ambulance service.
The audit takes EMSA's board to task for failing to stop "abusive expenditure patterns."
"During the period examined, Mr. Williamson was reimbursed for a number of expenditures that the general public would consider unwarranted and extravagant," the audit states.
"The CEO's total purchases (including reimbursed costs as well as corporate credit card purchases) for the period examined totaled $416,109 and, of that total, $220,436.89 was spent with no Board oversight."
Williamson was reimbursed for expenses including two spa bills - for $415 and $490 - indicating that Paramedics Plus should be billed, the audit states.
State Auditor and Inspector Gary Jones said EMSA "is a public entity and they should be transacting business in that manner."
Questioned costs paid by EMSA and noted in the audit include:
The audit notes that EMSA reimbursed its employees for questionable travel expenses including "sizable tips," valet services and souvenirs.
- $4,304 on a 20-year anniversary party for three employees, including three Mont Blanc pen gifts between $385 and $410 each in June 2009.
- $4,504 on a retirement party, including $2823 on catering, $831 on party planning fees and $325 on a crystal flower vase for the retiree in June 2010.
- $35,190 for "floral services" to provide "office beautification" and "consolation gifts."
- $23,875 for "fitness services" paid to the wife of an EMSA employee to provide exercise classes to EMSA's Oklahoma City employees.
- $15,000 donated to First Tee of Oklahoma City, a youth golf charity.
- $2,187 for food vouchers provided to paramedics working at the Tulsa State Fair.
- $7.1 million in purchases made by EMSA on behalf of Paramedics Plus, including a "gambling-themed event" and "a frozen drink machine." The money was deducted from EMSA's payments to the company but auditors "question the appropriateness of this arrangement," which allows the company to "tax advantage of EMSA's tax exemption as a public entity and leads to questionable expenditures."
EMSA also paid more than $40,000 to rent an apartment in Oklahoma City's "Deep Deuce" neighborhood, instead of renting hotel rooms for a board member and employee who frequently traveled to Oklahoma City for business, the audit states. EMSA reimbursed Williamson for expenses connected to the apartment including $1,028 for a computer and $433 for a remote control.
Though EMSA's policies now require some review of travel expenses, only 35 percent of Williamson's expenses involved travel, the audit states.
The audit notes that supporting documentation or "justification for individual purchases is often not included on the CEO's expense reports."
Though Williamson receives a $600 monthly car allowance, "he was also regularly reimbursed for fuel purchases while driving an EMSA vehicle," the audit states.
Questioned costs connected to Williamson include $800 in membership fees for the American Airlines' Admirals Club, gifts costing $349 and $255 each and two $399 lifetime subscriptions to Sirius Satellite radio.
Some expenses were connected to Williamson's role as president of the American Ambulance Association, the audit states.
Williamson was president of the industry lobbying group from November 2010 to November 2012.
The World's investigation found that EMSA accepted $25,000 from Paramedics Plus to defray some of Williamson's travel for the American Ambulance Association. The Texas-based company has a five-year contract valued at more than $150 million to provide paramedics to operate EMSA's ambulances.
"That definitely sets up a perceived conflict of interest," Jones said.
The audit recommends that if the board approves such arrangements in the future, the funds go directly to the outside agency, rather than EMSA.
The audit made five recommendations related to EMSA's billing practices, which had largely been overhauled by the time the audit began.
"While our testwork revealed that some billing errors did occur, they do not appear to have been intentional," the audit states.
An investigative audit by the State Auditor and Inspector's Office makes a number of recommendations regarding possible conflicts of interest, customer service, board oversight and spending practices. Here are selected recommendations:
Conflicts of interest
- Realign expenditure expectations.
- Enhance expenditure transparency.
- Seek legal counsel regarding certain questionable expenditure practices.
- Disclose any potential financial benefits or conflicts of interest.
- Assess costs and benefits of organizational memberships.
- Properly address potential sponsorships.
- Consider bidding process for collection services.
- Improve address data system.
- Enhance patient outreach efforts.
- Enforce contractual requirements.
- Strengthen trustee attendance policies.
- Create more committees.
- Enhance financial oversight by reviewing purchases over a certain threshold.
- Adopt a policy for formal evaluation of the CEO.
Original Print Headline: Audit rips EMSA spending
- Relationship between CEO and two contractors presents appearance of a conflict of interest and should be disclosed to the board.
- No policy requires formal evaluations of the CEO or board review of purchases.
- Donations to private entities may violate the state constitution.
- CEO expenditures should be reviewed in detail and subject to approval by board chair or committee.
- "Human error" resulted in EMSA pursuing collections actions against the wrong parties.
- Agency failed to levy fines per contract when paramedics did not collect accurate address information from patients.
- 33 percent of board meetings were canceled, despite availability of videoconference equipment.
Ziva Branstetter 918-581-8306
Steve Williamson: The audit notes inadequacies in board oversight