Chelsea contract dispute (1995–1998)
In 1995, as Cataldo's long-standing Chelsea contract approached expiration, the city—under state receivership since 1991 due to a reported $9.5 million budget deficit—reviewed its costs for emergency medical services. Officials found that other municipalities were paying substantially less than the $90,000 per year then paid to Cataldo and, after unsuccessful attempts to negotiate a lower rate, chose to solicit competitive bids. [35]
The city's invitation for bids specified a requirement for one basic life support (BLS) ambulance, garaged in Chelsea and staffed with two EMT-Basics 24 hours a day, at zero cost to the municipality. Although the bid document referenced the Massachusetts Uniform Procurement Act (G.L. c. 30B), ambulance contracts are expressly exempt from the statute. [36] Two companies responded: Cataldo, which met the stated specifications exactly, and CareLine Ambulance Service of Santa Ana, California, which proposed providing an advanced life support (ALS) ambulance with two paramedics at the same zero cost.
Cataldo's cover letter acknowledged the exemption, stating: “As you know, ambulance services are exempt from the Procurement Act, therefore, due to our standing and investment in the community, and in order to maintain continuity, we are requesting the opportunity of last refusal.” [36] On June 29, 1995, the city awarded the contract to CareLine. That same month, CareLine announced plans to merge with Laidlaw's MedTrans unit, with shareholder approval later that year. [37] [38] CareLine never began service in Chelsea during the acquisition and transition period, and Cataldo continued operating under its prior arrangement.
Cataldo filed suit on July 27, 1995, arguing that the city's references to c. 30B created a binding obligation to follow its requirements, and that CareLine's bid should have been deemed “non-responsive” for deviating from the stated specifications. A Superior Court judge granted summary judgment for Chelsea and CareLine, holding that Cataldo could not reasonably rely on the city's references to the statute given its own acknowledgement of the exemption.
In 1997, the Massachusetts Appeals Court reversed in part, ruling in Cataldo's favor against the city. The court declared CareLine's bid “null and void” and awarded Cataldo damages for its bid-preparation costs, but noted that ambulance contracts are exempt from c. 30B and that the city retained authority to award services on a non-competitive basis. [36]
On further appellate review, the Massachusetts Supreme Judicial Court in 1998 affirmed the original Superior Court ruling for the city. The SJC concluded that when both bids met minimum criteria at zero cost, Chelsea could lawfully award the contract to a bidder offering a higher service level; that Cataldo could not claim reasonable reliance on statutory procedures it acknowledged as inapplicable; and that municipal discretion applies when statutory procurement rules do not. [35]
Following the Appeals Court's decision and given that CareLine never implemented service, Chelsea did not re-bid the contract. Cataldo has continued to provide ambulance service to the city. The case is cited as a precedent in Massachusetts municipal procurement law and is often referenced in later disputes involving bid specifications, statutory exemptions, and municipal discretion in awarding emergency services contracts. [35]
Subsequent regulatory issues
In February 2009 the Massachusetts Attorney General entered an assurance of discontinuance with Cataldo over balance‑billing of auto‑crash patients. Cataldo refunded affected patients, paid US $100,000 and revised its billing protocols. [39]
A June 2016 audit by the Office of the State Auditor found Cataldo lacked Medical Necessity Forms for wheelchair‑van trips billed to MassHealth, putting up to US $942,000 in payments at risk. [40]
Later in 2016 the Attorney General sued Cataldo for allegedly up‑coding BLS transports as ALS, seeking roughly US $600,000; the suit remains in discovery. [41]
In June 2019 the Massachusetts Commission Against Discrimination ordered Cataldo to reinstate an EMT fired while on pregnancy‑related bed‑rest and pay back wages, interest and punitive damages; the order was affirmed in 2023. [42]
The most recent action came in September 2021, when HHS‑OIG fined Cataldo US $704,706 for billing Medicare Part B for transports already covered under skilled‑nursing‑facility consolidated billing and placed the firm under a three‑year compliance plan. [43]
