CCEMS had previously provided emergency medical services in portions of Harris County—including Cypress, Tomball, Spring, The Woodlands and Humble—until September 2021, when ESD 11 launched its own EMS provider, ESD 11 Mobile Healthcare.
The settlement agreement, signed by ESD 11 commissioners at an April 29 meeting, is coming roughly five months after CCEMS filed for bankruptcy in an effort to reorganize its debt.
According to court documents, CCEMS—including some of its current and former officers and directors, its insurance company and its billing company—will pay ESD 11 roughly $413,000 in cash, up to $380,000 in Federal Emergency Management Agency monies and up to $2.5 million resulting from the sale of CCEMS’ bankruptcy estate. The sale of CCEMS' assets is stipulated in the settlement agreement.
Brian Trachtenberg, ESD 11 special litigation counsel, said the settlement was a win for the district.
“The settlement is a fantastic result for the district and their taxpayers with a value in the millions, netting immediate cash and a promise of more money later as CCEMS liquidates its assets,” Trachtenberg said in an emailed statement.
CCEMS officials declined to provide a comment on the agreement.
The settlement is coming following an initial lawsuit filed by CCEMS against the district in December 2020 that sought to recover roughly $2.5 million in payments withheld by the district earlier that year.
ESD 11 officials said they initially withheld payments because of documents that were allegedly withheld pertaining to an investigation into CCEMS that alleged the nonprofit misused taxpayer funds by using its on-site mechanic to conduct repairs on employees’ personal vehicles.
ESD 11 commissioners voted later that year to withhold 30% of CCEMS’ invoices due to allegations of unpaid employee insurance claims. In January 2021, the district filed a counter lawsuit against CCEMS claiming the entity stole up to $20 million in taxpayer funds, in part, through the alleged vehicle repairs.
Per the settlement agreement, CCEMS is waiving its claims to recover the $2.5 million withheld by the district.
According to Trachtenberg, the district will receive up to $2.5 million of the funds taken in from the sale of CCEMS’ assets, though he said the actual amount of money the district will receive remains undetermined.
“As bankruptcy happens, you’re not likely to get 100 cents on the dollar,” he said at the April 29 meeting. “It remains to be seen what you will get.”
Moving forward, Trachtenberg said ESD 11 will remain an active participant in the bankruptcy case as CCEMS disposes of its assets.
“The district will take as much of a role in those proceedings as necessary to maximize the taxpayers’ $2.5 million claim against the assets,” he said.
