Ala. ambulance service unable to secure $2M bond

First Response Ambulance Service was unable to obtain a $2 million performance bond required by the ambulance ordinance prior to commencing operations


By Bayne Hughes and Eric Fleischauer
The Decatur Daily, Ala.

DECATUR, Ala. — The city's sole ambulance service was already in violation of a new Decatur ambulance ordinance Sunday, the day it took effect.

First Response Ambulance Service remains unable to obtain a $2 million performance bond required by the ambulance ordinance that the City Council adopted Aug. 19, a company official said Thursday.

The ordinance calls for a performance bond to pay the full $2 million to the city in the event the ambulance service ceases operations in Decatur prior to the expiration of its five-year license to operate in the city. (Photo/U.S. Air Force by Senior Airman Christopher Callaway)
The ordinance calls for a performance bond to pay the full $2 million to the city in the event the ambulance service ceases operations in Decatur prior to the expiration of its five-year license to operate in the city. (Photo/U.S. Air Force by Senior Airman Christopher Callaway)

The ordinance mandates that First Response obtain the performance bond, payable to the city, "prior to commencing operations."

While the new ordinance has taken effect, the city has not begun enforcing its requirements. The city is in a transitional phase that includes organizing the new Ambulance Regulatory Board.

At a called meeting this week, the City Council appointed Dede Hayes and Mayor Tab Bowling appointed Lillie Pike to the ARB. The other three members of the board, pursuant to the ordinance, are Fire Chief Tony Grande as chairman, Police Chief Nate Allen and Morgan County Emergency Management Agency Director Eddie Hicks.

David Childers, First Response director of operations, on Thursday said the company has been unable to secure a bond that meets the ordinance's requirements. The ordinance calls for a performance bond to pay the full $2 million to the city in the event the ambulance service ceases operations in Decatur prior to the expiration of its five-year license to operate in the city.

"We have not had any favorable responses from any bond company that we've reached out to," Childers said. "We've reached out to many bonding companies and we've had zero interest."

He said the bonding companies are requiring a contract with the city, rather than an ordinance, and a bond form that specifies the procedure by which the city could cash in the bond.

Under the ordinance, the full amount of the bond would be payable to the city if First Response ceases operations in Decatur before the natural expiration of its license for any reason, including because the city revokes its license.

Childers said he has been concerned about the financial impact of the new ordinance for some time, so the company is looking to expand in other cities so Decatur isn’t his company’s only place of operation.

The company is preparing to begin operating in Phenix City; Columbus, Georgia; and possibly two more locations in the state, Childers said.

Councilman Charles Kirby said he's not surprised bonding companies and banks are unwilling to provide First Response with a bond.

“There’s not enough revenues in Decatur for the banks to consider a $2 million bond,” Kirby said. “And the city can’t prove that it would suffer that kind of damage if First Response left or shut down.”

According to the ordinance and city officials, the purpose of the bond is to cover the expense of bringing in a new ambulance service until a permanent replacement could be found.

"The bond companies are having trouble putting together how a city of this size could actually lose $2 million if a provider left the city," Childers said.

Assistant City Attorney Chip Alexander was the primary drafter of the new ordinance and has represented the city’s side in discussions with First Response officials and representatives. He said the city is trying to help the ambulance service obtain a bond.

“We met with them and gave them information on where we think they might get a bond,” Alexander said. “We offered to help them by talking to the bond people for them.”

Council President Paige Bibbee said it will be up to the Ambulance Regulatory Board to determine how long the company has to get a bond and whether to seek a reduction in the bond amount from the council.

"We actually provided avenues to help them acquire that bond, so it's possible to do. Maybe they don't want to because paying for a premium takes away from their bottom line, but what it does is ensures for our residents that we have good quality and they're not going to walk out in the middle of the night. Obviously, Decatur's had a problem with that in the past," Bibbee said Thursday.

In 2014, Decatur Emergency Medical Services Inc. closed its doors abruptly and declared bankruptcy.

"We don't want to be there again," Bibbee said.

Childers said the city connected him to a local agent, but the two have not been able to meet. He said he's working with a bond firm in Birmingham, so far without success.

"We certainly hope that we can comply. We're going to try our best to comply and make the city happy," Childers said.

Alexander said the ARB will soon schedule its initial meeting and decide then when the city will begin enforcing the new ordinance. Violations of the ordinance can result in financial penalties as high as $20,000, and potentially loss of the certificate to operate in the city.

The new EMS coordinator will be Battalion Chief Ashley England. The ordinance gives him wide-ranging oversight of the ambulance service.

Formerly the interim coordinator, England continues to track First Response’s response times and this will make it easier to begin enforcing the new ordinance, Grande said.

The ordinance requires the City Council and mayor to each appoint to the ARB board a member who "must have a background in or related to the providing of emergency services." The terms last four years.

Bibbee said Hayes is an emergency management specialist who works for the Tennessee Valley Authority as a radiological emergency planner.

Kirby said he’s OK with Hayes’ appointment but he’s against Hicks serving on the board.

“Hicks has always treated Decatur’s resources like they belong to everybody in Morgan County, too,” Kirby said.

Pike, the mayor's appointment to the ARB, served on the Emergency Medical Services Committee that the City Council officially dissolved Monday. Pike previously worked as a safety specialist and industrial hygienist at Ascend Performance Products in Decatur, but she recently took an environmental health and safety position with HudsonAlpha Institute for Biotechnology in Huntsville.

“My objection isn’t about the person, it’s about experience,” Kirby said. “(Pike) has never had any experience that tells us she knows anything about how an ambulance service should be run.”

Bowling said Pike gives the board a needed connection to Decatur industries. He said she also “served faithfully and did a good job on the EMS Committee,” so she deserves to continue her service on the ARB.

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©2019 The Decatur Daily (Decatur, Ala.)

McClatchy-Tribune News Service

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