LAFD Billing Firm Investigated for Patient Data Leak

Nov. 29--Federal officials have opened a criminal investigation to determine whether confidential information was obtained illegally on hundreds of patients who rode in Los Angeles Fire Department ambulances, a high-level city lawyer said Wednesday.

The Fire Department has begun informing past patients that personal records, including Social Security numbers and birth dates, were accessed "deliberately and maliciously" by an employee of the company that provides ambulance billing services to the city.

Twenty-six notification letters have gone out so far and more than 900 people may have been victimized in total, said William Carter, chief deputy to City Atty. Carmen Trutanich. Carter said the Internal Revenue Service is one of the agencies conducting the investigation.

The city's ambulance billing duties are handled by Advanced Data Processing Inc., which received nearly $6 million from the Fire Department between June 2011 and Oct. 30, according to City Controller Wendy Greuel. Federal law protects private medical information, Carter said.

In its notification letter, a copy of which was obtained by The Times, the Fire Department said patient information was used to file fraudulent tax returns as part of a scheme to illegally obtain tax refunds. The department advised the potential victims to call the IRS to determine whether false returns had been filed in their names, and to take steps to protect their credit rating.

Lisa MacKenzie, a spokeswoman for Advanced Data Processing and its subsidiary, Intermedix Corp., said she could not discuss the matter Wednesday. A spokesman for Mayor Antonio Villaraigosa said only that Trutanich's office and the Fire Department were working closely with the billing company to investigate the incident.

The confidentiality breach is the latest embarrassment for a department struggling to address dispatching delays and problems with inaccurate 911 response time data. Over the last several months, the agency has found widespread problems with its performance data management, including flaws in a 30-year-old computer system and a lack of adequate training for firefighters working on response time analysis.

Fire Department officials had no comment on the investigation.

The new problems involving patient medical information could increase resistance to the city's efforts to privatize other operations, including management of the Los Angeles Zoo and the Los Angeles Convention Center. The council voted two years ago to take ambulance billing duties away from city employees, despite warnings from union officials that such a move would jeopardize patient information.

"I thought it was wrong to try to privatize ambulance billing for this reason ... and here it's come to pass," said Pat McOsker, president of the city firefighters union. "It's shameful, absolutely shameful, that some city contractor, a private company making a profit off this, has people getting access to people's private information."

City Administrative Officer Miguel Santana, the city's top budget official, defended the decision to go with a private billing company. The agreement backed by Villaraigosa and the council, he said, ensured that the contractor is legally liable for any violation of the law that protects patient information.

"Our concern had been that mistakes could occur, and if the city did this work, the city would inherit 100% of the liability," he said.

In 2010, the year the ambulance billing contract was awarded, Advanced Data Processing paid nearly $71,000 to Englander, Knabe and Allen, the City Hall lobbying firm headed by lobbyist Harvey Englander and former Villaraigosa deputy chief of staff Marcus Allen, among others. Budget officials backed the privatization proposal, saying it would allow the Fire Department to focus on its core mission while upgrading its ambulance billing system.

Villaraigosa also weighed in, telling skeptical council members that the contract would help stabilize the city's finances during a budget crisis, make the Fire Department more efficient and, when combined with a second contract, avert $15 million in cuts. Switching to a private company also allowed the department to reduce the staff of its billing operation.

Under its six-year agreement, the contractor receives at least 5% on the net revenue collected from patients transported in LAFD ambulances, according to city records.

david.zahniser@latimes.com

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