With records reflecting shaky finances and spotty performance, a private ambulance firm serving Westminster seems an unlikely player in a high-stakes battle to provide new emergency services in Los Angeles.
But Shoreline Ambulance Corp. of Huntington Beach has emerged as just that — a takeover target that could play a role in trying to provide paramedic services in the city, which now are exclusively provided byf the Los Angeles Fire Department.
The entity about to assume ownership of Shoreline Ambulance Corp. is Los Angeles-based Shoreline Ambulance Co. LLC, a small, 1-year-old firm.
Interviews and documents reveal Los Angeles businessmen associated with the takeover bid have links to an Orthodox Jewish charity called Hatzolah, which means “rescue.” For more than a decade, Hatzolah has assisted Los Angeles city firefighters provide paramedic services to the Orthodox Jewish community.
In recent months, officials in both Orange and Los Angeles counties have come to suspect that Hatzolah might use Shoreline Corp. to try to break the fire department’s exclusive hold on paramedic services. Officials of both Shoreline and Hatzolah deny any collaborative plans.
Altering the Los Angeles paramedic system has potential safety and financial implications, as ambulance services bring in some $75 million annually for departmental operations, say Los Angeles firefighter union leaders.
Specific safety issues regarding Shoreline LLC surfaced in May when it was fined heavily by Los Angeles officials for violations that led to the arrest of a two-medic Shoreline LLC team and the impounding of one of its ambulances.
That incident and Shoreline Corp.’s murky ownership situation add to a growing list of concerns among Orange County officials regarding the company. The issues include federal and state tax liens that have been filed against the company, questions regarding whether it has made proper disclosures and concerns about how its ambulances are equipped.
In recent months, the Orange County Health Care Agency has been trying to deal with an influx of ambulance companies from Los Angeles with suspect operations involving shadowy principals hiding criminal histories.
The Shoreline Corp. buyout plan became known as the company was competing for a new three-year, $2.5-million contract to provide ambulances in Westminster, which has a significant medically indigent population. The Orange County Fire Authority provides paramedic service in Westminster and since 2007 has used Shoreline’s ambulances when patients needed transportation to hospitals.
After a review, OCFA and Westminster police officials recommended to the City Council last March that the new contract be awarded to Care Ambulance Service of Fullerton, which received a much higher rating and was about $100,000 cheaper.
At one point during the review, records indicate Shoreline Corp. was to be disqualified because of inadequate disclosures. But records show the city made accommodations to allow it to stay in the running.
Shoreline Corp.’s issues cited in the report include: Not having the required two new ambulances for the contract; failing — even during its earlier contract — to have a required radio system and misrepresenting its ability to offer a computerized, patient-monitoring system. Issues regarding past response performance also were raised.
Nonetheless, the Westminster City Council on March 28 awarded the contract to Shoreline.
OCFA and police officials also became concerned about the buyout plan they say wasn’t disclosed during the review.
In the ensuing months, Shoreline Corp.’s inability to comply with the contract requirements to buy ambulances and radios increased concerns and ultimately led to the city extending finalization of the contract to Aug. 14.
Then OCFA and police officials discovered Shoreline Corp. had numerous tax liens issued by the state Employment Development Department and by the Internal Revenue Service, which filed one for $108,000.
On Aug. 13, OCFA Battalion Chief Scott Brown, who oversees his agency’s paramedic service, alerted Westminster officials to the tax liens in an email.
The liens “would put into serious question the required detail provided by Shoreline Corp. during” the review process, Brown wrote. Additionally, he wrote, the delays in the contract award “are a direct result of [company’s] lack of readiness to meet and fulfill the contract.”
Westminster Mayor Margie L. Rice did not respond to interview requests.
Shoreline Corp. founder Giovanni Chiarella said his firm won the contract because it was local rather than foreign-owned, with a strong community service record. Care Ambulance was purchased in early 2011 by a Danish conglomerate.
Chiarella blamed a faulty review process for delays in buying the required equipment purchases, noting all have been made. He acknowledged the liens, saying he was paying them off.
As Shoreline Corp. was addressing its issues in Orange County, Shoreline LLC came under fire in Los Angeles. Shoreline LLC’s purchase of Shoreline Corp. is slated to be completed by the end of the year, Chiarella said.
On March 22, records show an Orange County ambulance licensing official conducted a surprise visit at Shoreline Corp.’s Huntington Beach facility, noting possible irregularities in Los Angeles. (On Feb. 9, Shoreline LLC was approved to operate an ambulance in Los Angeles.)
On March 23, a Los Angeles investigator observed a Shoreline LLC ambulance at a Los Angeles hospital without the required plaque indicating inspection. The driver and attendant also didn’t have the required documentation. This led to the medics’ arrest, citations and ambulance seizure, a report says.
Ultimately, city officials determined that Shoreline LLC ambulances at least 12 times from Feb. 17 through March operated in violation of city ordinances in Los Angeles, even after the ambulance impound incident.
In May, Los Angeles suspended Shoreline LLC’s permit to operate an ambulance there until October, fining the firm a near-record $33,750, records show.
Chiarella says no ambulance from either Shoreline firm is now operating in Los Angeles. He claimed the questioned ambulance service was appropriate.
Asked about the liens and Los Angeles fine, Michael Noone of Orange County’s ambulance licensing office wrote that his agency would examine such issues for any licensed operator.
In a May 10 report about the violations, Los Angeles officials wrote there was evidence indicating Shoreline Corp. and Shoreline LLC “were being operated as one company.” Even the ambulances were painted to look identical.
This was “in contrast to assertions” by Shoreline LLC’s chairman Samuel Hauptman that they were separate companies, the report said.
This prompted more concerns among Orange County officials.
Hauptman identifies himself as the sole owner of Shoreline LLC but adds he has investors he wouldn’t disclose. And until early last year, Hauptman was the operations director of Hatzolah.
Interviews show Hatzolah used connections from Los Angeles to Sacramento to gradually obtain approvals to respond to emergencies in their communities. From a few volunteers about 12 years ago, it grew to a virtual ambulance company that didn’t charge fees with three ambulances, six “quick response” private vehicles and dozens of volunteer medics.
But early last year, Los Angeles officials greatly constrained its operations as a part of an upgrading of the region’s emergency response systems.
With Hauptman as part of the group seeking to purchase Shoreline Corp., officials in Orange County started probing to find out what else might be occurring.
More eyebrows went up when it was learned Shoreline Corp. was receiving financial assistance from one of the Los Angeles Orthodox Jewish community’s biggest philanthropists and supporters of Hatzolah — Shlomo Y. Rechnitz, who owns long-term care operations along with his twin brother, Yisroel Z. “Steve” Rechnitz. Both are known as strong supporters of Hatzolah.
California secretary of state office records for March 16 show that Shoreline Corp. received financial backing from Schlomo Rechnitz. Chiarella called this “a credit line.” Rechnitz didn’t respond to interview requests.
Because of these connections, records show officials in Orange County probed more, and the trail eventually led back to Los Angeles.
Under California law, a fire lose its exclusive right to provide paramedics if another entity is allowed to respond to 911 emergency calls, officials say.
After cooperating for years with the charity, leaders of the 3,300-member United Firefighters of Los Angeles City have become alarmed about Hatzolah trying to break the department’s exclusive rights.
“I am disappointed in the Hatzolah leadership,” said Patrick McOsker, a firefighter and paramedic who is president of the United Firefighters. “They have been deceptive.”
He even fears a breakup of the current paramedic regime could “put public safety in jeopardy.”
McOsker notes the $75 million brought in annually by ambulance services now is expected to double under the new national health plan, providing much-needed funds to bolster already strained operations.
“A loss of paramedic services would be a huge financial hit to the city,” said McOsker.
In an interview, Zvika Brenner, Hatzolah’s longtime board chairman until recently, contended his group’s operations effectively had “broken” the fire department’s exclusivity.
McOsker doubts the group has.
Some Hatzolah supporters advocate joining with an ambulance company and suing, Brenner said, thereby opening the door for his agency and other firms.
“They would love to jump in,” said Brenner, but he is against such a contentious course, hoping to resolve issues “politically.”
Brenner acknowledged “it is very easy to connect the supposed dots” between Shoreline and Hatzolah, but he insisted there were no plans for combined efforts. Chiarella and Hauptman concurred.
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