An out-of-state company that was previously awarded a multi-million contract by the State of Maine to provide transportation to MaineCare patients has now filed for voluntary Chapter 11 bankruptcy.
Although the company’s statewide contract is currently on hold amidst a legal battle over the legitimacy of the state’s proposal evaluation process, ModivCare has continued to provide medical transport services to patients in eight Maine counties.
As legal challenges continue to wind their way through the court system, contracts were drawn up allowing ModivCare, as well as Maine-based organizations Penquis and Waldo Community Action Partners, to keep operating non-emergency medical transportation services in their respective areas.
Reports suggest that despite the bankruptcy filing, services provided by ModivCare are not expected to be interrupted or changed.
According to a July article from the Portland Press Herald, some Mainers who rely on ModivCare to get to their medical appointments have previously reported struggling to communicate effectively with the company’s out-of-state customer service when there are issues with obtaining a ride as planned.
Despite the concerns that have been raised, the state has said that ModivCare is on time for 91 percent of appointments and has met all performance metrics.
While Penquis and Waldo Community Action Partners are based within the State of Maine, ModivCare is headquartered in Denver, Colorado and is the largest non-emergency medical transportation broker in the country.
The State of Maine decided in late 2023 to award contracts for MaineCare patients’ non-emergency medical transportation throughout the entire state to the Colorado-based company, creating a situation that would lead to a significant loss of revenue for both Penquis and Waldo Community Action Partners which currently serve patients in select areas.
The two nonprofits together appealed this decision, but on April 25, 2024, the Maine Bureau of General Services (BGS) ruled against them and denied their appeal.
With no administration options remaining, Penquis filed a legal challenge suggesting that they were unfairly harmed by the state’s proposal evaluation process.
According to Penquis, Department of Health and Human Services (DHHS) scorers admitted being unable to explain why points were deducted from their scores, frequently copied and pasted evaluations across regions, gave disparate ratings to identical question responses, and failed to review key parts of the proposals.
Typically, a Request for Proposals (RFP) will outline a transparent process for evaluating bids, complete with a predetermined scoring system that is used to assess each bid across four or five dimensions, such as cost, quality, or prior history. Whichever bidder earns that most points in total at the end of this process is then awarded the contract.
In this case, however, Penquis alleges that the process was convoluted and inconsistent.
Penquis suggests in their court filing that the state’s entire evaluation process was marred by “arbitrary and capricious” decisions—including through inconsistent scoring, a failure to consider local performance, and preferential treatment toward ModivCare.
In May, the Superior Court ruled against Penquis, upholding the validity of the state’s contract with ModivCare.
Penquis has since appealed this decision to the Maine Supreme Court, further extending the legal battle over the state’s MaineCare transportation contract. As a result of this, the state has extended the existing contract agreements for another year.
Several months ago, it appeared that ModivCare was in financial trouble.
Value Investing reported that ModivCare had a 57.5 percent chance of filing for bankruptcy and had received a notification from Nasdaq that it may be de-listed from the New York Stock Exchange.
According to documents that ModivCare filed on May 8 with the Securities and Exchange Commission (SEC), the company was facing the possibility of being delisted from the world’s biggest public investment market after its value had remained below the required minimum for 30 consecutive days.
On Wednesday, ModivCare filed for voluntary Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas.
According to Business Wire, “all of ModivCare’s service lines will continue to operate in the ordinary course,” and there is no expectation at this time that care will be interrupted or changed as a result of their bankruptcy filing.”
“ModivCare intends to close this transaction quickly by exiting the restructuring process early in the fourth quarter of 2025,” Business Wire reported.
