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The Indian Health Service hospital in Rosebud.

A company chosen to potentially operate emergency departments at four Native American hospitals in the Great Plains is led by a man whose former company paid $10 million to settle allegations of submitting false claims to Medicare, Medicaid and other government programs.

John Shufeldt is the chief executive officer and chief medical officer of Tribal Emergency Medicine, aka Tribal EM, which is a Scottsdale, Ariz.-based company. Tribal EM and Central Care Inc., or CCI, of Alexandria, Va., were each awarded contracts Sept. 27 by the federal government’s Indian Health Service after a competitive bidding process.

The contracts are for the management and staffing of emergency departments at IHS hospitals in Pine Ridge and Rosebud, both in South Dakota, as well as Fort Yates, N.D., and Winnebago, Neb.

IHS spokespeople did not immediately respond to questions from the Journal about whether the agency knows about, or is concerned about, the allegations against Shufeldt’s former company.

Shufeldt founded NextCare Inc. in 1993 and grew it into a chain of dozens of urgent-care clinics spread among Arizona, Colorado, Texas, North Carolina, Ohio and Virginia.

In 2009, a former NextCare sales employee filed a lawsuit against the company on behalf of the U.S. government. The lawsuit alleged that NextCare conducted hundreds of unnecessary allergy and respiratory tests, and submitted the costs for reimbursement from government programs such as Medicare and Medicaid. The government also alleged that the company inflated billings as part of a practice known as upcoding.

One of the exhibits in the lawsuit was a 2009 email from Shufeldt, the then-CEO, exhorting company employees to administer more allergy tests and authorizing company-funded rewards such as dinner and ice cream in exchange for conducting at least four tests per day.

Shufeldt, who communicated this week with the Journal by phone and email while he was in Pine Ridge, denied any wrongdoing and said NextCare’s testing program was medically justified by the number of high-risk patients who visited the company’s clinics and by criteria from groups such as the World Allergy Organization.

“In no way were we financially motivated to perform unnecessary tests,” Shufeldt said.

Shufeldt also said he disagreed with the decision by the NextCare board of directors to pursue a settlement, and he left the company with a severance package in 2010.

Shufeldt — who has medical and law degrees and is also an author, speaker and pilot — has been involved in several entrepreneurial efforts since then, including Tribal EM. The company has one other contract, he said, to run the emergency department of the Carlos Apache Health Care Corporation for the San Carlos Apache Tribe in Arizona.

People on the Rosebud Sioux Reservation are concerned about Shufeldt’s possible involvement in their health care, said O.J. Semans, a member of the Rosebud Sioux Tribal Health Board. He accused the IHS of insufficient consultation with the tribe during the contract-awarding process. He also accused the IHS of insufficiently researching Shufeldt’s involvement in the NextCare scandal, which is easily searchable online.

“What we should do is try to get a hearing before Congress to see if we can get internet and Google put in at the IHS,” Semans said sarcastically. “Then when people apply, they can Google them like we did.”

IHS spokespeople did not respond to Journal questions about Shufeldt but did respond to questions about the new contracts with Tribal EM and CCI.

They said the contracts are structured so that each of the four hospitals mentioned in the contracts may select one or the other company to provide emergency department staffing, or comprehensive emergency department staffing and management, depending on the needs of each hospital. In other words, the contracts put the two companies in competition with each other to win business from the hospitals.

The contracts are for one base year with four optional years. The combined maximum payment allowed by the contracts is $26.8 million per year, which would add up to $134 million over five years.

The IHS has an expiring contract with AB Staffing Solutions, of Gilbert, Ariz., to run the emergency departments at Pine Ridge, Rosebud and Winnebago. That contract was awarded in 2016 amid the public emergence of myriad problems at the facilities, including chronic understaffing. The problems caused a temporary closure of the emergency room at Rosebud, sparked a pending lawsuit from the Rosebud Sioux Tribe against the federal government, and forced IHS to enter systems improvement agreements with the Centers for Medicare & Medicaid Services for the Rosebud and Pine Ridge hospitals.

Bidding documents prepared by the IHS say annual patient volumes are 14,725 at Rosebud, 22,778 at Pine Ridge, 7,775 at Fort Yates and 9,595 at Winnebago.

The IHS provides health care to 2.2 million members of federally recognized tribes across the United States, pursuant to numerous laws, treaties and court decisions from throughout the history of the U.S. government’s displacement of Native Americans.

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Enterprise Reporter

Enterprise reporter for the Rapid City Journal and author of "Calvin Coolidge in the Black Hills." Receiving encrypted news tips through Peerio with the user name seth_tupper.