Gallego gave cash to his employer's corporate political fund as Citizens United era dawned

U.S. Senate hopeful Ruben Gallego once headed public affairs for a controversial private ambulance company that used the Citizens United court ruling to directly influence local political races and whose corporate parent was under investigation for Medicare fraud.

Gallego’s time with Southwest Ambulance began just before he was first elected to the Arizona Legislature and involved him touting the company’s community partnerships. His tenure ended when the struggling company changed hands and laid him off.

Months after Gallego, D-Ariz., was let go, the new private owners filed for bankruptcy and settled a federal probe of excessive Medicare charges for $2.8 million.

During a stint that lasted at least parts of two years, Gallego helped fund a company-aligned political action committee when Southwest Ambulance spent money to advocate for candidates in Scottsdale and Gilbert elections. His contributions to the PAC continued into 2012, though Gallego’s Senate campaign was unsure whether he was still with the company at that time and financial records suggest he was not.

It is a practice that stands in contrast to his many complaints about Citizens United, the U.S. Supreme Court ruling that allowed corporate money in political campaigns just months before Southwest Ambulance became active in Scottsdale elections.

Gallego’s time with Southwest Ambulance overlapped with the beginning of his political rise and as Southwest Ambulance and its corporate parent, Rural/Metro, faced contractual pressures and service concerns.

Tate Mitchell, a spokesman for the National Republican Senatorial Committee, tied Gallego’s past with Southwest Ambulance to a lower-cost home loan he received last year from the Veterans Administration and to his efforts related to a bank for immigrants that ultimately failed.

“Ruben Gallego signed potentially fraudulent loan documents, worked for a bank that allegedly defrauded immigrants, and worked for a company that paid millions to settle Medicare fraud allegations,” he said. “Wherever Gallego goes, fraud seems to follow.”

When asked about his tenure at Southwest Ambulance, Gallego’s campaign maintained he is the Arizona candidate for U.S. Senate most interested in campaign finance reforms.

“Unlike the people pushing this flimsy political attack, Ruben Gallego has been clear about wanting to get money out of politics — and he has the record in Congress to back it up,” said Hannah Goss, a spokesperson for the campaign. “Over 100,000 hardworking folks have chipped in to support his campaign because they know he’s laser-focused on representing the people of Arizona — not wealthy donors.”

End Citizens United, a left-leaning group that wants “big money out of politics,” endorsed Gallego in May. At the time, the organization called him “a leader in the fight to limit the influence of special interests and make Washington accountable to the people.”

On Wednesday, Bawadden Sayed, a spokesperson for the group, reiterated support for Gallego without addressing his prior financial support for the kind of corporate influence campaigns his organization opposes.

“Throughout his time in Congress, Representative Gallego has been a key ally in our efforts to get Big Money out of politics and make Washington accountable to the people,” Sayed said in a statement. “He has a proven record of championing democracy reforms to undo the damage of the disastrous Citizens United decision. We know he’ll continue to uphold those values and make it a priority in the Senate.”

Southwest Ambulance stint begins after Phoenix City Council work

Southwest Ambulance was founded in Phoenix in 1982 and was acquired by Rural/Metro in 1997. The merged company provided ambulance and fire protection services in 2010 to an estimated 1 million customers across the country, according to corporate regulatory records from that time.

Before working for Southwest Ambulance, Gallego was the chief of staff for Phoenix City Council member Michael Nowakowski from January 2008 until January 2010.

It’s unclear exactly when Gallego began working for Southwest Ambulance, but he identified the company as his employer in August 2010, when he appeared in an Arizona Republic roster of candidates running for the state’s House of Representatives.

Weeks before he won his legislative race that November, campaign finance records show Gallego began contributing to a PAC controlled by Southwest Ambulance.

Gallego contributed a total of $1,000 to the Southwest Ambulance EMS Employees PAC in $25 increments made between October 2010 and April 2012, records show.

His work for Southwest Ambulance included “getting the company out in the community,” Goss said. Among the events he helped coordinate were Southwest Ambulance’s partnership with the city of Mesa for the Fourth of July, Glendale’s observation of Cesar Chavez Day and CPR classes.

In a pair of tweets from 2011, Gallego noted the company’s work outside its primary focus.

He touted Southwest Ambulance as “a great community partner” when commenting on a community event in Mesa, and he invited people to watch “as we collect candy for our troops!”

Ambulance company showed big interest in Scottsdale elections

About the time Gallego began working there, Southwest Ambulance showed eye-opening interest in Scottsdale politics after another contractual disappointment.

In February 2010, the city extended its existing ambulance contract with Professional Medical Transport by two years. Southwest Ambulance had wanted a contract worth an estimated $6 million annually to instead be put up for bids.

City Council records show then-Fire Chief William McDonald described PMT’s relations with Scottsdale as “excellent.” The records also show “no one ... testified that they were unhappy with PMT’s service.”

After the council stuck with PMT, Southwest Ambulance complained the process lacked transparency and pressed the city to reopen the contract for bid. Only one of the city’s seven council members was willing to do so.

It was another disappointment in Scottsdale, where Rural/Metro was based.

Five years earlier, the city created its own fire department, ending fire services by Rural/Metro that began in 1951. Voters approved the change in 2004. Rural/Metro didn’t oppose it but also made plain in a series of ads ahead of the election that it considered its services worth keeping.

By 2010, after the Supreme Court handed down a landmark ruling that allowed corporations and labor unions to directly spend unlimited sums on elections, the company opted for a more assertive approach.

After Southwest Ambulance missed out on the ambulance contract with Scottsdale, and weeks before the city’s elections, Southwest Ambulance’s PAC started spending to advocate for the election of three City Council candidates.

According to accounts of that time, the company poured $205,000 into championing three candidates: incumbent council member Wayne Ecton and challengers Linda Milhaven and Dennis Robbins. It was, according to The Arizona Republic, more than all seven candidates running that year spent combined.

The company acknowledged the spending at the time without really hinting at why.

“Southwest Ambulance has an extensive history of community involvement. Participation in independent expenditures is just another way for us to be involved in the community,” it said in a statement.

Southwest Ambulance and Rural/Metro have changed hands more than once since Gallego left, including by a company known as American Medical Response. Its parent, Global Medical Response, said it could not comment on Gallego’s work or the company’s political efforts from that era: “American Medical Response (AMR) acquired Southwest Ambulance in October of 2015. AMR has no knowledge of Southwest Ambulance’s prior political activities or Ruben’s role for the Rural/Metro companies."

Back in 2010, two of the candidates Southwest Ambulance backed — Milhaven and Robbins — won at the same time Gallego first won election to the Legislature.

He remained with Southwest Ambulance when he became a state lawmaker in 2011.

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Money spent in Gilbert races

The company again showed notable financial interest in municipal politics in the Valley.

Less than five months after its foray into Scottsdale politics, Southwest Ambulance spent money in Gilbert Town Council races as that community weighed extending its contract with the company.

In March 2011, the company’s PAC supported then-Vice Mayor Les Presmyk and councilmember Dave Crozier. The Republic also reported the company directly gave $410 to two other incumbent council members, Linda Abbott and Ben Cooper.

Jenn Daniels, a council member at the time, asked to delay taking action on the contract until after the May election.

“There have been a number of independent expenditures as well as donations to individuals who are in the middle of a campaign,” Daniels said then. “I feel like that is somewhat of a conflict of interest. It brings me some concern.”

The town’s attorney said she saw no conflict of interest. The council voted unanimously to extend the contract for several months while other area communities negotiated a regional contract with Southwest Ambulance.

A year later, the town adopted an ethics policy that discouraged council members from discussing or voting on an issue where there is a “personal interest,” even if there isn’t a legal conflict of interest.

Controversy, corporate upheaval

About the time Southwest Ambulance wanted to extend its contract with Gilbert, the corporate parent, Rural/Metro, was up for sale. Rural/Metro provided services to about 700 cities in 21 states but still had serious problems.

In June 2011, the private equity firm Warburg Pincus LLC purchased the largest stake in the company. A New York Times investigation later noted that under Warburg, “Rural/Metro’s response times slowed in certain towns and it instituted more aggressive billing practices across the board.”

In Arizona, the company scrapped a program to give senior staffers raises and cut pensions.

Warburg told the Times the company made operational changes, but the “challenges Rural/Metro faced were too difficult to overcome.”

One of those challenges involved a federal investigation probing its billing practices in Arizona and elsewhere for a period that included when Gallego worked in community affairs for Southwest Ambulance. It coincided with a period when Rural/Metro’s expenses consistently outstripped its revenues.

By August 2013, after Gallego no longer worked with Southwest Ambulance, Rural/Metro filed for bankruptcy protection as it searched for new financial backing.

In December of that year, the company took dramatic steps to shake its problems.

First, a bankruptcy judge approved a plan to manage the company’s debts, according to an account at the time by the Wall Street Journal.

Days later, the company signed a settlement agreement with the federal government stemming from alleged overcharges to Medicare, the largest source of income to the company, according to financial records filed with the government.

The billing disputes occurred while Gallego worked with Southwest Ambulance, but his campaign maintained that his duties were not in areas such as business strategy or operations.

The federal investigation found Rural/Metro and its various corporate holdings — including Southwest Ambulance — incorrectly coded its hospital-to-hospital ambulance services as pricier emergency rides for five years, from 2007 to 2011.

“The United States alleged that as a result of these false and ‘upcoded’ claims, Medicare paid substantially more for the ambulance services than was warranted,” the government said in a statement at the time.

Under the agreement, the company didn’t acknowledge guilt for the incorrect billings, but it did agree to pay $2.8 million to end the government’s investigation.

Rural/Metro said at the time it settled to matter to “avoid expensive and time-consuming litigation and to maintain focus” on its patients.

After battling bankruptcy and sagging revenues, Rural/Metro was bought in 2015 by Colorado rival American Medical Response. Three years later, that company merged with a Texas air ambulance service and was rebranded as Global Medical Response.

Long before that, Gallego had been laid off, but his exact departure date isn’t clear in records from that time.

Gallego reported Southwest Ambulance as his sole employer in 2010 and in 2011 in personal financial records state lawmakers file annually with the secretary of state.

In 2012, he identified Strategies 360, a political consulting firm, as his sole employer.

But Gallego also made eight $25 contributions to Southwest Ambulance’s employee PAC in 2012, between January and April. His campaign could not explain the timing of those contributions and his employment.

At the time of his final contribution, Gallego was identified in campaign finance records as an employee of Southwest Ambulance.

Since then, Gallego has spoken disapprovingly of corporate money in politics.

In 2015, for example, he wrote an op-ed in The Republic lamenting the Citizens United ruling.

“Big-money campaign donors and wealthy special interests have amassed unprecedented political power," he wrote. "They have shown absolutely no hesitation in exercising that power to benefit their narrow objectives. It’s a corrosive influence on our government that is only growing.”

Gallego marked the 10th anniversary of the Citizens United ruling with a tweet condemning it.

Citizens United “continues to uplift dark money special interests & drown out voices of hard working Americans,” Gallego wrote. Democrats “won’t stop working until we’ve enacted campaign finance reform & ensure everyone has an equal opportunity to participate in our democracy.”

Reach the reporter Ronald J. Hansen at ronald.hansen@arizonarepublic.com or 602-444-4493. Follow him on X, formerly Twitter: @ronaldjhansen.

This article originally appeared on Arizona Republic: Gallego gave to AZ corporate political fund as Citizens United began