Broker penalties and sanctions: liquidated damages, fines, and trip suspensions

How broker penalties work

A broker penalty is a consequence your contract fixes in advance for a named failure. The money side usually carries the label “liquidated damages”: a set amount per occurrence, agreed at signing because the broker’s real loss from a late ride or a missing report is hard to measure. WellTrans’s Indiana provider agreement (the October 16, 2025 revision) explains exactly that in its Exhibit A, and the provider gives up any argument that the charges are unenforceable penalties. MTM Health’s standard agreement (version 01.01.2023, a copy of which Pennsylvania’s human services department publishes) states that the provider pays these sums “as liquidated damages and not as a penalty.”

The published agreements share three features:

1. The money comes out of your pay. MTM’s agreement lets it withhold or recoup the charges from sums it owes you. WellTrans nets them against the next payment, or a later one when nothing is due yet.
2. Charges flow down. Both agreements let the broker pass along to you any damages its own client (a state agency or a health plan) charges it because of your performance.
3. Paying does not end the matter. MTM’s agreement says charging liquidated damages does not stop it from using any other remedy, and skipping a charge once does not waive it next time. WellTrans also keeps the right to take corrective action on top of the charge, up to suspension, fewer trips, or termination.

The structure starts above the broker. A Medicaid managed care plan that delegates its transportation to a broker must, under 42 CFR 438.230, sign a contract that either lets the plan revoke the delegation or spells out other remedies if the broker performs poorly. Brokers write the same kind of remedies into their provider agreements, so a miss on your van can become a charge on your statement.

What published contracts charge

Amounts vary by broker and by program. MTM Health’s Virginia handbook, for example, sends providers to their own service agreement for its liquidated damage amounts. The published schedules below show what these clauses look like in practice.

Service failures

Paperwork and compliance failures

Thresholds and exceptions matter as much as the dollar figures. WellTrans waives its lateness charges for pickups, drop-offs, and dialysis arrivals for delays you could not control, provided you warned WellTrans ahead of the scheduled time. MART skips its wait-time charges for unexpected weather, natural disasters, and similar causes outside your control, as MART alone decides.

Here is how the math can land, as an example. An Indiana fleet runs 1,000 scheduled pickups in a month, 18 of them more than 15 minutes late, plus one provider no-show. Late pickups passed 1%, so the late-pickup charge applies, up to 18 × $25 = $450, and the no-show adds $100. With 9 late pickups instead of 18, the month stays under 1% and the late-pickup charge does not apply at all.

Some of the money can come back to good performers. In Virginia, MTM Health runs a quarterly incentive for providers whose on-time rate reaches 95%, and it pays for the program out of the liquidated damages collected from the whole network.

Penalties that are not a fine

Money is often the smaller cost. The same contracts and manuals use four other levers.

Unpaid trips. MTM’s agreement withholds payment for any trip where the driver, the attendant, or the vehicle lacks MTM credentialing. If a late van costs the rider the appointment, MTM may assess its provider no-show charge or simply not pay for the trip.

Points. MTM Health’s Virginia handbook runs an infraction system. Each point stays active for a year after it is assessed:

Its most serious level, 3 points per instance, covers a driver, attendant, or vehicle never credentialed in MTM’s system, an incident or accident never reported to MTM, and a substantiated case of rider abandonment. MTM counts a drop-off at an unscheduled location as abandonment, and the same goes for skipping the assistance level the trip requires, such as a hand-to-hand handoff. A level 3 violation also brings a suspension of five days or more, starting right away. Each expired credential used on a trip counts separately at 2 points, so one trip with two expired items can add 4 points.

Lost volume. MART’s corrective process for demand-response providers measures complaints against a standard of 1% of scheduled trips. One month over it brings an emailed warning and a performance review. No improvement by the close of the second month means a 60-day corrective plan and a cut to 80% of your capacity from the third month. Still short, and capacity drops to 50% from the fourth month. Failing at 50% leads to a full review that can end in a suspension lasting between 15 and 30 days, or in termination. CareOregon’s manual also lets brokers send a provider fewer trips while it works through a corrective plan, and Modivcare tells out-of-network providers that missing credentialing requirements could cut their trips or cost them the contract.

Removal from the manifest. In Rhode Island, MTM Health wants each renewed credential document two weeks (10 business days) ahead of the old one’s expiration. If a document is still missing five days before it lapses, MTM may pull every trip tied to that company, van, or driver off the manifest as of the expiration date. A credential approved after it lapsed goes through MTM’s “Final Sanction Pending Approval” process before full reinstatement.

The failures that cost the most

Four problems show up across these schedules with the heaviest consequences.

1. Unreported incidents. A late incident report costs $1,000 for every day it is overdue under the WellTrans schedule, and the total has no cap. The same agreement wants a call to WellTrans within 3 hours when a trip produces a moving violation or someone is hurt or killed, and the written report is due inside 24 hours of every accident or incident. MTM’s Rhode Island handbook says a provider that does not report an injury or fatal accident right away will lose its contract. Train drivers to call the office first, then build the report the same shift. The incident report template and our guide to investigating an incident cover the details.
2. Credential lapses. One expired license can cost the trip payment, a daily charge, and points at once. Track expirations weeks ahead, not days. See broker credentialing.
3. Time-critical rides. Dialysis arrivals, hospital discharges, and provider no-shows each carry their own charge, and a late dialysis arrival costs $150 before any hourly add-on. Put your most reliable drivers and spare capacity there first.
4. Late turnbacks and refusals. WellTrans wants 12 hours’ warning before you hand back a trip it assigned you 36 or more hours ahead. Miss that and you pay the difference between your trip charge and the cost of the replacement, or $100 when nobody picks the trip up. Refusing a rider without telling WellTrans ahead of the pickup day also brings liquidated damages. Our trip turnback entry explains how brokers score returned trips.

Disputing a penalty

A penalty notice is a claim you can check. Work through it the same way every time.

1. Match the notice to the clause. Confirm the failure, the amount, the monthly cap, and any threshold. A late-pickup charge that applies only above 1% late cannot apply to a month at 0.8%.
2. Look for the exception. Many clauses excuse delays beyond your control when you reported them before the scheduled time. Your dispatcher’s call record to the broker is the evidence that makes the exception work.
3. Meet the window. WellTrans owes you a written notice, open to challenge, 10 or more days ahead of any charge. MART gives providers 10 days from the date of a fine letter to appeal, and the appeal must be written. Log the deadline the day the notice lands.
4. Send records. Attach the GPS pickup and drop-off timestamps, the trip log with the rider’s signature, the dispatch call log, and a signed driver statement. Explain in two or three sentences what happened and which clause applies.
5. Watch silence rules. When a clinic tells WellTrans a rider never showed for an appointment tied to a trip you billed, WellTrans asks you about it in writing. No written answer within 30 days counts as confirming the ride never took place, and you give up the right to protest. The cost comes off the next payment.
6. Escalate the way the contract says. Under WellTrans’s agreement, each company first names a senior manager to try to settle it. If they cannot, Indiana’s Family and Social Services Administration runs a binding arbitration at no charge. CareOregon’s manual lets a provider challenge a driver suspension through a written appeal.

Denied claims follow their own appeal track. In Virginia, MTM Health allows a year (365 calendar days) from the denial to file the appeal through its online claims portal. See appealing a denied claim.

The corrective action path

Before a broker suspends or drops a provider, it usually asks for a written corrective action plan. MTM’s agreement connects its performance improvement plan process with the liquidated damages schedule, and the provider agrees to work out corrective plans with MTM. WellTrans’s agreement has the provider help develop them.

CareOregon’s manual lists what a plan must contain:

• The factors behind the problem
• Who will carry out the plan
• A detailed description of what you will do to fix it
• A timeline with a deadline for resolving each issue
• Any effect the issue had on members getting to care
• How the broker will track your work to prevent a repeat

You then send written status updates until the plan is complete. A provider that is unwilling or unable to follow the plan moves to suspension and possibly termination. Serious violations can skip the plan entirely. CareOregon’s manual also lets a broker suspend or terminate without substantiated proof, based on how likely it is that the incident happened, and with or without notice depending on how severe it was and whether member safety is at risk.

A weekly routine that keeps deductions off your statement

Most penalties trace back to a handful of habits. A 30-minute weekly review catches them early:

• Credentials: list every driver, attendant, and vehicle document expiring in the next three weeks and chase the renewals.
• Scorecard: compare your own numbers with the broker’s targets. In Virginia, MTM Health targets on-time performance over 95%, provider no-shows below 0.25%, GPS compliance above 90.01%, and trip re-routes below 0.5%. Our on-time performance guide shows how to measure the first one.
• Deductions: tie every deduction on the broker’s payment statement to a notice, and dispute the ones that do not match inside the window.
• Calls: check that dispatch phoned the broker before every late pickup, not after.
• Incidents: confirm every incident from the week has a written report on file with the broker.

When a complaint triggers the penalty, the response itself matters. Our guide to broker complaints covers the evidence and the reply.

Catching problems before a broker does

In HealthRide, licenses, insurance, registrations, and certifications for drivers and vans live in one registry with their expiration dates. Reminders go out ahead of time, and an expired item is flagged when someone tries to assign it. The live map shows every vehicle with ETAs and late warnings, which gives dispatch time to call the broker before a pickup slips. Trip records carry GPS-verified miles, timestamps, signatures, and recorded wait times on no-shows for your dispute file. See how fleet and credentials work.