The Cheapest Trip Is Rarely the Lowest Cost

By: Dan Reid, President & Managing Member, Grove Transit

Why Montgomery v. Caribe Transport should change how brokers, and the payers behind them, pay NEMT providers

For as long as non-emergency medical transportation trips have been brokered, the winning number in most procurements has been the same: cost per trip. Brokers award trips to the lowest cost provider; paying sources reward brokers who keep per-trip costs down. It’s a tidy system with a hidden flaw: the price on the invoice is not the whole cost. To be clear, I’m not saying the problem is all about low prices. Clearly, an efficient provider can be both reasonably priced and provide excellent service, and an expensive provider can still be dangerous. The problem arises when algorithms use trip cost as the primary factor in how trips are allocated to NEMT providers, even though trip cost alone tells you nothing about whether the ride will be safe.

A recent decision from the United States Supreme Court, an ongoing federal fraud discussion, and a growing body of health-economics research now make the same point from three different directions: the industry needs to stop asking what a trip costs and start asking what a provider costs. 

On May 14, 2026, the Supreme Court may have opened a new path for the plaintiffs’ bar in the unanimous Montgomery v. Caribe Transport II, LLC decision. This case involved freight, not NEMT, transportation: Shawn Montgomery was catastrophically injured when his vehicle was struck by a truck operated by a motor carrier that broker C.H. Robinson had hired to move a load. Montgomery sued the broker for negligent selection. Freight brokers had long answered such claims with federal preemption under the Federal Aviation Administration Authorization Act, and courts, including the Seventh Circuit in this very case, often agreed, dismissing suits before anyone examined how the broker actually chose its carriers. The Supreme Court, unanimously, took that defense away. Writing for the Court, Justice Barrett held that negligent-selection claims fall within the FAAAA’s safety exception, which preserves “the safety regulatory authority of a State with respect to motor vehicles.” Requiring a broker to use reasonable care in choosing who drives, the Court reasoned, plainly concerns motor vehicle safety.¹

Let’s be precise about what this means for NEMT transportation, because we could easily overstate the impact, and the overstatement obscures the real danger. Montgomery did not take away any existing protections for NEMT brokers since FAAAA preemption was never the shield in NEMT that it was in freight. What Montgomery delivers is arguably more consequential: a unanimous Supreme Court declaring that how a broker selects transportation providers is jury material, governed by ordinary negligence standards. That is a newly well-lit path for plaintiffs’ attorneys, and the plaintiffs’ bar reads Supreme Court opinions for direction, not just doctrine. Broker-liability theories may now attract attention, creativity, and capital across every brokered transportation market. NEMT, whose passengers are elderly, disabled, and medically fragile, presents the most sympathetic plaintiffs imaginable. NEMT brokers did not lose any protection under Montgomery, but they now have a major new concern they must consider.

Here is the detail that should command the industry’s attention: the carrier in Montgomery was federally compliant. It held operating authority. It carried the required insurance. It checked every box a minimum-requirements screen would check, and it was still, allegedly, an unsafe carrier. The Supreme Court did not decide whether hiring it was negligent; it gave that right to a jury. Justice Kavanaugh’s concurrence sketched the terrain: federal law imposes no meaningful safety standards on how brokers select carriers, and brokers who act reasonably and hire safe, reputable operators should be able to defend these suits successfully.² The standard, in other words, is reasonableness, not minimum compliance. Nothing suggests that “we confirmed the minimums” will carry the day when the minimums are demonstrably insufficient to ensure safety; the case exists because a minimally compliant carrier allegedly should never have been hired. That logic lands with force in NEMT, where passengers are routinely injured without any vehicle crash at all: wheelchair securement failures, falls during transfers, improper passenger assistance.

Just as thin is the statement often heard from brokers, “all of our providers are quality providers.”  If every credentialed provider is “by definition” a quality provider, then quality has been converted into a pass/fail checkbox, and price becomes the only variable that distinguishes one provider from another. “Everyone is quality” is not a quality standard; it is a price-only selection process under the guise of quality, and in discovery it will be exposed as exactly that. It also collapses on its own premise because we can now quantify provider quality. NEMTAC, an ANSI-accredited standards developer, is publishing consensus standards covering all aspects of the NEMT industry.³ In addition, telematics, on-time performance, turnback rates, complaint and incident histories, vehicle maintenance records, and insurance claims experience are all easily obtainable and comparable today. When objective quality measurement is readily available, declining to use it is not a resource problem. It is a choice.

Today’s brokers have no excuse not to have ready access to GPS data, on-time performance dashboards, complaint logs, turnback rates, and incident reports for every provider in their networks. After Montgomery, “knew or should have known” is a devastating phrase. Picture one of the Morgan & Morgan clan producing document after document showing a provider’s mounting complaint and incident history on one screen, and trip-assignment records showing the broker kept routing volume to that provider, because it was cheapest, on the other. The discussion easily moves from negligence to punitive damages. Nor does the duty of care end at initial approval. Negligent retention is the natural companion theory, and credentialing a provider once, then re-verifying annually, will not look like reasonable care when continuous performance data was sitting in the broker’s own system the entire time.

But the same data could be the industry’s best defense, because it makes quality-based selection cheap to operationalize and easy to document. A broker that weights verified performance data and recognized standards in its awards, audits against them continuously, and maintains their records is building, trip by trip, precisely the record of reasonable care that should win these cases. The evidence that convicts a price-only broker and the evidence that acquits a quality-driven one comes from the same systems. The only question is which story a broker’s data will tell about it.

Oftentimes change doesn’t come about until the risk is realized and felt in the profit and loss statement, and it can take years before litigation risk hits home to a broker.  However, insurance companies are the exception to this rule. Commercial auto liability has been hardening for years under the weight of outsized verdicts, and underwriters have learned to price the practices that produce them. It is a short step, one insurers are already taking in freight, to underwriting a broker’s provider-selection practices directly: What do you verify? How do you monitor? What happens when the data turns bad? A broker or provider network assembled on price alone may start to feel that answer in premiums, retentions, and declined coverage long before any jury verdicts are awarded. The cheapest network, in other words, becomes uninsurable before it becomes liable, and payers should understand that this cost, too, flows back to them.

Liability is not the only risk that rides along with price-only selection. NEMT has long been flagged by federal watchdogs as a fraud-prone benefit; the Government Accountability Office has catalogued schemes ranging from phantom trips to billing for services never rendered.⁴ Intentional fraud gets the headlines. The quieter, and arguably broader, exposure is unintentional fraud. The False Claims Act does not require intent to defraud; reckless disregard or deliberate ignorance is enough. A provider without strong systems (GPS-verified pickups and drop-offs, electronic trip logs, automated driver credentialing, real-time eligibility checks) will generate billing errors at scale even under honest management: wrong mileage, wrong level of service, no-shows recorded as completed. When those claims flow upstream through a broker’s attestations to a Medicaid agency or health plan, deliberate ignorance of a provider’s error rate becomes the exposure, with recoupments, penalties, and program-integrity scrutiny to match. The audit record bears this out: OIG and state audits of NEMT programs routinely find more mistake-driven billing than intentional schemes. Those audits also carry a risk nobody prices in. They arrive years after the trips were run, and by then the low-cost provider that generated the errors may not be around anymore. The broker will be. So will the health plan and the state Medicaid agency, and they are the ones left holding the bag when the federal government wants its money back. And there is a structural irony: the provider paid the lowest rate in the market is precisely the provider least able to invest in the verification technology that prevents these errors. A broker that squeezes the last dime out of the per-trip rate is, in effect, purchasing a higher error rate, then certifying the claims built on it.

Finally, the cheapest trip is only cheapest if you stop counting when the trip ends. Peer-reviewed research analyzing two decades of the National Health Interview Survey found that 5.8 million Americans delayed medical care in a single year because they lacked transportation, a barrier that falls hardest on precisely the low-income, disabled, and chronically ill populations NEMT exists to serve.⁵ Missed appointments are estimated to cost the U.S. health care system roughly $150 billion annually.⁶ And industry-supported research points the same direction: the Medical Transportation Access Coalition’s 2018 return-on-investment study estimated that reliable NEMT averted approximately $3,423 per member per month in medical costs for dialysis patients and roughly $792 for diabetic wound care, net of transportation expense.⁷ Reasonable people can debate the precision of any single estimate. No one seriously debates the direction: when the ride fails, the costs do not disappear; they reappear, larger, somewhere else in the system.

Reverse the logic to see what a low-quality provider truly costs. A missed dialysis appointment quickly becomes an expensive ambulance trip, an emergency room visit, and often a hospitalization, costs that exceed the price of an NEMT trip, even an expensive trip, by orders of magnitude. For Medicare Advantage plans offering transportation as a supplemental benefit, the arithmetic extends further still: the member-experience a transportation provider delivers feeds directly into satisfaction surveys and star ratings, which means provider quality touches plan revenue, not merely medical spend. A provider with chronic late arrivals, high turnback rates, and unreliable vehicles does not deliver worse service at a better price. It shifts its true cost onto budgets where nobody in the transportation procurement ever sees it.

Before you think I place all the blame on brokers alone, let me make this point: brokers often only optimize the rules written by the paying sources.  A broker managing a capitated rate that has been squeezed in successive procurements passes that squeeze downstream to per-trip rates as a matter of arithmetic, not malice. A payer cannot award its transportation benefit to the lowest bidder, compress the capitation year after year, and then profess surprise that the network underneath is not built on quality service. And there is an uncomfortable tension in a payer that declares “it is all about our members” while declining to fund the transportation those members need to reach the care the payer is already obligated to cover. That is a choice, and it deserves to be owned as one. The obligation runs the other way too: quality standards imposed without adequate trip rates do not produce quality; they produce provider exits, network gaps, and access failures that harm the same fragile passengers. Nor would I think payers should assume legal distance protects them. The procurement structure is the policy; a contract that rewards lowest cost per trip, with quality relegated to boilerplate, is a decision a plaintiff’s lawyer can put on a slide.

The fix is not to abandon cost discipline; it is to count all of the costs. The true cost of a transportation provider is the per-trip price plus the liability exposure its safety record creates, plus the program integrity and compliance risk its systems permit, plus the insurance consequences of its practices, plus the downstream medical spend its unreliability generates. On that arithmetic, the providers focused on quality are routinely going to be the lowest-cost option, even if they have a higher per-trip cost. For brokers, the solution follows the math: ensure that adherence to recognized standards and verified performance data weigh appropriately against price in allocating trips; monitor continuously rather than re-credentialing annually. For paying sources, the agenda is to make that behavior rational: procurements and rates that fund demonstrated quality instead of merely demanding it.

There is one more reason to move now. Justice Kavanaugh’s concurrence pointedly noted the absence of federal safety standards for broker selection practices, an observation that reads less like a description than an invitation. Standards are being written for this industry as I write this.  The only open question is will the industry adopt these standards, or will the industry be forced to adopt standards written by legislators reacting to a tragedy, regulators reacting to a fraud headline, or juries reacting to a discovery file.  But let’s be clear, NEMTAC can only write the standards, it can’t enforce them, or as it has been said, NEMTAC can create the ruler, it can’t control how or what you use it to measure. 

Montgomery did not create the duty to choose quality providers; however, it may have removed the last good excuse for not taking that duty seriously. The brokers and paying sources who internalize that first and take a holistic, and realistic, approach to measuring the true cost of NEMT will not just be safer defendants; more importantly they will be buying transportation at its true lowest cost.

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Dan is the Past-President of The Transportation Alliance (TTA) and on serves on both TTA’s and NEMTAC’s Board of Directors.  Dan is Co-Chair of NEMTAC’s Safety and Training Advisory Committee and is past Co-Chair of NEMTAC’s Accreditation Advisory Committee, Compliance & Regulatory Advisory Committee, and Technology Advisory Committee.  Dan is a frequent author and speaker on issues related to the passenger ground transportation industry.

Notes

1. Montgomery v. Caribe Transport II, LLC, 608 U.S. ___ (2026) (No. 24-1238), decided May 14, 2026 (Barrett, J., for a unanimous Court), rev’g the Seventh Circuit’s holding that the FAAAA, 49 U.S.C. § 14501(c), preempted negligent-selection claims against brokers.

2. Id. (Kavanaugh, J., concurring, joined by Alito, J.) (noting the absence of meaningful federal safety standards governing broker hiring practices and observing that brokers who act reasonably in selecting reputable carriers should prevail against such claims).

3. The Non-Emergency Medical Transportation Accreditation Commission (NEMTAC), an ANSI-Accredited Standards Developer since 2018, publishes consensus standards including levels of service, passenger verification, provider and broker organizational standards, and transport specialist education. See nemtac.co/standards.

4. U.S. Government Accountability Office, Medicaid: Efforts to Address Fraud in Nonemergency Medical Transportation, GAO-22-105447 (2022).

5. Wolfe, M.K., McDonald, N.C. & Holmes, G.M., “Transportation Barriers to Health Care in the United States: Findings from the National Health Interview Survey, 1997–2017,” American Journal of Public Health 110(6): 815–822 (2020).

6. Medical Transportation Access Coalition, citing industry estimates that missed appointments cost the U.S. health care system approximately $150 billion annually.

7. Medical Transportation Access Coalition, Non-Emergency Medical Transportation Return-on-Investment Study (July 2018) (analyzing Medicaid claims and beneficiary surveys in New Jersey, Louisiana, and Michigan for dialysis, diabetic wound care, and substance use disorder treatment populations).