NEMT Broker Penalties in 2027: Liquidated Damages and How to Avoid Them

A broker penalty rarely arrives as a bill. It shows up as a smaller deposit, a line on your remittance, or fewer trips on next week’s manifest. The rules behind it sit in your provider agreement and the schedules attached to it. This guide shows what those clauses say in three real agreements, where they come from, and how to keep your own count.

What counts as a broker penalty

Broker agreements call most penalties liquidated damages. These are fixed amounts you agree in advance to pay when a set failure happens, so the broker never has to prove what the failure cost. MTM Health’s standard agreement says you pay them “as liquidated damages and not as a penalty” (section 7.B, January 1, 2023 version). WellTrans’s Indiana agreement goes further: you waive any defense that the amounts are void as penalties (Exhibit A, October 16, 2025). Either way, treat them as a cost you can plan for.

Brokers use several kinds of consequence, often together:

Type	How it works	Example
Charge per event	A set amount each time	WellTrans: $100 for each provider no-show
Charge past a line	Nothing until a monthly rate is crossed	WellTrans: $25 per late pickup once more than 1% of the month’s pickups are late
Daily charge with a cap	Adds up each day the problem lasts	WellTrans: $100 a day per noncompliant driver, up to $2,500 a month per occurrence
No pay for the trip	The trip is run but not paid	MTM: no payment for trips by uncredentialed drivers or vehicles (section 6.B)
Pass-through	A charge the state or plan puts on the broker lands on you	MTM section 7.A and WellTrans Exhibit A
Fewer trips	Your capacity or trip offers shrink	MART cuts capacity to 80%, then 50%, when complaints stay high
Points and suspension	Violations add up to time off the network	MTM Virginia: 10 points end your contract
Loss of money owed	Unpaid claims are held or forfeited	WellTrans: leaving without proper notice forfeits all outstanding amounts

Your scorecard measures the same things. The NEMT broker scorecards guide explains how each rate is counted. This guide covers what each miss costs.

What brokers charge: three agreements side by side

Three agreements show the range. WellTrans runs Indiana trips under an agreement revised October 16, 2025. MART, a Massachusetts broker, adds its fines in Attachment H to its provider amendment effective July 1, 2025. MTM Health’s standard agreement, in the January 1, 2023 version Pennsylvania posts, lists its amounts in Schedule B, which comes with the agreement a provider signs. MTM’s Virginia handbook (approved August 10, 2026) says the same: for the amounts, see your service agreement. Ask for every schedule before you sign.

Service failures

What happened	WellTrans, Indiana	MART, Massachusetts	MTM Health
Pickup more than 15 minutes late	$25 each, once more than 1% of the month’s scheduled pickups are late	$100 when a rider waits over 45 minutes for a scheduled, non-urgent pickup. $500 over 3 hours.	Virginia: on time above 95%. Missing it can bring liquidated damages.
Rider late to the appointment	$25 each, once more than 1% of the month’s drop-offs are late	No set amount	If your lateness means the member cannot be seen, a provider no-show penalty or no pay (section 2.CC)
Late dialysis arrival	$150 each, plus $50 per hour or part of an hour when the arrival is more than an hour late	No set amount	No set amount
Will-call return	$25 if you do not arrive within 60 minutes of the ready call	No set amount	Virginia: arrive within 45 minutes
Hospital discharge	No set amount	No set amount	Virginia: over 3 hours from notice brings liquidated damages
Provider no-show	$100 each	No set amount	Virginia standard: under 0.25% of assigned trips
Trip handed back late	The extra cost of the replacement ride, or $100 if no one covered it, for a trip handed back under 12 hours before pickup	Fines or less work for returning trips you accepted	Virginia standard: under 0.5% of assigned trips
Too many trips handed back	$200 for each percentage point above 15% in a month	No set amount	No set amount
Lower level of service than requested	$200 each	$1,000 each time, after MART’s notice, you put a rider documented as unable to share a ride into a shared ride	Virginia: the wrong level, such as skipping hand-to-hand, counts as member abandonment

WellTrans’s 12-hour rule applies only to trips assigned at least 36 hours before pickup. Its lateness and dialysis charges do not apply when the cause was beyond your control and you told WellTrans before the scheduled time.

Paperwork, drivers, and vehicles

What happened	WellTrans, Indiana	MART, Massachusetts	MTM Health
Uncredentialed or noncompliant driver	$100 per driver per day, up to $2,500 a month per occurrence	No set amount	No pay for the trip, plus liquidated damages under Schedule B (sections 2.N and 6.B)
Vehicle out of compliance	$100 a day for a health or safety hazard (up to $1,000 a month), $25 a day for a comfort problem (up to $250), $10 a day for a paperwork problem (up to $100)	No set amount	No pay for an unapproved vehicle, and liquidated damages (section 4.D)
Insurance lapse, or broker not named as additional insured	$100 per vehicle per day	Work is reassigned and put on hold if a renewed certificate is not in 3 business days before expiration. Insurance failure may be a material breach.	Immediate termination if coverage lapses (section 9.C)
Incident report late	$1,000 per day, with no maximum	No set amount	Rhode Island: $500 for missing any accident or incident reporting rule or deadline (handbook, July 1, 2026)
Wheelchair not secured and the rider is hurt	No set amount	$5,000 each	Virginia: a substantiated securement complaint adds 2 points
Excluded from Medicaid and did not tell the broker	No set amount	$5,000	Notify MTM immediately (section 11.B)
Removed employee has contact with riders	No set amount	$5,000 each	No set amount
Billing a trip that did not run	$50 each, unless you show a clerical error	Recoupment, fines, suspension, and possible prosecution	Investigation, and MTM may end the agreement at once for breach (sections 2.Z and 14.D)
Late or unacceptable reports	$25 per working day, up to $500 a month per occurrence. Missing cancellation reports: $100 each, up to $500 a month.	Fines for not answering a Passenger Service Report within 48 hours	No set amount
No manager reachable	$100 each time for an hour or more during business hours or with a rider on board	No set amount	No set amount
GPS data missing	No set amount	Warnings and fines below 90% of trips with GPS data	Suspended trips, termination, or liquidated damages if your own software does not pass trip data to MTM (section 4.B)

Brokers in other states set their own lists. Massachusetts’s standards for providers in its human service transportation program (effective July 1, 2022) let each broker fine providers under its own provider accountability policy. Ask your broker for its current schedule, and see its page in the broker directory, such as WellTrans, MART, or MTM Health.

Where broker penalties come from

Many of these charges mirror the broker’s own contract with the state or health plan.

When a state runs NEMT as a brokerage program under its Medicaid plan, federal rules require the broker to have oversight procedures that monitor access and complaints and make sure rides are timely and drivers are licensed, qualified, competent, and courteous. The state must audit and oversee the broker regularly (42 CFR 440.170(a)(4)). When a Medicaid health plan subcontracts rides, its subcontracts must allow the plan to revoke the work or apply other remedies when the subcontractor does not perform (42 CFR 438.230).

States then put prices on failures. Rhode Island’s contract with MTM Health (effective July 1, 2025) lists what the state may charge its broker:

Failure	What Rhode Island may charge the broker
A verified trip not delivered safely and on time	$100 each
A verified dialysis or oncology trip not delivered safely and on time	$200 each
A contracted provider uses a driver or vehicle that is not fully credentialed	$2,000 each
A contracted provider uses a driver terminated from Medicaid for fraud or abuse	$2,500 each
An accident, injury, or incident with a rider aboard not reported to the state	$500 each
The broker pays providers late	$1,000 per day
A pattern of wrongly denying, delaying, or recouping provider payments	150% of the value of those claims

Mississippi shows the scale. Its Division of Medicaid assessed $3,007,750 in liquidated damages against MTM, its broker at the time, under the 2018 contract, which ran into 2023, according to the state legislature’s PEER Committee (Report 705, October 15, 2024). In the report’s breakdown for June 2022 to May 2024, most instances fell under the scheduling and dispatching standards for trips to appointments, return trips, and will-calls, at $25 each. Each vehicle and driver noncompliance instance cost $1,000.

Brokers can hand these charges down. MTM’s standard agreement reserves the right to pass through any sum assessed against MTM by its client or a government agency for your performance (section 7.A), and your indemnity covers liquidated damages assessed against MTM or its client for your actions (section 10.A). WellTrans’s agreement says any liquidated damages its client assesses against WellTrans because of your service become your own.

The last two rows of Rhode Island’s table cut the other way. They protect you when a broker pays late or takes money back without cause.

Points, capacity cuts, and suspensions

Money is not the only consequence. Some brokers count violations and take trips away.

MTM Health’s Virginia handbook (approved August 10, 2026) uses infraction points, assessed from field audits, complaints, or state monitoring. Points stay valid for one year from the date they are assessed.

Points	What happens
3	Your trip marketplace access is suspended until points come off
5	A 5-day business suspension
8	A 10-day suspension and the loss of any recurring trips assigned to you
10	Termination from MTM’s network

Level 1 violations, worth 1 point, include a driver without an MTM name tag or a vehicle that moves before a passenger is secure. Level 2, worth 2 points, include each use of an expired driver or vehicle credential and substantiated securement complaints. Level 3, worth 3 points, include using a driver or vehicle never credentialed, failing to report an incident or accident, and member abandonment. Level 3 also brings a suspension of at least 5 days.

MART cuts a provider’s trip capacity to 80 percent, then 50 percent, when complaints stay above 1 percent of scheduled trips, and can then suspend for 15 to 30 days. CareOregon’s manual (February 2024) uses a corrective action plan before it suspends or ends a contract, skips the plan when an infraction is severe enough, and may limit your trips while you work on it. The broker scorecards guide walks through each step.

How penalties come out of your payments

Brokers rarely ask you to pay a penalty. They keep it.

• Offsets. MTM may withhold, offset, recoup, and deduct liquidated damages from any sums it owes you (section 7.B), and recover overpayments from future payments (section 6.D).
• Future payments. WellTrans deducts liquidated damages from amounts due. If it owes you nothing yet, it takes them from future payments.
• Notice first, at WellTrans. WellTrans gives written notice you may contest at least 10 days before it imposes a charge. You must keep running trips while any amount is in dispute.
• Attendance checks. WellTrans confirms that riders attended their appointments. If a facility reports a rider did not attend a trip you billed, you have 30 days to answer in writing. If you do not, the trip counts as not run, you lose the right to appeal, and WellTrans deducts its cost.
• When you leave. MTM holds unpaid claims after a termination notice until it audits your records, and it can offset liquidated damages against them (section 14.E). If you give notice while holding assigned trips, you must run them during the 30 days, or face liquidated damages plus the cost of rescheduling them (section 14.B). WellTrans needs 60 days’ written notice to end its agreement without cause. Leaving without proper notice forfeits all outstanding amounts it owes you, and handing back more than a daily average of 15 percent of trips after notice counts as insufficient notice.

Look for these deductions on every remittance. How to read remittance advice shows where offsets appear, and leaving a NEMT broker covers exit notices.

How to track your penalty exposure

Keep your own penalty ledger, one line per event, and update it daily. Columns that work:

Date	Trip ID	Event	Clause and amount	Your proof	Notice received	Contested	Deducted

Threshold charges need a daily count, because one bad week can push the whole month over the line.

Late pickup rate = pickups more than 15 minutes late ÷ scheduled pickups × 100

Handback rate = trips handed back ÷ trips assigned × 100

A worked example under WellTrans’s schedule

Here is one hypothetical month for a small Indiana company with 800 scheduled pickups, priced with WellTrans’s Exhibit A (October 16, 2025). The counts are examples.

Event	Count	Charge
Pickups more than 15 minutes late	12 of 800 (1.5%, over the 1% line)	12 × $25 = $300
Riders late to appointments	6 of 800 (0.75%, under the line)	$0
Late dialysis arrivals	2, each under an hour late	2 × $150 = $300
Will-call returns over 60 minutes	3	3 × $25 = $75
Provider no-show	1	$100
Trip assigned 3 days ahead, handed back 6 hours before pickup, not covered	1	$100
Trips handed back in the month	128 of 800 (16%)	1 point over 15% × $200 = $200
Driver with an expired license on duty	2 days	2 × $100 = $200
Incident report filed 2 days late	2 days	2 × $1,000 = $2,000
Total		$3,275

Three lessons come out of it:

• Paperwork is the biggest line. The late incident report costs more than every late trip together.
• Lines are cliffs. With 8 late pickups instead of 12, the late rate is exactly 1 percent and the charge is $0.
• Ask how the lines and clocks work. The agreement does not say whether only the late pickups above 1 percent are charged. This example charges all 12, the larger figure. The incident report charge also runs “from the date of incident”, so a late report may be charged from that day rather than from the 24-hour deadline. Get WellTrans’s answers in writing.

How to avoid the most common penalties

Penalty trigger	What prevents it	Proof to keep
Late pickups and drop-offs	Build a buffer into each route, and schedule dialysis runs first. Call the broker before the scheduled time when a delay is outside your control.	GPS arrival times, and the time of each call to the broker
Will-call returns and discharges	Accept only returns a van can reach in time: 60 minutes at WellTrans, 45 minutes and 3 hours for discharges at MTM in Virginia	The ready-call time and the arrival time
Handbacks	Hand back 12 hours or more before pickup, and watch the monthly 15 percent line	The time you sent each handback
A rider you will no longer carry	Tell WellTrans before the requested date, and at least 24 hours ahead	Your written notice
Credentials	Renew early. MTM in Rhode Island wants documents 10 business days before they expire, and may pull trips when they are not in 5 days ahead.	A credential calendar for every driver and van
Vehicles and insurance	Pull a noncompliant van the day you find the problem, and name the broker and its client on your certificate	Inspection logs and certificates of insurance
Incidents	Call right away for serious events and send the written report within 24 hours	A completed incident report form
Billing	Bill only completed trips, and check every claim against its trip log	Trip logs with times and signatures
Reachability	Keep a decision maker on call during business hours and whenever a rider is aboard	An on-call schedule

For the trip-level fixes, see how to improve on-time performance, NEMT broker trip offers, dialysis transportation, and NEMT broker credentialing.

MTM’s Virginia program also pays for good timing. Its quarterly on-time incentive shares a pool of liquidated damages collected across the network among providers at 95 percent on time or better, weighted by trip volume and on-time tier. Providers below 95 percent get nothing from the pool.

How to contest a penalty

1. Read the notice the day it arrives. Note the trip IDs, the clause cited, the amount, and the deadline.
2. Check the clause. Confirm the event matches the wording, including any monthly line, cap, or 36-hour rule.
3. Check the exceptions. WellTrans excuses lateness beyond your control when you told it before the scheduled time, and billing errors you can show were clerical. CareOregon may excuse a no-show caused by an accident or a sudden vehicle problem.
4. Pull your evidence. Use GPS times, trip logs, dispatch notes, and phone records.
5. Answer in writing before the deadline. WellTrans gives at least 10 days’ notice before charging, and MART takes appeals within 10 days of the fine letter.
6. Keep running trips. WellTrans requires you to keep performing while any amount is contested.
7. Use the grievance process. Rhode Island’s contract requires MTM to acknowledge a provider grievance within 5 business days and resolve it within 60 days if possible.
8. Escalate a pattern. If a broker keeps charging or recouping without cause, tell the state Medicaid agency or the health plan that hired it. See how to escalate broker problems.

What to check before you sign

Read the penalty terms as closely as the rate sheet. Before you sign any broker agreement:

• Get every schedule. MTM’s standard agreement lists Schedule A for rates and Schedule B for performance standards and metrics. Do not sign without both.
• Find the pass-through clause. Know whether charges placed on the broker can land on you.
• Find the offset clause. Know which payments the broker can take penalties from.
• Note the lines and caps. Write down each monthly line (1 percent, 15 percent) and each monthly cap.
• Note the exceptions and how to claim them. Most need a call before the scheduled time.
• Note the dispute window. Put each deadline in your calendar.
• Note the exit terms. Find the notice period, any forfeiture, and what happens to unpaid claims.

Penalty exposure belongs in your rate talks too. See how to negotiate NEMT broker rates and how to get NEMT broker contracts.