A Paramedic's Referral Fee Turned Into a Claim on an Entire Contract

The situation

The plan had never needed writing down, as far as anyone at the organization was concerned. For years, when a patient at the local hospital needed non-emergency transport and the attending paramedic thought of it, Prakash would mention the non-profit's transport service, the patient's family would call, and a modest fee would move quietly from the organization to Prakash a few weeks later, the way it always had, until it did not, and a demand letter arrived instead describing an arrangement Camille barely recognized.

Camille was the executive director of a small non-profit in Sault Ste. Marie that operated a non-emergency medical transport service, driving patients to appointments and between facilities for a modest fee, funded by a mix of grants and service charges. Prakash, a paramedic who worked emergency calls around the city, had for several years referred patients and families to the organization when he encountered someone who needed transport the ambulance service itself could not provide. In return, the organization paid him a flat referral fee for each confirmed booking that traced back to him, an arrangement set up informally years earlier and never reduced to a written agreement, on the understanding that both sides simply knew how it worked. It was the kind of easy, informal relationship non-profits with small administrative teams tend to accumulate over the years, useful and uncomplicated right up until it is not.

The organization landed a significant opportunity: a multi-year contract directly with the hospital to provide transport services on a standing basis, replacing much of the ad hoc referral traffic that had built the service's reputation in its early years, including a meaningful share of patients Prakash had originally sent their way. Once that contract began, Prakash's individual referrals largely stopped mattering, since the hospital itself now directed most of the traffic, and the organization, focused on delivering the new contract well, gave little thought to what winding down the old referral arrangement should look like or cost.

Prakash did not see it that way. He took the position that the new contract was, in substance, the natural continuation of years of referrals he had provided, and that he was owed a share of the contract's value going forward, not the small per-referral fee the arrangement had always paid. The gap between what Camille's organization understood it owed and what Prakash was now claiming ran into six figures, a sum the non-profit's budget could not easily absorb without real damage to its programs, forcing Camille's board to weigh a costly settlement against an equally costly fight over an arrangement no one had ever bothered to write down.

The risk we had to size

An unwritten referral arrangement, built on years of consistent practice, can still be legally enforceable, and Ontario courts will look at what the parties actually did over time to determine what they agreed to, even without a signed contract. That cut both ways here: years of a flat per-referral fee, paid consistently and without complaint, was strong evidence of what the arrangement actually was, but years of an ongoing relationship also gave Prakash's broader claim some surface plausibility, since a court unfamiliar with the file's details might see a long relationship and a large new contract and wonder whether the two were meant to be connected.

The risk we had to size, honestly, at the outset had two parts. First, whether a court could plausibly read the years of informal fee payments as evidence of a broader, ongoing entitlement rather than a bounded, per-transaction arrangement, since the absence of a written agreement left the door open to competing interpretations. Second, and more concretely, whether the size of Prakash's claim, calculated as a percentage of the new contract's full value over its term, sat anywhere near what a court would actually award even if some version of his claim succeeded, since a claim can be filed for far more than it is realistically worth, and a demand letter's number often reflects an opening negotiating position rather than a considered legal assessment.

This was not the organization's first time facing exactly this kind of exposure. Camille's non-profit had come to us roughly two years earlier over a dispute with a different informal partner, a supplier arrangement that had also never been documented, and at the time we had recommended putting every ongoing informal fee relationship into a short written agreement, however simple, to avoid precisely this kind of scope dispute down the line. That advice had been followed for some relationships and not others, and the Prakash arrangement was one of the ones left unwritten, a gap that made this file harder than it needed to be, and a fact Camille was candid about from our first meeting, aware the organization had, in effect, been warned about exactly this kind of exposure once already.

Sizing the real risk meant separating what the evidence actually supported, a modest, per-referral fee tied to identifiable, individual bookings, from what Prakash's demand letter asserted, an open-ended share of a contract his individual referrals had not created and could not, on the facts, be shown to control. Getting that separation right, and demonstrating it convincingly, mattered more to the outcome than any single legal argument about how unwritten agreements are generally treated.

What we did

1. Gathered every record of past fee payments to Prakash, cross-referencing dates, amounts, and the patient bookings each payment corresponded to, to build a clear, consistent picture of the arrangement as it had actually operated over the years rather than as either side now remembered it, since memory alone, on both sides, had already started to drift toward whichever version of events best suited each party's current position.
2. Located archived correspondence from Gita, a surveyor who had served as the organization's board treasurer during the years the arrangement began, whose old emails setting up the payment process explicitly described it as a per-booking fee tied to individual referrals, giving us contemporaneous, written evidence of the arrangement's original scope from the very moment it was created, rather than a reconstruction built years after the fact from memory or assumption.
3. Mapped the timeline of the new hospital contract's negotiation against Prakash's referral activity, establishing that the contract had been developed through the organization's direct dealings with hospital administration over many months, independent of any individual referral Prakash had made, which undercut the claim that his referrals had caused or entitled him to a share of it, since a contract negotiated through a formal procurement process could not fairly be attributed to informal patient referrals years earlier.
4. Assessed what a court would realistically value Prakash's actual, documented referral activity at, using the historical per-referral fee applied to a reasonable estimate of referrals that might otherwise have continued, to give Camille's organization a grounded sense of fair exposure rather than reacting to the number in Prakash's demand letter, which helped the board approach settlement discussions from a position of confidence rather than anxiety.
5. Sent a detailed response to Prakash's counsel setting out the documented history of the arrangement, including the treasurer's original correspondence, and proposing a settlement figure reflecting the per-referral practice rather than any share of the new contract, framed around the actual documentary record rather than either side's recollection of how the relationship felt, and inviting a response grounded in the same kind of evidence rather than a renewed demand letter.
6. Held firm through an exchange of further correspondence in which Prakash's counsel pressed the contract-based theory, responding each time with the same documentary record rather than shifting position, since the evidence supporting the narrower, established practice did not change no matter how the claim was reframed, and repetition of a weak theory does not make it stronger the second or third time it is presented.
7. Negotiated a final settlement figure tied to the actual referral history, once it became clear the contract-based theory had little documentary support to stand on, closing the matter without a hearing, sparing both sides the cost and uncertainty of litigating an unwritten arrangement in front of a judge who would have had only the parties' competing accounts to go on.
8. Recommended, again, that every remaining informal arrangement the organization relied on be put into a short written agreement, this time walking Camille's board through specifically why the gap had mattered in this dispute, to reduce the chance of the same scope argument recurring with a different partner, and offering to draft the short agreements directly so the recommendation would not again go unimplemented.

The outcome

The dispute settled for an amount reflecting the documented per-referral practice, well below what Prakash's initial demand, framed as a share of the new hospital contract, had sought, and comfortably within a range the organization's board had accepted going in as a realistic worst case. The settlement acknowledged some value for the relationship's history without accepting the broader theory that individual referrals years earlier had created an ongoing entitlement to a contract those referrals had not produced. The settlement was reached within a few months of the demand letter, without either side needing to file anything formally in court.

The organization's board treasurer's old correspondence, kept only because Gita happened to be a careful record-keeper years earlier, ended up being the single most useful piece of evidence in the file, a reminder that informal arrangements often leave a paper trail somewhere even when no one thought to create a formal one on purpose. Gita, retired from her surveying career and no longer connected to the organization, was glad to hear the emails had proven useful when Camille reached out to thank her for keeping them.

The legal fees the organization spent defending the file, while a real cost for a small non-profit, were still far less than the difference between the settlement figure and Prakash's original demand, making the decision to fight the contract-based theory rather than simply pay it the more sound choice financially as well as on principle.

For Camille, the more lasting outcome was internal. The organization moved to put its remaining informal referral and fee arrangements into short written agreements, following through this time on advice it had received once before and set aside, having now seen directly what the gap could cost when a relationship that had worked smoothly for years hit a disagreement about its scope. Prakash, for his part, continued referring occasional patients to the organization afterward, on the same modest per-booking basis as before, and the working relationship, if not the trust behind it, largely survived the dispute intact.

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