HOUSTON -- There are big changes to a government contract between a private helicopter company and a north side emergency group.

Local 2 Investigates first told you about the contract Tuesday, and why some were questioning the ethics of the agreement.

KPRC Local 2 investigative reporter Amy Davis learned that the deal is now off.

The Director of Emergency Services District 1 made the announcement by e-mail Thursday.

It said the decision is in no way related to our investigation, but that the current economic condition and reduced flights are to blame.

For the last 14 months, a private for-profit PHI helicopter has transported patients to hospitals in and around Houston, working exclusively for the nonprofit government agency Emergency Services District 1.

Anytime ESD 1 paramedics decided a patient needed to fly to a hospital instead of taking a ground ambulance, ESD 1 would dispatch PHI.

In 2007, before ESD 1 signed the contract with PHI, the district only airlifted 12 patients in the entire year. In 2008, after ESD 1 signed the deal with the air medical company, it transported 106 patients. That’s a 783% increase.

PHI made its money by directly billing and collecting from the patients it flew.

Jason Boatswain was one of those patients.

"I think it's wrong," Boatswain told Davis. "I believe that you should have a choice if you want to go by ground unit or by air."

Boatswain received a $12,400 bill from PHI a week after his car accident. An ESD 1 ambulance ride costs an average of $847, but someone made the call to send him in the helicopter.

"What do you think factors into their decision?" Davis asked Boatswain.

"Money," he answered.

Under the contract, PHI paid ESD 1 more than $77,000 a month to cover the salaries of the ESD 1 medics and flight nurses that ride in the chopper.

The e-mail sent by the ESD 1 director Thursday afternoon reads, "Due to the current economic condition and reduced missions system-wide, PHI's share holders had to come to the difficult decision to close our base."

This doesn't mean that ESD 1 will not still call on PHI to transport patients in its district. It just means PHI will not be the exclusive air ambulance the district uses.

When we contacted State Sen. Mario Gallegos, who represents most of the constituents in ESD 1, he told Davis, "I still don’t know all of the details of why the contract was canceled all of a sudden. It is certainly because of your investigation. Common sense dictates that something was wrong and you have brought it out."

Gallegos is authoring a bill that, if passed, would appoint either Harris County Commissioners or a state agency as overseers of ESD’s. Currently, once an ESD is created as a taxing authority, the only oversight in place is the ESD’s own Board of Commissioners.

We're still following this story and we will bring you updates as we get them.

Full E-mail From ESD 1 Director Jody Meads

It is with deep regret that we must announce the closing of the CC1 base at Fallbrook.  Due to the current economic condition and reduced missions system-wide, PHI's share holders had to come to the difficult decision to close our base.  Please know that this is in to way related to the media coverage that we have experienced as of late. HCESD-1 has been in negotiations with PHI to try and save the base for approximately 6 weeks, but no suitable agreement could be made that would satisfy both parties.

Please know that both the nursing staff and the paramedics will be offered continued employment with HCESD-1 and/or PHI.  PHI and HCESD-1 will continue to work closely to ensure that the patients in our district have access to the air medical services that were previously performed by CC1.  PHI and HCESD-1 would like to thank all of our flight medics, nurses, pilots, and all others involved for their support. Sincerely, Jody Meads