CARD Clinic ordered to pay $6 million in fraud case

Libby’s CARD Clinic is on the hook for nearly $6 million in damages and penalties after a judge’s ruling last week in federal court in Missoula.

U.S. District Judge Dana Christensen issued the order July 18 following a June trial in which a jury said the Center for Asbestos Related Disease had submitted 337 false patient claims making people eligible for Medicare and other benefits they shouldn’t have received. The jury said 246 violations occurred before Nov. 2, 2015 and 91 after that date.

BNSF Railway, upon behalf of the United States government, brought the suit in 2019 under the False Claims Act. The act allows private parties to sue on behalf of the federal government.

BNSF — which is itself a defendant in hundreds of asbestos-related lawsuits — argued the center submitted claims on behalf of patients without sufficient confirmation they had asbestos-related disease.

In the trial, attorneys for CARD argued the clinic signed people up for Social Security and Medicare benefits by diagnosing Asbestos Related Diseases under the clinic's interpretation of the Affordable Care Act. Benefits included early access to Medicare and enrollment in the Medicare Pilot Program – a program that helps disabled individuals pay for everyday tasks, such as snow removal.

In the jury’s verdict, it determined that damages to the federal government are $1,081,265. By law, a civil penalty may be tripled.

"BNSF Railway appreciated the jury's thoughtful consideration of this case, resulting in a unanimous verdict that the Center for Asbestos Related Disease filed hundreds of false claims for Medicare benefits in Libby, Montana," BNSF spokesperson Lena Kent said in a statement. "The Court's order clearly intended to deter future misconduct by CARD and those individuals implicated at trial in the fraudulent behavior."

Christensen ordered that the clinic must award the government $3.2 million in damages and imposed $2.5 million in penalties. BNSF is eligible for 25% of the total proceeds. Attorney’s fees and costs for BNSF will be addressed at a later date.

In a phone interview Monday morning with CARD Board President LeRoy Thom, he said he didn’t know a judgement had been ordered and didn’t want to comment until he had seen it.

CARD filed an appeal on July 20 that it is contesting the verdict and all adverse rulings in the matter to the Ninth Circuit Court of Appeals.

Thom and CARD Executive Director Tracy McNew previously said the clinic’s defense was hampered by a ruling that barred testimony from former U.S. Sen. Max Baucus of Montana. Baucus helped craft a provision in the Affordable Care Act that made Libby asbestos victims eligible for government benefits. He’s said the clinic was acting in line with that law.

"CARD is disappointed in the judgment, especially since the judge issued an order blocking CARD from finding out the bases of the 337 false claims," McNew said. "Based on the number, CARD can guess what the jury determined were false claims, but CARD does not even have definitive answers about what the jury found to be false claims. Based on what CARD thinks the likely bases of the false claims were, it has changed the process of filling out EHH forms to qualify people for Medicare. CARD has also appealed the verdict and the trial court’s rulings. It comes down to interpretation of the Affordable Care Act’s Libby provision. The judge and subsequently the jury interpreted the ACA differently than CARD has. Since 2010, CARD’s implementation of the ACA provisions has remained constant. Prior to this lawsuit, CARD’s implementation of the ACA provisions had never been at issue. CARD’s granting agency, ATSDR, testified at trial that it agreed with CARD’s implementation of the law."

McNew also addressed some other questions that have been in public discussion.

She said the clinic has received funding for the new grant year which will run from September 2023 through August 2024.

In terms of those currently receiving benefits, "It is CARD’s understanding that the government has no intention of taking away anyone’s existing benefits," McNew wrote in a response to an email from The Western News.

In terms of the clinic's ability to treat patients and the upcoming Big Sky Bash fundraiser, she said CARD remains open, continues to treat patients and the Big Sky Bash will be held as planned.

The Bash is scheduled for Saturday, Aug. 5.

Christensen said in the July 18 order that he was imposing a stiff penalty to prevent future misconduct.

“Specifically, the Court is satisfied that this penalty will deter future wrongdoing and reflects the seriousness of the offense,” Christensen wrote.

Christensen also wrote that, “Fraudulent claims make the administration of Medicare more difficult and wide-spread fraud would undermine public confidence in the system.”

The judge referenced some of the evidence at the trial that spoke directly to the concern. “One pharmacist from the Libby area testifying that the running joke around town was that an individual could qualify for lifetime Medicare benefits by going to the CARD Clinic and coughing.”

Judge Christensen also cited in a need to deter future misconduct by CARD and others, that CARD’s current physician, Dr. Karen Lee Morrissette, testified that the clinic intends to continue operating in the same manner that it had been leading up to the lawsuit.

Christensen said he was concerned in particular that the clinic’s former doctor, Brad Black, had diagnosed himself with asbestos-related disease and that a nurse signed off for benefits for her own mother.

Expert witnesses testified that some individuals who received benefits were fraudulently labeled as sick and suffered from unnecessary narcotic prescriptions.

“The Court is also concerned about the evidence regarding alarmingly high rates of opiate prescriptions from the CARD Clinic for people who may or may not have had a legitimate diagnosis of an asbestosis related disease,” Christensen wrote. “While these acts may not have constituted any of the 337 FCA violations found by the jury, they do demonstrate, in this Court’s opinion, a reckless disregard for proper medical procedure and the legal requirements of government programs.”

The Libby area was declared a Superfund site two decades ago following media reports that mine workers and their families were getting sick and dying due to hazardous asbestos dust.

Health officials have said at least 400 people have been killed and thousands sickened from asbestos exposure in the Libby area.

"Due to the actions of the CARD Clinic, millions of dollars of taxpayer money were wasted and resources were diverted from those who legitimately needed it," Kent said. "The focus of this trial was on CARD's treatment of the hundreds of people who were not sick. It's a sad chapter in this saga that this trial was necessary to restore the focus on those who are truly impacted and who should continue to have access to the benefits and care they deserve."

The clinic has certified more than 3,400 people with asbestos-related diseases and received more than $20 million in federal funding, according to court documents.

Asbestos-related diseases can range from a thickening of a person’s lung cavity that can hamper breathing to deadly cancer.