Federal judge ponders future of Libby's CARD Clinic

Considering certain statements by U.S. District Court Judge Dana Christensen during last week’s hearing in Missoula, the immediate future of Libby’s CARD Clinic may be less than promising.

The judge heard a number of arguments Thursday, June 12, from attorneys for the non-profit clinic, the U.S. government and BNSF Railway as the railroad seeks to collect money on a $3.1 million judgment it won in 2023.

The 2023 ruling was ordered by Christensen after a seven-person jury found the Center for Asbestos Related Disease submitted 337 false claims to the federal government. Most of the claims at issue in the trial concerned the submission of EHH forms to Medicare, which certified that patients had been diagnosed with an asbestos-related disease and were eligible for coverage under an Affordable Care Act provision created to respond to Libby’s environmental health threat. 

According to CARD Executive Director Tracy McNew, prior to trial, Judge Christensen made a legal ruling that any claim based only on an imaging read by an outside “B-reader” radiologist was invalid, making it likely that those certifications constituted a bulk of the 337 claims.

"In other words, most, if not all, of the false claims were likely due to a doctor outside of CARD (we have a panel of outside readers per screening grant requirements) making an interpretation that medical testing (a CXR or CT) was consistent with asbestos related disease, but CARD did not diagnose these people," McNew said in a statement to The Western News. "Lastly, it is important to note that CARD didn't make the decision about whether the patient was approved for Medicare, the Social Security Administration (SSA) makes that determination and they were approving the applications for Medicare even though we were clearly stating on the EHH form that the patient was diagnosed by "outside read only. SSA only stopped approving these applications right before the trial started in 2023."

Christensen’s opening remark could be interpreted as a preview of things to come when he said, “When I saw this case on my schedule, I didn’t know if I was having a nightmare or what.”

Christensen oversaw a 12-day trial that ended in late June 2023.

Nearly two years later, clinic officials are fighting for its future after it was closed on Wednesday, May 7, when the Lincoln County Sheriff's Office served a Writ of Execution on the Center for Asbestos Related Disease, Inc. to satisfy the judgment against the clinic.

Christensen, in his closing remarks Thursday, reminded the parties that a judgment was ordered.

“I know some of my rulings will make some of you very unhappy and some happier, but there is a judgment and I won’t get in the way of that,” he said.

Lynsey Ross, an attorney for the United States, argued that the government has a substantial interest in CARD’s interests because of the federal grant money the clinic receives.

“In a sense, we are a defendant,” Ross said.

But Christensen said he was having a hard time understanding the government’s case.

“The fraud was using the government’s money, you had plenty of time to intervene and you didn’t,” the jurist said. “And now you don’t seem interested in collecting any of it.”

The government, according to court documents, is owed $4.3 million.

James Patten, CARD’s attorney, questioned clinic Executive Director Tracy McNew about her work at the clinic.

“I started there in 2009 as a nurse and then I became executive director in 2021,” she said. “I answer to our board and staff and I represent CARD in many ways. We do outreach programs and monitoring, but the shuttering of the clinic has left us not able to do screening.”

McNew recalled May 7, the day the clinic was closed.

“It was in the middle of the day, I had to cancel appointments, lay off some staff and we didn’t know what to tell patients about rescheduling,” she said.

She said later that she knew of at least employees who told her they wouldn’t be returning to the clinic.

Nearly two-quarters of a million dollars has already been garnished from CARD bank accounts. 

A letter from Glacier Bank indicated it received a Notice of Levy/garnishment from the county Sheriff’s Office in the amount of about $3.1 million. The bank wrote in a letter to CARD it had debited its account $240,793.89 and sent the funds to the sheriff’s office.

Chad Knight, one of BNSF’s attorneys, questioned McNew about the clinic’s finances and co-mingled money. In 2011, CARD was chosen by the U.S. Agency for Toxic Substances and Disease Registry for a four-year grant for a screening program for environmental health hazards, including asbestosis, pleural thickening and pleural plaques, caused by exposure to hazardous substances at Libby’s Superfund sites. The federal grants continued with the most recent reward in September 2024. It is scheduled to run through August 2029.

The grant money is estimated to provide 80% of the clinic’s operating finances.

Following the clinic filing for bankruptcy in 2023, in eight bank accounts, the clinic had $701,333 and their property was valued at $1.1 million.

One account with Glacier Bank, listed as “Fundraiser,” has a balance of $71,751.25. Jan. 13, 2023, $67,961.79 was transferred to the account following the dissolution of the CARD Foundation, a separate 501c3 non-profit. 

Knight shared other documentation showing other CARD properties, such as office furniture, computer servers, collectibles, three freezers, two pulmonary function testing machines and other medical equipment. 

There was also an accounts receivable balance of $312.339. 

The value of the clinic’s collectibles was listed at $93,930.

When it’s added up, CARD assets are a little less than $2.3 million.

Attorneys representing, individually, Dr. Brad Black, Karen Lee Morrissette, McNew, Michelle Boltz and Miles Miller, argued that BNSF signed a stipulation in the clinic’s bankruptcy case that federal grant money and property held in trust by CARD “cannot be used to pay the judgment, including attorney fees, nor can federal grant money be used to pay fees and costs associated with the bankruptcy.

Jori Quinlan, who is representing the aforementioned individuals in this matter and in the wrongful death suit involving Terry Steiger, said the failure to preserve evidence would be, “devastating.”

“Getting that data is not a simple process because of HIPPA laws and that is invaluable to my clients,” she argued. 

The wrongful death and malpractice suit filed Oct. 10, 2024, in Lincoln County District Court, alleges medical malpractice, wrongful death and claims of disabling Lincoln County residents by prescribing them opioid pain killers following the misdiagnosis of health issues. 

The plaintiffs are Thomas Steiger, the personal representative of the estate of Terry L. Steiger, and Thomas J. Matilas, a Libby resident. According to the suit, Steiger, a Troy resident, was a CARD patient at the time of his death Jan. 12, 2015. Matilas is listed as a former CARD patient. 

The civil suit accuses Dr. Charles Brad Black and the Center for Asbestos Related Disease, including Executive Director Tracy McNew, of medical malpractice. The court filing also argues CARD knew or should have known both men didn’t satisfy diagnostic requirements for asbestos-related disease and should not have been giving opioid pain medications in the manner prescribed by CARD providers.  

That suit is still pending.

Knight’s final argument Thursday said the government is only rewarding CARD for its behavior.

“CARD is a serial fraudster,” Knight said. “Every false claims case involves property and their (government) motion to intervene is not well taken. The government is wrong. They own none of the property at the clinic. It is all in the name of CARD.

“CARD is trying to avoid its responsibility and I don’t understand why the government is doing this,” Knight argued.

“I don’t either, Mr. Knight,” Judge Christensen said.

Also, Lincoln County Sheriff Darren Short signed a notice Thursday, June 5, giving notice to a sheriff's sale July 2 to the highest bidder to satisfy the judgment for the plaintiff, BNSF, with interest and costs.  

While the date is subject to change pending an order from the court, the sheriff's sale is currently set for 10 a.m. Wednesday, July 2. According to Montana code, the sheriff's office has 120 days from the day it received the writ to conduct the sale. The sale will include the real property as well as office equipment, furnishings, and other machinery, fixtures and equipment. 

For more information, contact the sheriff's office at 406-293-4112, ext. 1232.