Montana asbestos clinic seeks to reverse court finding that it submitted hundreds of false claims

BILLINGS, Mont. (AP) — An attorney for a health clinic in a Montana town polluted with deadly asbestos asked a federal appeals court on Wednesday to reverse a lower court determination that it submitted hundreds of false claims on behalf of patients.

That judgment came last year in a jury trial following a lawsuit against the clinic from Texas-based BNSF Railway, which separately has been found liable over contamination in Libby, Montana, that’s sickened or killed thousands of people. Asbestos-tainted vermiculite was mined from a nearby mountain and shipped through the 3,000-person town by rail over decades.

After BNSF questioned the validity of more than 2,000 cases of asbestos-related diseases found by the clinic, a jury last year said 337 of those cases were based on false claims, making patients eligible for Medicare and other benefits they shouldn’t have received.

The judge overseeing the case ordered the clinic to pay almost $6 million in penalties and fees. However, even if the lower court ruling is affirmed, the clinic won’t have to pay that money, under a separate settlement it reached in bankruptcy court with BNSF and the federal government, court documents show.

Clinic attorney Tim Bechtold told the three-judge panel of the 9th U.S. Circuit Court of Appeals on Wednesday that Libby’s Center for Asbestos Related Disease acted in compliance with federal law.

A provision in the 2009 Affordable Care Act sponsored by former U.S. Sen. Max Baucus, a Montana Democrat, said asbestos-related disease could be determined for Libby-area residents even without a clinical diagnosis, assuming other evidence of disease such as an X-ray interpretation from an outside party, Bechtold said.

Bechtold also wrote in court filings that the judge overseeing the lawsuit gave the seven-person jury erroneous instructions, essentially predetermining the verdict.

BNSF urged the judges to affirm last year’s ruling.

Railroad Attorney Dale Schowengerdt argued that an outside X-ray reader can identify abnormalities in a patient’s lungs, but can’t diagnose them as asbestos-related disease.

“The abnormality could be asbestos-related disease, but it could also be a broken rib, emphysema, past thoracic surgery, autoimmune disease,” Schowengerdt said.

Asbestos-related diseases can range from a thickening of a person’s lung cavity that can hamper breathing to deadly cancer. Exposure to even a minuscule amount of asbestos can cause lung problems, according to scientists. Symptoms can take decades to develop.

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 from vermiculite that was mined by W.R. Grace & Co.

Federal prosecutors previously declined to intervene in the false claims case, and there have been no criminal charges brought against the clinic.

Clinic representatives argued during last year’s trial that they were acting in good faith and following the guidance of federal officials who said an X-ray reading alone was sufficient diagnosis of asbestos disease.

But Judge Dana Christensen issued a scathing judgment following the trial and ordered the clinic to pay $5.8 million in penalties and damages. He said clinic staff demonstrated “a reckless disregard for proper medical procedure and the legal requirements of government programs.”

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

The clinic filed for bankruptcy after the judgment, but that case was later dismissed at the request of government attorneys. They said the U.S. Department of Health and Human Services was the main funding source for the clinic, meaning any costs associated with the bankruptcy or the false claims judgment would have come at taxpayers’ expense.

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

There has been no attempt to revoke those services following the false claims ruling, according to testimony on Wednesday, and the jury in last year’s trial did not specify which patient’s cases were problematic.

BNSF is itself a defendant in hundreds of asbestos-related lawsuits. In April, a federal jury said the railway contributed to the deaths of two people who were exposed to asbestos in Libby decades ago. The jury awarded $4 million each in compensatory damages to the estates of the plaintiffs, who died in 2020.