Montana clinic files for bankruptcy following $6 million judgment over false asbestos claims

BILLINGS, Mont. (AP) — A health clinic in a Montana town plagued by deadly asbestos contamination has filed for bankruptcy protection after a judge ordered it to pay the government almost $6 million in penalties and damages for submitting hundreds of false claims for benefits.

The federal bankruptcy filing, submitted Tuesday, will allow the Center for Asbestos Related Disease clinic in the small town of Libby to continue operating while it appeals last month’s judgment, said clinic director Tracy McNew.

A seven-person jury in June found the clinic submitted 337 false claims that made patients eligible for Medicare and other benefits they shouldn’t have received. The federally-funded clinic has been at the forefront of the medical response to deadly pollution from mining near Libby that left the town and the surrounding area contaminated with toxic asbestos dust.

The $6 million judgment against it came in a federal case filed by BNSF Railway under the False Claims Act, which allows private parties to sue on the government’s behalf. The clinic has denied any intentional wrongdoing and its attorneys have appealed the jury’s verdict to the 9th U.S. Circuit Court of Appeals.

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.

“We filed (for bankruptcy) because we want to continue to offer the same services and keep our doors open to pay our employees,” said McNew.

The jury did not identify the 337 patients who were the subject of the false claims and federal officials have not said if they will lose any benefits. Under a provision in the 2009 federal health law, victims of asbestos exposure in the Libby area are eligible for taxpayer-funded services including Medicare, housekeeping, travel to medical appointments and disability benefits for those who can’t work.

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

U.S. District Judge Dana Christensen awarded BNSF 25% of the total proceeds in the false claims case, as allowed under federal law. BNSF representatives did not immediately respond to a request for comment on the clinic’s bankruptcy.

In his July 18 judgment, Christensen blasted the clinic’s “reckless disregard” for medical procedures and cited evidence from trial of high rates of opioid pain medication prescriptions for people who may not have had a legitimate asbestos-related diagnosis.

McNew disputed the criticisms and said the the case came down to opposing interpretations of what was allowed under the 2009 health law. A new medical director took over two years ago — replacing longtime clinic doctor Brad Black — and the clinic has since stopped prescribing opioids, instead referring pain management to outside providers, McNew said. At the time of Black’s retirement, only 39 of the clinic’s thousands of patients were on opioids, she added.

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

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. The contamination came from tainted vermiculite that was mined near town by Maryland-based chemical company W.R. Grace & Co.

The mine closed in 1990 but asbestos has continued to be found, including at a BNSF rail yard in the heart of the town of about 3,000 people.

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.