Health clinic in Montana Superfund town faces penalties for false asbestos claims

MISSOULA (AP) — A health clinic in a Montana town plagued by deadly asbestos contamination faces millions of dollars in penalties — and potential bankruptcy — after a jury found it submitted more than 300 false asbestos claims to the U.S. government, making patients eligible for Medicare and other benefits they shouldn't have received.

The federally funded Center for Asbestos Related Disease clinic has been at the forefront of the medical response to deadly pollution from mining near Libby, Montana.

The town of about 3,000 people along the scenic Kootenai River gained national notoriety when it was declared a Superfund site two decades ago, following media reports that workers and their families were getting sick and dying due to dust from a W.R. Grace mine.

A seven-person jury said Wednesday night that the clinic's false claims caused more than $1 million in damages to the federal government. Under federal law, the clinic is liable for three times the damages — or about $3.2 million — and millions of dollars more in potential penalties.

The verdict also could undermine lawsuits from asbestos victims against BNSF Railway and other entities that courts have held liable for contamination that's turned Libby into one of the nation's deadliest polluted sites. Health officials have said at least 400 people have been killed and thousands sickened from asbestos exposure in the Libby area.

The trial against the Libby clinic followed a civil lawsuit filed by BNSF in 2019 under the False Claims Act, which allows private parties to sue on the government's behalf. BNSF's lawsuit alleged the center submitted claims on behalf of more than 300 patients without sufficient confirmation that they had asbestos-related disease. The jury agreed.

The railway also said 1,369 people received federal benefits with no proper disease diagnoses — an argument the jury rejected.

Former Libby resident Judy Woller's husband worked at the mine and died of lung cancer in 2015 after being treated at the center. Woller said her lungs, too, have been scarred from asbestos exposure, a condition she said was determined by the clinic. She has a pending lawsuit against BNSF on behalf of her husband.

"They ought to be ashamed of themselves for tarnishing that clinic," Woller said of the railway in a telephone interview. "They're a big corporation of course and it always comes down to money. They don't want to pay money for lawsuits where they know they were in the wrong."

A BNSF spokesperson in an emailed statement blamed asbestos disease among Libby residents on W.R. Grace's mine.

"The focus of this trial was on CARD's treatment of the hundreds of people who are not sick," spokesperson Lena Kent said, using the clinic's acronym. "Millions of dollars of taxpayer money were lost, and resources were diverted from those who legitimately needed it."

Hampering the clinic's defense in the case was a ruling by U.S. District Judge Dana Christensen that barred testimony from former U.S. Sen. Max Baucus of Montana. Baucus helped craft a provision in the 2010 Affordable Care Act that made Libby asbestos victims eligible for government benefits.

Baucus told The Associated Press that he was stunned at the result of the trial. He questioned whether jurors understood that the health law says a diagnosis derived from reading X-rays is sufficient for coverage even if the clinic did not make a positive diagnosis of disease.

""It is written intentionally that way because it's very hard to detect this disease, and the detection often comes quite late, because it's a disease that develops so slowly," Baucus said.

Federal prosecutors previously declined to intervene in the case, and there have been no criminal charges related to false claims from the center.

The clinic and its high-profile doctor, Brad Black, have certified more than 3,400 people with asbestos-related diseases, according to court documents. It has received more than $20 million in federal funding.

The center's Executive Director Tracy McNew said Thursday it plans to appeal the verdict and had tried to abide by the law. If the ruling stands it would bankrupt the clinic, she said.

The jury's verdict did not specify which patients were involved in the false claims. McNew said she was trying to get clarity from the Social Security Administration, which oversees Medicare, on whether those patients will lose any government services.

The federal agency was not a party in the case. Spokesperson Nicole Tiggemann said administration officials don't know how the jury came up with 337 false claims.

BNSF — owned by billionaire Warren Buffett — is a defendant in numerous lawsuits over its own role in the town's contamination. In 2020, Montana's Supreme Court found BNSF liable for its handling of asbestos-tainted vermiculite in Libby, which the railroad shipped to numerous sites in the U.S. where it was used as home insulation.

The railway could be eligible for 15% to 25% of any amount recovered by the government from the false claims case.

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.

Dr. Black, a pediatrician, has said the ailments caused by the type of asbestos in Libby are difficult to detect and can be missed by outside radiologists less familiar with it than he is.

During closing arguments in the false claims trial, BNSF attorney Adam Duerk criticized Black's stated ability to perceive early signs of asbestosis disease that others missed.

"That's not the practice of medicine. That's the practice of roulette," Duerk said. "When you see it, when you're certain it's there, that's when you diagnose, not before."