Attorneys for BNSF Railway, the U.S. government, and a Libby asbestos-screening clinic sparred in federal court Thursday over how the railroad giant can collect a multimillion-dollar judgment stemming from hundreds of fraudulent diagnoses made by the nonprofit health care clinic, a case litigated extensively in a 2023 jury trial.
The prior legal battle left the Center for Asbestos Related Disease, or CARD, saddled with a more than $3 million penalty. The jury found that the clinic had filed 337 false medical claims for patients who were not independently confirmed to have asbestos-related disease, thereby making them eligible for lifelong Medicare benefits, the Montana Free Press reports.
A quarter of that judgment is slated to go to BNSF because of a roundabout legal maneuver: the Berkshire Hathaway-owned company spent years prosecuting the fraud case after the federal government, which has repeatedly awarded CARD grants to carry out its asbestos screening, declined to do so.
The financial weight of the judgment drove CARD to declare bankruptcy in 2023. In later court proceedings, the parties agreed that most of the clinic’s assets were funded or purchased through federal grants and would therefore be held in trust for the federal government. But attorneys for the railroad company said Thursday it is still appropriate to enforce the judgment the clinic has so far failed to pay.
U.S. District Court Judge Dana Christensen, the Missoula judge who oversaw the False Claims Act, initiated the Thursday proceedings with an expression of shock at finding another case involving the same parties on his docket.
“I didn’t know if I was having a nightmare or what was happening,” Christensen said. “But here we are.”
BNSF is one of the primary defendants in ongoing litigation over asbestos contamination in the northwest Montana town of Libby. Health researchers estimate that the toxic byproduct of vermiculite mining and transportation has contributed to hundreds of deaths and thousands of cases of debilitating illness.
The Texas-based railroad was found liable in 2024 for the deaths of two patients with mesothelioma, a lung cancer linked to asbestos, resulting in an $8 million jury verdict. The company is currently appealing the decision, even as plaintiffs’ attorneys say many more cases against BNSF are waiting in the wings. Many of those patients-turned-plaintiffs were diagnosed by CARD.
BNSF attorney Chad Knight repeatedly asked Christensen to endorse the company’s strategy for pursuing the penalty against the clinic, reminding the judge of the severity of the case by reading excerpts from his own rulings and highlighting key testimony.
“It has been established that CARD is a serial fraudster,” Knight said.
“We did believe, and do believe, that the responsible thing to do is enforce the judgment,” he added later.
In May, BNSF leveraged the authority of local law enforcement to shutter the clinic and seize its assets, an action that led CARD to cease seeing patients and carrying out many of the terms of its federal grant, CARD Executive Director Tracy McNew testified Thursday. Officials from the Lincoln County Sheriff’s Office changed the locks on the doors, she said, permitting clinic staff to access the premises only under supervision.
Montana law lays out a timeline for seized assets subject to an unpaid judgment to be sold. In court arguments, attorneys said that the date for CARD’s property had been set for July 2, barring another ruling from Christensen.
Much of Thursday’s court proceedings centered on whether the U.S. government could intervene in the case, given its interest in the clinic’s grant-funded assets. Assistant U.S. Attorney Lynsey Ross sought to convince Christensen that, although the government declined to take part in litigating the false-claims case, it should be allowed to join the latest court proceedings in its role as the grant administrator.
Christensen repeatedly questioned Ross about the multiple hats the federal government appeared to be wearing and why he should allow intervention now, after the government opted out of prosecuting the clinic for fraud. The judge repeatedly removed his glasses to rub both hands over his face, appearing frustrated and confused.
“The U.S. government, which was defrauded, is not interested at all in recouping the monies that were the subject of this [fraud]?” Christensen posed. “You don’t seem very interested in collecting on any of it.”
Ross said that as a party to the case, the government will be well-positioned to review which of CARD’s assets were or were not purchased with federal grant funds.
Lawyers for CARD petitioned the judge to temporarily lift the block on the clinic’s assets. Attorney James Patten, representing CARD, also asked for a careful review of the clinic’s finances before allowing BNSF to garnish the proceeds of any asset sales.
“BNSF is shooting first and asking questions second,” Patten said, maintaining that the sale of some of CARD’s materials would “irreparably harm” the clinic and members of the public who benefit from the screenings it can provide.
Christensen said he will consider the arguments and issue a ruling as quickly as possible. But in his final remarks, the judge emphasized that he would not allow the court’s prior ruling to be neglected.
“There is a judgment in this case,” Christensen said, pointing his finger toward the bench where the lawyers for all parties sat. “And to the extent that there are assets available to satisfy that judgment, I’m not going to get in the way.”
This story was originally published by Montana Free Press at montanafreepress.org.
