The Montana Asbestos Clinic is seeking to overturn a court finding that it filed hundreds of false claims

A lawyer for a health clinic in a Montana town polluted with deadly asbestos asked a federal appeals court Wednesday to overturn a lower court’s ruling that it filed hundreds of false claims on behalf of patients.

That ruling came last year in a jury trial following a lawsuit against the Texas-based BNSF Railway clinic, which was separately found responsible for contamination in Libby, Montana, that sickened or killed thousands of people. Asbestos-contaminated vermiculite was mined from a nearby mountain and transported through the town of 3,000 by rail over decades.

After BNSF questioned the validity of more than 2,000 asbestos-related disease cases found by the clinic, a jury said last year that 337 of those cases were based on false claims that made patients eligible for Medicare and other benefits which he should not have received.

The judge overseeing the case ordered the clinic to pay nearly $6 million in penalties and fees. However, even if the lower court ruling is upheld, the clinic will not have to pay that money, according to a separate settlement it reached in bankruptcy court with BNSF and the federal government, court documents show.

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

A provision in the Affordable Care Act of 2009, 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 trial gave erroneous instructions to the seven-person jury, essentially predetermining the verdict.

BNSF asked the justices to uphold last year’s decision.

Railroad attorney Dale Schowengerdt argued that an external X-ray reader can identify abnormalities in a patient’s lungs but cannot diagnose them as asbestos-related diseases.

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

Asbestos-related diseases can range from a thickening of a person’s lung cavity that can impede breathing to fatal cancer. Exposure to even a tiny 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 from dangerous asbestos dust from vermiculite that was mined by WR 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 guidance from federal officials who said only an X-ray reading was a sufficient diagnosis of asbestosis.

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

Christensen said he was particularly concerned that the clinic’s former doctor had self-diagnosed an asbestos-related illness and that a nurse had approved benefits for her own mother.

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

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.

There was no attempt to revoke those services as a result of the false claims ruling, according to Wednesday’s testimony, and the jury in last year’s trial did not specify which patient cases were at issue.

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

Top photo: Dr. Lee Morissette shows a picture of lungs affected by asbestos exposure, April 4, 2024, at the Center for Asbestos Related Diseases in Libby, Mont. (AP Photo/Matthew Brown, File)

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