Hearing set June 12 in CARD Clinic seizure; sheriff's sale set for July 2

Yahoo

14 hours ago

Jun. 6—A federal judge in Missoula will hear arguments next week dealing with BNSF's attempts to seize the assets of Libby's CARD Clinic.
The hearing is scheduled for 9:30 a.m. Thursday, May 12, in the Russell Smith Federal Courthouse. Judge Dana L. Christensen will hear the case.
Also, Lincoln County Sheriff Darren Short signed a notice Thursday, June 5, giving notice to a sheriff's sale July 2 to the highest bidder to satisfy the judgment for the plaintiff, BNSF, with interest and costs.
While the date is subject to change pending an order from the court, the sale is currently set for 10 a.m. Wednesday, July 2.
According to Montana code, the sheriff's office has 120 days from the day it received the writ to conduct the sale. The sale will include the real property as well as office equipment, furnishings, and other machinery, fixtures and equipment.
For more information, contact the sheriff's office at 406-293-4112, ext. 1232.
The non-profit clinic, which has served thousands of patients afflicted with asbestosis and other deadly ailments, has been closed since May 7 when the Lincoln County Sheriff's Office served a Writ of Execution on the Center for Asbestos Related Disease, Inc. to satisfy a $3.1 million judgment. A writ of execution is a court order directing a sheriff to seize and sell property to satisfy a judgment.
The judgment stems from a lawsuit won in 2023 by Texas-based BNSF, owned by billionaire Warren Buffett, that accused the clinic of filing hundreds of fraudulent claims over several years. Federal jurors ruled two years ago that the clinic made or presented false claims 337 times, including 91 violations after November 2015.
CARD filed for Chapter 11 bankruptcy in August 2023, allowing it to continue operations. But the United States intervened in the bankruptcy proceeding and determined that the judgment should not be paid, so the bankruptcy was settled and dismissed in spring 2024.
In September 2024, CARD lost an appeal to a jury's 2023 judgment.
In the meantime, CARD officials recently found another location to serve its patients. It is located at 118 West 3rd Street. It will be open the same hours as the clinic, 8 a.m. to 5 p.m. Monday through Wednesday.
"We are still receiving grant money and we have a mission to fulfill so we're pleased we can still offer some services," McNew said. "Patients are welcome to stop in and we'll work to answer their questions."
McNew said they are able to answer emails from patients and send test results to patients. She also hopes that they will be able to continue outreach education.
Another hope is that the new location will have working phones next week.
McNew said since the seizure of the clinic, BNSF has taken at least $100,000 from the clinic's operating account.
In a May 9 court filing, Billings-based Assistant U.S. Attorneys Mark Smith and Lynsey Ross filed a motion in Lincoln County District Court to quash the court's writ on the CARD Clinic. In the motion, the attorneys said it contacted BNSF attorney Cole Anderson and requested the company withdraw the application. But the company declined and objected to the motion.
"In 2023, a Montana jury found that the CARD clinic had submitted false asbestos claims costing taxpayers millions of dollars. The judge determined the amount of damages to be repaid, and the process for recovery is set by law," said Kendall Sloan, BNSF Director of External Communicatons.
According to a declaration by CARD Executive Director Tracy McNew filed with the motion to quash, she reported that all CARD employees were compelled to vacate the clinic May 7 following the seizure and the sheriff's office replaced all of the locks.
Thursday, May 8, following a request, certain CARD employees were allowed to enter the clinic to access the CARD Quickbooks accounting program. McNew said sheriff's office officers monitored CARD employees activities and once they were done using the accounting program, they left the office and haven't returned.
In a May 20 filing in federal court in Missoula, CARD's attorney, James A. Patten of Patten, Peterman, Bekkedahl and Green, a Billings firm, sought to join the federal motion to quash the writ and sought a preliminary injunction and temporary restraining order.
CARD argues that the railway's writ violates bankruptcy proceedings and applicable law. It is seeking the injunction and restraining order to prevent further harm upon CARD and the wrongful interference with the clinic due to its status as a federal grant recipient.
In 2011, CARD was chosen by the U.S. Agency for Toxic Substances and Disease Registry for a four-year grant for a screening program for environmental health hazards, including asbestosis, pleural thickening and pleural plaques, caused by exposure to hazardous substances at Libby's Superfund sites. The federal grants continued with the most recent reward in September 2024. It will run through August 2029.
The argument also includes the harm the clinic will suffer because it cannot screen patients, provide education, monitor diagnosed patients and provide follow up of testing results and respond to patient requests.
In another declaration by McNew, she said the clinic had to cancel about 50 appointments per week since the May 7 closure. It also said the clinic's pulmonary function testing equipment, the only of its kind in Lincoln County, has sat unused as a result of BNSF's seizure.
"CARD has on several occasions identified patients in need of emergency care and/or serious treatment for previously undiagnosed malignancies as part of our routine screenings," McNew wrote.
BNSF replied to the clinic's filings in a 53-page document filed May 30 in federal court.
Among its arguments, railway attorneys Knight Nicastro MacKay maintain because the federal government didn't intervene in the original lawsuit, it doesn't have a right to stop BNSF from recovering money from the judgment.
"The Government begins by claiming that litigation in which the United States is a party is reserved to the officers of the Department of Justice, under the direction of the Attorney General, citing U.S. statute.
But BNSF attorneys say federal attorneys left out a relevant portion of the statue which directly applies.
It reads, "Except as otherwise authorized by law, the conduct of litigation in which the United States, an agency, or officer thereof is a party, or is interested, and securing evidence therefor, is reserved to officers of the Department of Justice, under the direction of the Attorney General."
They also say because CARD has mixed its grant income with non-grant income that it must prove its bank accounts and property represent only grant money.
During the 2023 trial, a number of donations from plaintiff attorneys were revealed. From 2012 to 2017, the clinic received $81,000 from attorneys and $30,000 for a mortality study.
Dr. Brad Black, CARD's former medical director, testified to $116,000 in donations from Montana plaintiff attorneys. The list didn't include two $10,0000 donations from a national plaintiffs' law firm or a $24,381.94 donation for the clinic's new parking lot.
BNSF also believes CARD has received its most significant non-grant income in the form of Medicare payments for treating its patients.
"This is the equivalent of personal income for CARD and the amount of this income what property it was used to buy is still unknown to BNSF," the attorneys argued.
Railway attorneys also said they do not intend to use grant funds to satisfy the judgment or ask to liquidate CARD assets pending the federal court's review of whether grant funds were mixed with non-grant funds to secure the assets.
Gold miners discovered vermiculite in Libby in 1881. In the 1920s, the Zonolite Company formed and began mining the vermiculite. In 1963, W.R. Grace bought the Zonolite mining operations. The mine closed in 1990. In 2002, the Environmental Protection Agency placed the site on the Superfund program's National Priorities List and cleanup work continues to this day.
Fibers from the asbestos tied to vermiculite mining that began in the 1920s can embed in lung tissue and cause fatal lung disease. No one knows how many people in the region have died from the effects of asbestosis, mesothelioma or other cancers linked to exposure to asbestos-containing vermiculite mined, processed and shipped from Lincoln County and Libby.
BNSF's involvement relates to asbestos-contaminated vermiculite in the rail yard that a 2024 federal jury said was a considerable factor in the negligent deaths of former Libby residents Thomas Wells and Joyce Walder. Both Wells and Walder lived near the railyard and were both diagnosed with mesothelioma and died in 2020.
Hundreds of people died and more than 3,000 were sickened from asbestos exposure in the Libby area, according to researchers and health officials. BNSF faces accusations of negligence and wrongful death for failing to control clouds of contaminated dust that used to swirl from the rail yard and settle across Libby's neighborhoods.
The vermiculite was shipped by rail from Libby for use as insulation in homes and businesses across the U.S.