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Medicaid Fraud Issue Headlines Big Week For Asbestos Litigation

Huffington Post, March 24, 2017

By : Sara Warner 

The insular world of asbestos litigation, best known for those ubiquitous mesothelioma TV ads, is having a decidedly non-insular month, with the U.S. Congress considering greater transparency. Concurrently, more than a dozen state attorneys general are investigating potential Medicaid fraud by some of the nation’s largest bankruptcy trusts.

With that as context, the Texans for Lawsuit Reform (TLR) Foundation tort-reform group has issued a white paper detailing the Lone Star state’s role in both establishing the litigation and regulating the lawsuits, including references to many of the same issues referenced in the Medicaid fraud investigation.

For anyone “connecting the dots” in asbestos issues, it’s becoming polka dots.

Forbes magazine’s Daniel Fisher broke the Medicaid story, explaining that “... the Attorney General of Utah has sued four of the largest asbestos bankruptcy trusts to try and force them to comply with civil investigative demands more than a dozen states have sent to the trusts, seeking information on whether they are squandering money and failing to reimburse states for Medicare and Medicaid expenditures.”

Fisher, a senior editor at Forbes who writes frequently about asbestos issues, reported that “... the AGs cite the Medicare Secondary Payer law, a little used federal statute that carries stiff penalties for insurers and others who arrange for lawsuit settlements to be paid directly to claimants without making sure they first settle outstanding bills for Medicare coverage. Penalties can include double damages and even plaintiff attorneys can be liable, said Frank Qesada, an attorney with MSP Recovery, a Miami law firm that has filed numerous national class actions on behalf of private Medicare providers.”

Fisher also backgrounds that “... the states cite the case of Garlock Sealing Technologies, a North Carolina company that convinced a judge to probe into the practices of asbestos attorneys after uncovering evidence they engineered claims to recover money from trusts before filing lawsuits against solvent companies, often claiming work histories that conflicted with documents they filed with the trusts. The AGs cite the cases of several named individual claimants, suggesting they have been combing through the Garlock files.”

That last sentence is both insightful and ominous.

“Individual claimants” is another term for “asbestos victims” and the Garlock files paint a difficult picture. In all 15 cases studied, the presiding judge said, there were issues of evidence suppression in each case. I’ve written since 2014 about “Perjury Pawns” in asbestos litigation and about concerns that shady practices by some lawyers will eventually ensnare people who more or less did what their lawyer told them to do. Time will tell if this lawsuit is the first step toward real trouble for those plaintiffs’ attorneys and hopefully not the families.

A similar “pawn” theme emerged in the Texas paper, with Hugh Rice Kelly, president of TLR Foundation, telling the Southeast Texas Record that some lawyers’ “... activities were carried out at the expense of the judicial system, thousands of plaintiffs who were pawns in the litigation game, and hundreds of defendants who paid settlements to uninjured plaintiffs.”

While the AG lawsuit does not name individual firms, both the Forbes article and the Texas paper name the Dallas-megafirm Baron & Budd (B&B), a pioneer in asbestos litigation and still one of the largest litigators in the U.S. Forbes says B&B is an example of big victims’ firms that have power over the sort of trusts being investigated while the Texas paper notes the firm’s role in asbestos litigation, including recent efforts of a Dallas journalist to unseal decades-old depositions about the so-called “coaching memo,” which many feel told clients how to express selective recall when it came time to identify asbestos exposures.

Those depositions remain sealed after an Austin court ruled in February that it did not have jurisdiction in the issue. The journalist told my producers that she has filed notice of appeal and might even introduce new evidence from the TLR research. (See an NBC Austin report on the issue here.)

Meanwhile, back in the D.C. swamp, a bill that would increase transparency of the very trusts getting all that AG attention has cleared the U.S. House and is headed to the Senate. If the expressed concerns of the attorneys general turn out to be well-founded, the implications for Medicaid programs could be significant, with hundreds of millions of dollars potentially at issue.

Until we know that, it’s at least worth noting that when it comes to asbestos, the heat is transparent, and it’s on.