Some light has been shed on the inner details of the nasty battle in the Clinton, Iowa Fire Department over the EMS overbilling allegations that led to a $4.5 million fraud settlement, the fire chief being dismissed then reinstated, and a legal malpractice suit being filed against the city’s attorneys.
At least as outlined in the malpractice lawsuit, the lion’s share of the blame for what occurred falls upon the attorneys who supposedly investigated the overbilling allegations, concluded the city’s liability was in excess of $100 million, and recommended the city settle the case by paying $4.5 million back to the US government.
Upon further investigation, it appears that the fire department did not commit fraud, and that the mistakes that occurred (if any) were within the realm of normal, creating a maximum potential liability of just over $100,000.
Recall that Fire Chief Mark Regenwether and EMS director Andrew McGovern were blamed for the overbilling problem and fired back in 2010. Both were later reinstated with backpay. The details of the case help to explain what happened and why they were initially made out to be scapegoats.
The Clinton Herald published an excellent overview of what occurred, but essentially:
- On September 19, 2008, Clinton firefighter Timothy Schultheis filed a Federal False Claims Act suit alleging Medicare fraud in Clinton’s EMS billing practices. He claimed BLS runs were being billed at ALS rates. The suit was sealed by a Federal Court as the matter was investigated.
- On September 10, 2009, the United States chose not to intervene in suit and the suit became public on September 19, 2009.
- Facing the suit, the city hired the law firm of Hopkins and Heubner PC to defend it; they investigated, concluded city had major liability exposure potentially exceeding $100 million, and advised the city to settle the case. Critical to that decision was that 95% of Clinton’s runs were billed as ALS while the national average was 60%.
- On September 22, 2010 the Schultheis case was settled with an agreement to pay $4.5 million to the US, 30% of which would go to Schultheis.
- In October 2010 Chiefs Regenwether and McGovern were fired.
- In December 2010 Chiefs Regenwether and McGovern were reinstated as it appeared the settlement was based on flawed information. Further researched revealed that after new “Medicare approved” billing practices were instituted the ALS-BLS split was 86 percent ALS and 14 percent BLS, and at most created a liability of $108,000.
- In March 2012 – the city of Clinton filed a lawsuit against Hopkins & Heubner for malpractice, alleging “It was negligent for defendants to have reasonably believed that any court or jury actually would have penalized the city in the amount of $10,000 to $15,000 [per run] for an inadvertent $45 [per run] overcharge to Medicare.”
Here is a copy of the malpractice suit. City of Clinton v