The Clinton Herald, Clinton, Iowa

Local News

October 7, 2013

Trial update: Original settlement was $9.9 million

CLINTON — Timothy Schultheis asked the city for $9.9 million as the two parties negotiated an amount to settle a Medicare fraud case in 2010, attorney Michael Walker told jurors Friday. 

While the city’s initial counter offer was around $1 million, on Aug. 3, 2010, the city council agreed to settle for $4.5 million with the U.S. Department of Justice and Schultheis.

That settlement is the reason Walker is standing trial, facing a legal malpractice suit from the city of Clinton. Walker, along with his firm Hopkins and Huebner, represented the city in that case, which former firefighter and whistleblower Schultheis brought upon the city on behalf of the federal government, claiming the city had violated the federal False Claims Act by knowingly billing Medicare and Medicaid incorrectly for ambulance calls in order to receive a higher reimbursement rate.

The city claims Walker’s negligence led to the settlement and is seeking $4.67 million to recoup the settlement and other expenses incurred in the case. 

On Friday, Walker testified about the events that led to the city settling, along with the fines the city might have faced in the event it hadn’t settled.

During a closed session on April 13, 2010, the Clinton City Council authorized Walker to offer $1 million to settle the case, Walker testified. Schultheis wanted $9.9 million, Walker said. 

Beyond dwindling down the settlement amount, Walker said he also was able to negotiate some better terms from the federal government.

The U.S. government opted not to intervene in the the Schultheis suit, a point the city’s attorneys have continuously brought out during trial. Walker testified that he understood the government intervenes in only 10 percent of whistleblower cases. 

Despite the decision not to intervene, the feds did have to sign off on the settlement and claimed 70 percent of it. The other 30 percent belongs to Schultheis and his attorneys. The city made the first of 10 annual payments on Oct. 1, 2010. 

Assistant U.S. Attorney Maureen McGuire wanted the settlement to only cover Medicare and leave the potential false claims that had been made to Medicaid unsettled, Walker testified. Eventually, the government agreed to release both the Medicare and Medicaid claims. 

The feds also wanted the $4.5 million to have interest, a term of the settlement they ultimately backed away from. 

Walker, former city attorney David Pillers and former city administrator Jeff Horne talked about the savings the city realized from the $4.5 million settlement, Walker testified.

Since the settlement, the city has outsourced billing and implemented a dispatch protocol. Its ALS billing rate has dropped from 99 percent to 86 percent.

Assuming that 13 percent of calls, 1,560 calls a year, from 2002 to 2008 had been upcoded, Walker’s attorney Bob Waterman, walked through the different penalties the city could have faced.

The penalty for each improperly coded bill would have been between $5,5000 and $11,000. On the low end, the fines would be $8.58 million; on the high end $17.16 million. Those multi-million dollar penalties don’t include the amount the city could have been forced to pay in the difference between what was billed and what should have been billed.  

With more than eight hours of his testimony on the record, Walker will return to the stand today.

1
Text Only
Local News
  • 4-15-14 jail photo County hears jail proposal

    CLINTON -- A needs assessment study on the Clinton County Jail and communications department is bringing forth more questions on how the city and county will proceed. Former Clinton County Justice Coordinating Commission Coordinator Brian McKenrick a

    April 15, 2014 1 Photo

  • Sex abuse trial under way in Clinton CLINTON -- Prosecutors will present their case today in the trial of a Clinton man accused of sexual abusing a 3-year-old girl. The trial against Russell S. McColley, 39, began late Monday afternoon. He is charged with second-degree sexual abuse, a c

    April 15, 2014

  • 4-15-14 Clinton School Board Meeting School board finalizes new budget, cuts positions CLINTON -- Cutting 11 district staff positions to make up for a $636,000 shortfall wasn't an easy task for the Clinton School Board, but was a necessary step in balancing the 2014-2015 budget. That budget received unanimous approval Monday as Clinton

    April 15, 2014 1 Photo

  • Share My Name cover photo Northeast grad pens book on Egyptians' suffering GOOSE LAKE -- A new book co-written by a native of Clinton County reveals firsthand the suffering of Christians in Egypt at the hands of the radical Muslim Brotherhood. Writing as Rik Doirse to protect those who shared their stories with him, the aut

    April 15, 2014 1 Photo

  • Fulton park photo Fulton council to pursue new park on donated land

    FULTON, Ill. -- An unexpected turn of events has offered Fulton leaders something they had been hoping to see in the river city-- a community park in the Third Ward. During a Fulton City Council meeting last week, City Administrator Ed Cannon announc

    April 15, 2014 1 Photo

  • County attorney says officer justified in shooting

    The Jackson County Attorney's Office has found a Maquoketa police officer was justified in using deadly force after a motorists fired repeatedly at him.

    The Iowa Department of Public Safety on Monday released details of the April 1 shooting, including dash-cam video played at a news conference.

    April 14, 2014

  • IMG_1031.jpg Legislators: Session lacks productivity

    CLINTON -- Iowa legislators are frustrated with the way this year's session has unfolded, but not everything has come with disappointing results. During a legislative coffee gathering Saturday, Sen. Rita Hart, Rep. Steve Olson and Rep. Mary Wolfe exp

    April 14, 2014 1 Photo

  • Central eyes name change DEWITT -- It has been more than 50 years, and the Central Community School District of Clinton County is still talking about it -- Its name. Superintendent Dan Peterson for the second time brought the issue to the Central Board at its meeting Wednesd

    April 12, 2014

  • Board mulls over glass recycling CLINTON -- Plans are continuing at the Clinton County Area Solid Waste Agency to investigate a contract for glass recycling. Director of Operations and Education Brad Seward on Thursday told the CCASWA board that he is still working with Ripple Glass

    April 12, 2014

  • Senior housing plan picks up steam

    CAMANCHE -- The likelihood of a senior housing development in the city of Camanche is gaining momentum as residents came out in full support of the first installment of focus group meetings hosted by Park Vista Senior Housing Management. Two of the f

    April 12, 2014

Facebook
Clinton
Camanche
Fulton
Clinton Herald photos


Browse, buy and submit pictures with our photo site.