By Katie Dahlstrom
UPDATE: Former Clinton Fire Chief Mark Regenwether was appalled and upset when he learned the city was being sued, accused of fraudulently coding ambulance calls in 2009. He had a similar reaction when a year later he learned the city had settled the suit for $4.5 million.
"I couldn't believe it," he said Tuesday as he testified in the city's legal malpractice suit. "There was no fraud and that's a huge amount."
Regenwether was the first witness the city of Clinton called during the first day of testimony as the city of Clinton tries to prove legal malpractice on the part of attorney Michael Walker and his law firm Hopkins and Huebner.
The city claims Walker's negligence in a 2008 emergency medical services case resulted in the city reaching a $4.5 million settlement with whistleblower Timothy Schultheis and the U.S. Department of Justice in 2010.
Mike Hannafan, from the Chicago law firm representing the city in its legal malpractice suit, questioned Regenwether on Tuesday afternoon regarding the whistleblower case. His questions ranged from Tim Schultheis's personality to the city's process for coding ambulance calls.
Regenwether testified he met with Walker and other city employees in September 2009 where he learned the city was being sued by Schultheis for allegedly coding ambulance calls as advanced life support rather than basic life support in order to get higher reimbursement rates from Medicare and Medicaid.
When he learned about the allegations he was appalled and upset, he said. During the meeting, Walker asked then finance director Deb Neels, finance clerk Sarah Nolan, Andrew McGovern and then city attorney Paul Walter questions to gather information about the city's ambulance billing. Regenwether told Walker that McGovern was in charge of coding ambulance calls and was dismissed from the meeting. This was the last time Regenwether saw or heard from Walker, he said.
Regenwhether also testified the September 2009 meeting wasn't the first time he had been contacted about the city's ambulance billing procedures.
In the fall of 2007, McGovern, who at the time was in charge of emergency medical services and training, told Regenwether that Schultheis, who was hired earlier that year, had complained about the city's coding procedures. While McGovern told Regenwether he tried to explain the coding to Schultheis, Schulteis was not satisfied.
McGovern showed Regenwether a scenario from a coding training manual the department used to illustrate why calls were being billed as ALS rather than BLS. The scenario entailed the city ambulance being dispatched to a scene for a patient with heart or respiratory troubles, Regenwether recalled. If the crew did an ALS assessment, but only provided BLS care, the call would still be billed as ALS, the scenario read.
"It appeared the procedure we were following, the fire department was following, was right off that sheet," Regenwether said Tuesday.
Regenwher testified Schultheis never contacted him about the coding problems or submitted any of his complaints in writing.
Schultheis and Regenwether did discuss other things, Regenwether said Tuesday: Once, when Schulteis was upset over his shift being switched and another time when Schultheis was seen at a golf course the same day he called in sick to work.
Neither of those discussions ended with Schultheis being satisfied nor was he disciplined, Regenwether said, calling Schultheis "headstrong" and "not the easiest to talk to."
Schultheis filed his whistleblower suit in September 2008, but it was kept under seal until September 2009. His last working day with the department was in November 2008.
Before the suit was unsealed, Regenwether and then-mayor Rodger Holm received a letter on Jan. 28, 2009 from the U.S. Department of Justice informing them the federal government was looking into billing submitted by the city to Medicare.
At issue was the ALS reimbursement when only BLS services were provided, the letter stated. According to documents that had been submitted to Medicare, almost 99 percent of bills submitted from 2005 to 2008 were ALS bills.
The rate of ALS billings was not surprising due to Clinton's large elderly and impoverished population, Regenwether testified before Judge Nancy Tabor ended his testimony for the day.
Regenwether will take the witness stand again today.
ORIGINAL: Both attorney Michael Walker's qualifications and the city of Clinton's ignorance of improperly coded ambulance calls were called into question during opening statements delivered Tuesday morning in the city's legal malpractice lawsuit.
The second day of the trial of the city of Clinton versus attorney Michael Walker and his firm Hopkins and Huebner started Tuesday morning with the city, through Chicago law firm Hannafan and Hannafan,
delivering an opening statement that explained to the jury why the city should be awarded $4.67 million.
The city is suing Walker and his law firm Hopkins and Huebner, which represented the city in the emergency medical services case that resulted in the city settling with whistleblower Timothy Schultheis and the U.S. Department of Justice for $4.5 million in 2010.
Walker’s firm was retained to represent the city’s interests in 2009 after Schultheis filed a complaint under the Federal False Claims Act that emergency medical calls handled by city ambulances were being improperly coded. By coding even routine calls as emergency calls, known as ALS calls, Schultheis claimed the city was able to receive higher reimbursement rates from Medicare and Medicaid. The city wants to recoup the costs of the settlement along with Walker's attorney fees and money paid to EMS expert Douglas Wolfberg, who the city hired for the EMS case.
Mike Hannafan told members of the jury they have two jobs as the case unfolds.
"If the Schultheis case went to trial and whether you think the city would have won and Schultheis would have lost, job one," Hannafan said. "Then you have to decide if Mr. Walker and his firm committed legal malpractice by not taking the case to trial and settling for too much too soon."
Hannafan forewarned the jury they would hear from the defense that the city's erroneous billing could have resulted in the city paying anywhere from $40 million to $100 million in fines under the worst case scenario. However, Hannafan argued, the suit could have ended in the city's favor, but Walker was not qualified to handle the case.
"This case should have and could have gone to trial and could have been defended if they city had a lawyer who knew what he was doing," Hannafan said.
According to Hannafan, Walker had never heard of the Federal False Claims Act before being hired to defend the city in the EMS case. Further, Hannafan contended, Walker did not do enough work on the case before he suggested the city settle.
In January 2010, a federal judge set a trial date for June 2011. Three months later in April 2010, Walker told his staff to stop working on the city's EMS case because he was going to settle it, Hannafan told the jury.
While Walker entered defenses for the city in the EMS case, he did not do anything with them, Hannafan said. Hannafan argued the city could have walked away from the case because it could prove it did not knowingly file false claims. Walker didn't take any depositions during
his handling of the case or monitor Wolfberg, he claimed. Hannafan also lambasted Walker for not questioning Wolfberg's statistic that on average a city should have 40 percent ALS calls and 60 percent BLS calls for Medicare and Medicaid. During the period of the EMS lawsuit the city had around 99 percent ALS calls for Medicare and Medicaid.
"He was hired to defend the case and he did not. He babysat the case for 10 months and then rolled over to a Des Moines law firm and Schultheis," Hannafan said.
The defense then had its turn to tell the jury its view. Bob Waterman, with Lane and Waterman, said the settlement was necessary.
"This was a case that needed to be settled and would have gotten worse had it gone on," Waterman said.
In their research, the defense found at least 1,488 cases of improperly coded calls, which Waterman said could have resulted in the city being fined more than $16 million.
While Walker had not worked with the Federal False Claims Act before, he had worked on cases without federal statutes, Waterman said.
He went on to explain that Walker found several red flags as he worked on the city's case that led him to suggest a settlement rather than a trial. The city had duplicate records of calls, suggesting they had been changed to get a higher reimbursement. Also, firefighter Andy McGovern, who was in charge of training the coding procedures, had been asking for the city to outsource ambulance billing and for Clinton County to institute a dispatch protocol since 2002, Waterman said, which Walker
believed would not look favorable for the city.
Walker also believed McGovern would not have made a good witness. He did not depose Schultheis, Waterman said, because he did not want McGovern to be deposed.
An "extreme level of problems" in the city's finance department, where bills were sent out for reimbursement, as well as missing e-mails concerning the EMS codes were also cause for Walker's concern, Waterman told members of the jury.
Walker also felt he could not prove the city didn't act with deliberate disregard or ignorance when it coded at the higher rate.
"The trouble was the facts. They were billing incorrect and in notice of that and didn't do anything," Waterman said.
With opening statements delivered, the city will call former fire chief Mark Regenwether as its first witness Tuesday afternoon.