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Thursday, Apr. 8, 1999

Justice Department stays out of Driscoll suit

But investigation into fraud claims will continue

By JENNY STRASBURG
Staff Writer

   At least for now, the U.S. Department of Justice has declined to intervene in a federal whistleblower lawsuit that accuses Driscoll Children's Hospital, the Driscoll Foundation and several physicians and trustees of defrauding the government.
   The local U.S. Attorney's office filed the Department of Justice's notice Wednesday, meeting a deadline set in March by U.S. District Judge Hayden W. Head Jr.
   The Justice Department stated that its investigation is not complete and the department therefore is "not able to decide, as of the Court's deadline, whether to proceed with the action."
   The Justice Department said its investigation into the charges against Driscoll will continue.
   The notice also emphasized certain conditions of the False Claims Act - the federal law under which the lawsuit is filed - which say the court shall not grant any motions to dismiss the lawsuit without first gaining written consent from the attorney general.
   A Driscoll Foundation trustee and member of the hospital governing board said Wednesday that the Justice Department's decision not to intervene in the whistleblower lawsuit is evidence that the allegations are unfounded.
   "It's just wonderful news," said Nettie Ruth Hoskins, who also is controller of the foundation and a defendant in the lawsuit.
   The Justice Department's decision Wednesday does not bar it from joining the case in the future, as allowed by the False Claims Act, also known as the whistleblower law.
   Lois Koester, the interim chief operating officer and designated spokesperson at Driscoll, could not be reached for comment Wednesday. Koester is not a defendant in the lawsuit.
   

Pending lawsuits


   William N. Goodwin filed the lawsuit in May 1998, about a month after he left his job as chief financial officer at the hospital. He had worked there since 1992.
   Goodwin, 47, accuses the defendants of conspiring to overcharge the government by several millions of dollars per year over about five years. Among the allegations, Goodwin accuses defendants of overbilling for services provided to Medicaid patients and inflating reports of charity care to receive higher government reimbursements.
   The case remained under seal until last month while the Department of Justice investigated Goodwin's charges.
   A separate case is pending in federal court against Goodwin. The hospital accuses him of breaking a confidentiality agreement by posting financial figures on the Internet and otherwise disclosing privileged information after he left the hospital.
   Also this week, attorneys for the hospital filed a motion for dismissal of complaints against three physicians who are defendants in the whistleblower lawsuit.
   The motion asks that pediatricians Joseph Oshman, William Dirksen and Edgar Cortes be removed as defendants because claims against them fail to constitute a conspiracy or violation of anti-trust laws, or are too "vague and ambiguous" to respond to.
   No hearing has been set for the motion to dismiss.
   Besides the hospital, the foundation, Hoskins, Oshman, Dirksen and Cortes, defendants in the lawsuit are Roger Timperlake and Christopher Comstock, pediatric orthopedists specifically accused of overbilling Medicaid by about $1.2 million over five years; J.E. "Ted" Stibbards, Driscoll's former chief executive officer; Teresa Clark, Driscoll's head of government affairs; foundation Executive Director Ted Daniel; Wayne New, Driscoll's former chief operating officer; and T.S. "Ted" Scibienski, a foundation trustee.
   Parties on both sides of the lawsuit have been waiting for Wednesday's notice, because it in large part dictates how they will proceed with accusations and defense.
   

Lawsuit continues


    Goodwin said the Justice Department's announcement Wednesday, however, does not change his case.
    "It'll go on. We will continue," Goodwin said.
   "The decision won't have any bearing on our decision whether or not to pursue the suit," said his attorney, Cage Wavell. "It doesn't make any difference one way or another."
   The Department of Justice by law must investigate lawsuits filed under the False Claims Act. It chooses to intervene in about 30 percent of cases filed and declines action in the others, said Chris Watney, a department spokesperson in Washington, D.C.
   The government weighs the merits of the charges and either intervenes or declines based on its own investigation, Watney said. The Justice Department also can elect to intervene on some allegations but not others.
   Whether or not the government intervenes in the lawsuit, it still stands to gain should Goodwin's lawsuit prove successful and federal money be recovered.
   "The case is still being brought on behalf of the federal government, even if the government has not intervened," said Amy Wilken, a staff attorney with Taxpayers Against Fraud and The False Claims Act Legal Center.
   The nonprofit organization in Washington, D.C. advocates whistleblower lawsuits - also called qui tam lawsuits - as a means to combat fraud against the federal government.
   In fiscal year 1998, 417 whistleblower lawsuits were filed, resulting in more than $331 million returned to the government, according to Taxpayers Against Fraud.
   Wilken said a decision by the Justice Department not to intervene does not necessarily mean a lawsuit lacks merit. The government has limited time, money and staff to conduct its investigations, so it declines many lawsuits that eventually result in significant recoveries of taxpayer money, Wilken said.
   But the government is a powerful co-plaintiff, one that most attorneys representing whistleblowers want on their side, said attorney Mark D. Polston of Washington, D.C.
   After the Justice Department declines intervention in a case as it did in Goodwin's case Wednesday, the likelihood declines that the Justice Department will intervene later, Polston said.
   He has practiced exclusively in whistleblower lawsuits the past two years; from 1989 to 1993, he investigated whistleblower lawsuits on behalf of the Department of Justice.
   Staff writer Jenny Strasburg can be reached at 886-3779 or by e-mail at strasburgj@caller.com

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  © 1999 Corpus Christi Caller Times, a Scripps Howard newspaper. All rights reserved.


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