Judge Issues Sanctions Against Halifax For Destroying Files

A federal magistrate judge has ordered sanctions against Daytona Beach, Fla.-based Halifax Health for destroying patient files that were to be produced as part of an ongoing legal battle, and threatened the medical center with additional sanctions for filing a "tardy and deficient" statement with the court, according to a Daytona Beach News-Journal report.

In 2009, a whistle-blower lawsuit was filed against Halifax alleging the medical center knowingly violated the Stark Law by paying physician kickbacks. The lawsuit further alleged Halifax had violated the False Claims Act by submitting fraudulent claims to Medicare.

Because of the complexity and breadth of the lawsuit, U.S. District Judge Gregory Presnell agreed to split the case into two trials — one focusing on physician kickbacks and a second focusing on the fraudulent billing.

The first trial was scheduled to begin March 3, but just before the jury was seated, Halifax and prosecutors came to a settlement agreement for $85 million.

Halifax and Elin Baklid Kunz, the Halifax employee whistle-blower, are now engaged in settlement negotiations concerning the second portion of the case.

Concerning the alleged fraudulent billing, the court has ordered Halifax to turn over patient records relevant to the case several times, with the first request in 2009. Halifax admitted in December 2013, it destroyed many of the records the court had requested in 2012, despite the suit being filed in 2009 and a hold being placed on documents related to the case, according to Daytona Beach News-Journal.

On May 27, the court ordered Halifax to pay the whistle-blower's attorney's fees related to trying to obtain the records Halifax destroyed and stated Halifax's conduct was "reprehensible." The attorney's fees are expected to be in the "six figures," according to the report.

As part of the mediation and settlement process, both parties were asked to submit non-argumentative statements to the court containing an outline of remaining issues in the case and settlement positions.

The court wrote on May 26 that Halifax's statement was submitted late and was inadequate, as it was "mostly argumentative." The court stated sanctions would be entered against Halifax if it did not correct the statement by the following day, according to the report.

Halifax's attorneys did submit a new statement with additional information by the deadline, and the parties are not progressing to the mediation process, according to the report.

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