Alleged asbestos fraud scheme started years ago

Chris Dickerson and Justin Anderson Jul. 24, 2009, 8:20am



CHARLESTON, W.V. – A Pittsburgh-based law firm and a West Virginia physician were part of an intricate web of deceit that led to big money for all, say their accusers in a civil fraud lawsuit.

The Robert Peirce and Associates firm and Bridgeport radiologist Dr. Ray Harron face allegations in federal court leveled by CSX Transportation that the two conspired to create false asbestos exposure diagnoses for CSX employees.

With a trial set to begin Aug. 11 at U.S. District Court in Wheeling, CSX seeks to recover the cost of defending and settling allegedly fraudulent asbestos claims.

The Peirce firm and Harron deny being involved in fraud, according to court documents.

The players

It all begins with "The Mason Enterprise," according to court filings. And the alleged fraud wasn't just targeting CSX, but other industrial giants such as Owens Corning.

Charlie Heath Mason, an Alabama resident, was co-owner and operator of a company called N&M -- the latest of at least four others that were in the same business of coordinating mass screenings of potential plaintiffs.

The earliest of the "enterprise" was begun by Jewel "Jerry" Pitts, Mason's step-grandfather in 1989. The enterprise companies were called Pulmonary Advisory Services, Pulmonary Testing Services and Gulf Coast Pulmonary Laboratory. Jewel and his cousin, Glenn Pitts, together owned another company, Pulmonary Advisory Services of Louisiana.

In the early 1990s, Glenn Pitts approached a former Mississippi chiropractor, Dr. Harry Netherland, asking if Netherland could perform x-rays for the Pitts' companies, court filings say.

Netherland provided his wife, Molly Ruth Netherland, with the office space and equipment to perform the x-rays for the Pitts' businesses.

Glenn Pitts got out of the business in 1992 and transferred the testing equipment to his cousin Jewel "Jerry" Pitts, who then started Pulmonary Testing Services. This company worked exclusively for asbestos injury law firms, the filings say.

In 1993, Mason graduated high school and started working for his step-grandfather's company, doing clerical work, the filings say. He also directed potential claimants to law firms that paid PTS for its work.

Harron came into the fray in late 1994 to replace two other doctors who had previously been reading the x-rays and diagnosing clients. Harron became the diagnosing physician and medical director of PTS in 1995, the filings say.

Harron quit his practice in radiology and began exclusively evaluating the x-rays taken of potential asbestos litigation clients.

The first rumblings of trouble came in 1996 when Owens Corning sued the Pitts cousins and a former doctor for violations of federal racketeering laws in U.S. District Court in New Orleans. The Pitts eventually settled with Owens Corning.

Then PTS stopped performing the screenings.

But that didn't stop Jerry Pitts. He and stepson Ted Broadus started Gulf Coast Pulmonary Laboratory. Molly Netherland continued to provide the company with x-rays through her business and Harron continued to read x-rays and give diagnoses for them.

The Florida Attorney General in 1996 closed Gulf Coast for engaging in deceptive trade, court filings say.

Mason continued the enterprise by starting N&M that same year, bringing Netherland and Harron along. From 1996 through 2005, the company worked almost exclusively for law firms, the filings say, screening more than 45,000 people in connection with asbestos personal injury litigation. The company grossed more than $25 million over that time, the filings say.

N&M performed screenings for law firms in several states, including West Virginia, the filings say.

By 2001, Mason hired Christopher Taylor to actively court law firms to use N&M in performing screenings in litigation. Business increased for N&M when Taylor came on board, filings say.

Neither Mason nor Netherland was qualified to perform the type of work each was doing, the filings say, with Mason being blamed for playing "fast and loose with data" to ensure law firms got the results they wanted. Mason allegedly went as far as performing pulmonary function tests on people, though he was not qualified to do so, the court documents say.

Harron, all the while, was allegedly "over reading" the x-rays provided to him to falsely report lung scarring caused by the inhalation of asbestos or silica dust, filings say. Harron's rate of positively diagnosing people with asbestos damage "far exceeded" actual occurrence, the court filings say.

Harron's son, Andrew, later was brought in to take over for his aging father.

Eventually, several courts began to ban any screenings that originated from N&M.

How it worked

According to the CSX lawsuit, N&M spent more than $1 million in wooing law firms and lawyers. The company sent solicitation letters and brochures to targeted firms, representing itself as a group of "qualified professionals."

When the law firms were on the hook, N&M went to the media to generate claimants, court filings say. The company promised free screenings, but the cost was deducted from any settlements reached with the defendant companies.

Sometimes the law firms would participate in drumming up customers, filings say.

Once customers were found, the company would hold mass screenings in places such as motels, union halls and parking lots, filings say. The process allegedly would be tailored to whichever law firm had hired N&M.

When the x-rays were collected, they were sent to the Harrons.

According to the filings, the normal rate of lung scarring in a population of exposed individuals was 15 percent.

With the Harrons on board, some law firms saw rates of 90 percent, filings say.

Harron also is accused of finding a great number of people positive for both asbestos and silica poisoning. One set of results would be sent to a law firm engaged in asbestos litigation and the other sent to a firm engaged in silica litigation.

According to the filings, it is rare for a person to be affected by both asbestos and silica poisoning.

Once the positive diagnoses were achieved, N&M would advise those who did not yet have lawyers that if they went with a specific firm (one that hired N&M), they would not be charged for their screening and that a lawyer was waiting to talk to them nearby.

Should a law firm ask that the X-rays be read by a doctor other than Harron, N&M would send the X-rays on to another doctor who worked for N&M, according to the lawsuit. If that doctor found the X-rays negative, N&M would shop the X-rays around until a doctor got a positive read, filings say.

Some law firms would request this to hide the involvement of Harron in the X-ray readings, the lawsuit contends.

One allegation involving the Peirce firm and Harron says that the firm obtained a former CSX employee's X-ray from the Veterans Administration. Harron positively diagnosed the man. But the firm "invented" a diagnosing doctor in Huntington to allegedly hide Harron's involvement, the suit claims.

In the end, armed with the positive results, the law firms would flood courts with lawsuits. Instead of fighting each individual case, many companies simply settled, filings say.

Last month, a federal judge in Wheeling ruled that the Peirce firm must produce correspondence with Harron. U.S. District Judge Frederick Stamp affirmed Magistrate Judge James Seibert, who ruled in May that CSX could see correspondence between Harron and the Peirce firm.

Stamp's order allows CSX to see all communications between the firm and Harron since 1999, including consulting agreements and other contracts. It allows CSX to see any documents relating to expenses Harron or the firm created or retained in connection with Harron's review of X-rays. And, subject to a confidentiality order, it allows CSX to see the firm's internal correspondence concerning selection and retention of consulting physicians.

More on Harron

Harron reportedly has been paid millions by lawyers to diagnose potential asbestos victims. He sometimes did it at the rate of one patient per minute, reports say. The New York Times has reported that Harron made 75,000 diagnoses since the mid-1990s, commonly reading as many as 150 x-rays per day, at a rate of $125 each.

"In the eyes of defense lawyers fighting some of those claims, Dr. Harron was not a professional rendering an independent opinion, but a vital cog in a multibillion-dollar lawsuit machine," The New York Times said of Harron. "They contend that Dr. Harron's X-ray evaluations are unreliable at best, fraudulent at worst."

The Times also said that in 2005, Federal Judge Janis Graham Jack found that Harron "failed to write, read, or personally sign" reports supporting 6,350 claims by people saying they had inhaled silica, another potentially dangerous material.

Testifying before Jack in Texas, Harron admitted to making diagnoses from X-rays taken by a screening company using mobile machines in parking lots. There were no doctors supervising the X-rays. The owners of the screening company said they were working for lawyers.

Harron said he did not physically examine the patients. He also testified that secretaries interpreted his X-ray readings into diagnoses letters that were rubber-stamped with his signature and mailed without his final read.

He also testified to making silicosis diagnoses in the same patients he had once diagnosed with asbestosis.

Jack wrote that the diagnoses relied on X-rays and on medical histories taken by screening companies or law firms, not on physical examinations, as the reports under his name claimed.

"When Dr. Harron first examined 1,807 plaintiffs' X-rays for asbestos litigation," Jack wrote, "he found them all to be consistent only with asbestosis and not with silicosis." But after re-examining X-rays of the same 1,807 people "for silica litigation, Dr. Harron found evidence of silicosis in every case," she wrote.

Now retired, Harron is a B-reader, which is a doctor certified by the national Institute for Occupational Safety and Health to detect abnormalities such as black lung disease, asbestosis and silicosis in chest X-rays.

A fake doctor

In a high-profile case involving CSX, the Peirce firm and Harron, the railroad giant unearthed another scandal when plaintiff Rodney Chambers of Huntington fabricated a doctor who he claimed had treated him for asbestosis.

Chambers filed his asbestosis complaint against CSX in Marshall (West Virginia) Circuit Court on April 9, 2002. The Peirce firm filed a motion to refer Chambers and several hundred other consolidated cases to mediation. That process was similar to other trial plans that CSX says forced it to rely upon limited information provided by the Peirce Firm, including x-rays taken at its occupational asbestosis screenings, for settlement negotiations.

CSX said Chambers provided the name of a Dr. Oscar Frye in Huntington as the physician who treated him for his asbestosis. But through its investigation, CSX "determined that there has never been a physician, chiropractor, podiatrist, physician's assistant or osteopath licensed to practice in the State of West Virginia by any licensing board or agency with the name 'Oscar Frye.'"

Upon further investigation, the phone number Chambers listed for Dr. Frye has belonged to a Huntington woman for 12 years, and the address he listed for Frye's office does not exist in Huntington and hasn't since at least 1954.

"Without faking this type of medical evidence, plaintiff Chambers would not have been able to allege a proper cause of action against CSXT," CSX claimed.

CSX also says the Peirce firm that specializes in asbestosis claims provided its plaintiffs with a "pre-printed form and diagnosis regarding their potential claim and its alleged cause."

CSX sued the Peirce firm in 2005, alleging a conspiracy to fabricate suits. CSX later added Harron to the suit.

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