Va. Rescue Squad Prepares to Fight Fraud Charges

April 27--ABINGDON, Va. -- Some banks fear the Saltville Rescue Squad has a bleak future and won't loan it any cash to hire a lawyer, federal court records reveal.

Four banks rejected outright the loan applications because the volunteer squad faces charges of health-care fraud, according to a recent judicial opinion concerning the group's financial assets. A fifth bank simply failed to respond to the squad's application.

Those failed applications were at the heart of an April 19 judicial decision allowing the squad to pull more money for legal fees than originally granted from a frozen account. U.S. Magistrate Judge Pamela Meade Sargent ruled to allow a total of $20,000 for legal fees.

"The prosecution of the Squad, and the related criminal forfeiture of its assets, cannot move forward until such time as the Squad is represented by counsel who appears on its behalf," Sargent wrote in her ruling.

In January, federal prosecutors filed criminal charges against the squad as a corporation to force the forfeiture of $800,000 thought to have been involved in alleged health-care fraud. The money is now frozen and the squad can't touch it.

Also charged are squad business manager Eddie Wayne Louthian Sr., of Chilhowie, and member Monica Jane Hicks, of Meadowview, who have pleaded not guilty to charges of defrauding insurance companies.

They are accused of sending $2.6 million worth of fraudulent billing slips to insurance companies from December 2010 until September 2011.

A two-week long trial is set to begin Sept. 10.

Squad attorney R. Wayne Austin, of Abingdon, said the freeze did not touch money meant for day-to-day operations, and labeled the untouchable cash as "excess funds."

"The rescue squad will survive this, regardless of what the outcome is," Austin said.

To continue running emergency calls, the squad is allowed to spend what it makes from donations and billed services. For example, court documents show the squad took in $33,051 in early March and spent it on such necessities as first aid supplies, fuel and payroll.

Still, local and state officials worry the squad might go under.

"We're concerned for the people that need to be transported (by ambulance)," Saltville Councilman Tom Holley said.

Saltville officials have already asked their local fire department to consider taking on the additional role of running ambulances. And the Virginia Office of Emergency Medical Services has confirmed it is keeping an eye on the situation. Also, neighboring rescue squads and fire departments from Tannersville, Glade Spring and Chilhowie have offered to step in if needed, local and state emergency coordination officials have said.

Initially, prosecutors left $10,000 in the squad's bank account for operating expenses and later agreed it could be used to hire a lawyer.

Without a lawyer, the case against the squad would stop in its tracks. Though courts can appoint counsel for indigent defendants, federal law does not allow such appointments for corporations, and trials can't be held without legal representation.

To get a bank loan, the squad offered its building and surrounding land, valued at $750,000, as collateral, squad treasurer Linda Larmer testified at an April 16 hearing. There were no takers.

Sargent's April 19 ruling opened access to an additional $10,000.

"The evidence shows that, to date, the Squad has been unable to obtain a loan using any of its assets as collateral," Sargent wrote. "While the Squad has not attempted to sell any of its assets ... all of the assets released from pretrial seizure by the Government are essential to the Squad's core mission."

The new allotment doesn't cover a third of what the squad initially sought, however.

Austin, who has represented the squad since the first hearing, has quoted a $75,000 price tag for his services, court records show. This includes the cost of an extra attorney with experience defending rescue squads.

Of this discrepancy, Sargent wrote: "I find that, with modification of the outstanding seizure warrant and protective orders, the Squad has assets which it can use to retain counsel, although perhaps not its first choice."

On Tuesday, Austin filed a notice with the court stating that he will represent the squad.

mowens@bristolnews.com

(276) 645-2549

Twitter: Mike_BHCNews

YOU SHOULD KNOW

Saltville Rescue Squad

Bank account

--$800,000 -- frozen and untouchable

--$10,000 -- originally allowed for legal fund

--$10,000 -- additional amount for legal fund

Legal fee estimate

--main lawyer -- $50,000

--assistant -- $25,000

--total -- $75,000

Copyright 2012 - Bristol Herald Courier, Va.