You probably didn’t think Florida’s Halifax Health could make its situation any worse.  After all, only two months ago Halifax agreed to pay $85 million to settle just the first half of a Medicare fraud case.  That still leaves the second half of the case, now set for trial in July.  With penalties and treble damages under the False Claims Act, exposure for the second half could exceed $300 million.

So, things couldn’t get any worse, right?  Wrong.  Last Tuesday the judge overseeing the case ruled that Halifax had wrongfully destroyed patient records that were central to the trial.  The court called the behavior “reprehensible” and ordered Halifax to pay the attorney fees incurred by the plaintiff in trying to get the records—likely a six-figure amount.

Several factors persuaded the court that Halifax had acted reprehensibly.  Not only were the records vital to the case, but they were destroyed years after the court had entered a record-retention order.  What’s more, until late in the game, Halifax withheld the fact of the destruction from the court and the plaintiff.  And to top it all off, Halifax claimed that the destruction was “in the regular course of business,” but the record-destruction policy they produced was adopted after the destruction in question.