Dismissal of fraud investigation ends five-year ordeal

Questions about what led to the settlement remain. But Montana physician Patsy Vargo, MD, is lobbying for a change in the way the government does business.

By Tanya Albert, AMNews staff. Sept. 17, 2001.

Life has been a roller coaster for Patsy Vargo, MD, a Shelby, Mont., family physician, but the ride has finally ended.

For more than five years, she has been jolted by the bumps and twists of two federal fraud inquiries -- a wild journey that captures the fears that many physicians have of government persecution.

It began with a 1995 audit that led in 1997 to federal criminal charges of upcoding and seeing more patients than possible. Before the year ended, the government dropped the charges.

Dr. Vargo's life in rural Montana returned to normal for two years. Then came the $37 million civil lawsuit. The government charged that she upcoded and didn't have documentation to support many claims.

She turned down offers to settle for $500,000, then $300,000. Her community rallied around her by taking out newspaper ads supporting her and by calling local congressmen requesting that they intervene.

Now, the series of ups and downs is finally over for the physician.

Just weeks before Dr. Vargo was set to go to trial to fight the government's civil lawsuit, the two sides reached an agreement.

According to court documents in the U.S. District Court for the District of Montana, Great Falls Division, the case was dismissed with prejudice last month. That means neither side will be able to pursue the matter in court again.

"It went from $37 million to nothing in a day," Dr. Vargo said.

But what finally brought the locally high-profile case to an end is unclear. And it will likely remain that way. [...]