Health Diagnostic Laboratory has confirmed it is nearing an agreement with the U.S. Justice Department regarding its past practices for reimbursing providers. The Virginia-based purveyor of assays that test for chronic conditions such as diabetes and heart disease released a statement late last month that said in part, “we look forward to concluding a settlement with the Department in the very near future that will enable our company to avoid potentially expensive and protracted litigation and allow us to move ahead with our important work of helping improve the health of millions of Americans.” The Wall Street Journal reported on March 23 that HDL was nearing a settlement. Although HDL would not comment on the specific financial components of the settlement beyond the statement it issued, the Journal said it would include a payment of $47 million. HDL also said it would enter into a five-year corporate integrity program that would include monitoring by the U.S. Department of Health and Human Services’ Office of the Inspector General for the next five years. “The agreement … will contain an explicit denial of any wrongdoing. We have consistently sought to comply with all applicable legal and regulatory requirements, and are committed to […]
Health Diagnostic Laboratory has confirmed it is nearing an agreement with the U.S. Justice Department regarding its past practices for reimbursing providers.
The Virginia-based purveyor of assays that test for chronic conditions such as diabetes and heart disease released a statement late last month that said in part, “we look forward to concluding a settlement with the Department in the very near future that will enable our company to avoid potentially expensive and protracted litigation and allow us to move ahead with our important work of helping improve the health of millions of Americans.”
The Wall Street Journal reported on March 23 that HDL was nearing a settlement. Although HDL would not comment on the specific financial components of the settlement beyond the statement it issued, the Journal said it would include a payment of $47 million. HDL also said it would enter into a five-year corporate integrity program that would include monitoring by the U.S. Department of Health and Human Services’ Office of the Inspector General for the next five years.
“The agreement ... will contain an explicit denial of any wrongdoing. We have consistently sought to comply with all applicable legal and regulatory requirements, and are committed to continuing to do so,” HDL said in its statement, also noting that “we wish to make it clear that HDL, Inc. has worked cooperatively with the Department of Justice since the inception of its investigation of various diagnostic laboratory industry practices, many of them common within the industry.”
Citing confidential sources, Laboratory Industry Report reported in late 2013 that HDL was likely under the scrutiny of federal regulators for its practice of paying providers up to $30 or more to receive specimens from patients. While HDL co-founder and Chief Executive Officer Tonya Mallory denied at the time that her company was making such payments, she would neither confirm nor deny that an investigation was under way.
Last July, a federal investigation was confirmed by the Richmond Times-Dispatch, and the Wall Street Journal confirmed that HDL was paying doctors as much as $20 per draw—the $3 the Medicare program allows for a venipuncture, and another $17 for what HDL described as handling fees. Some medical practices were earning as much as $4,000 a week from the HDL payments, according to Wall Street Journal.
HDL discontinued the practice in June 2014 after the U.S. Department of Health and Human Services issued an advisory saying that such payments could violate the statutes governing kickbacks to doctors and create an incentive to commit fraud. Mallory left the company last September to work with her brother in a startup firm. She co-founded the company in 2008 and it had sales of more than
$400 million a year by 2012, nearly 40 percent of which came from payments from the Medicare program. HDL said as part of any settlement it would continue to participate in all federal programs, including Medicare and Tricare, the benefits program for dependents of members of the military.
Mallory’s replacement, company co-founder and chief laboratory office Joe McConnell, ended the company’s relationship with its independent sales and marketing arm, BlueWave Healthcare Consultants, last January. BlueWave acted as HDL’s primary conduit to doctors. That company, which was founded by former colleagues of Mallory’s, earned $220 million in sales commissions from HDL between 2010 and 2014, according to The Wall Street Journal. BlueWave has since filed suit against HDL for breach of contract.
The pending settlement would not include either Mallory or BlueWave, according to The Wall Street Journal.
Takeaway: Health Diagnostic Laboratory is trying to put its rocky episode with physician payments behind it.
