Health Diagnostic Laboratory President and CEO Tonya Mallory resigns
Tonya Mallory, president and CEO of Health Diagnostic Laboratory Inc. (HDL) in Richmond, resigned Tuesday from the fast-growing company that she helped found in 2009.
Citing personal family reasons, Mallory said she was stepping down immediately from her executive positions. Her abrupt departure comes during a federal investigation into the company's payment practices to doctors.
Dr. Joe McConnell, a co-founder of the company and currently its chief laboratory officer, will succeed her in both roles. Mallory will continue to serve HDL as a member of its board of directors and as an adviser to McConnell.
In a letter to employees that the company released in a statement, Mallory wrote, “Many of you know that my brother lost his wife a little over two years ago. He has recently started a new business close to home to avoid what was a two-hour round-trip commute each day. The new venture will permit him to keep his young kids in their supportive community. I am leaving HDL Inc. to help him get his new company off the ground in an effort that we hope will give his family financial security in addition to allowing him more time with his children.”
Mallory’s departure comes while HDL is cooperating with a Department of Justice investigation into what is reportedly an industry-wide review of certain clinical laboratory practices.
Earlier this month, HDL also was the subject of a front-page story in the Wall Street Journal. The story detailed how HDL collected millions of dollars from Medicare while using a model — paying some doctors a $20 fee per blood sample — now under review by federal investigators.
According to the WSJ story, $157 million, or 41 percent of HDL’s 2013 revenues of $383 million, came from Medicare. It also said that HDL’s fee to doctors was higher than other labs.
HDL discontinued the practice after June 25 when the Office of the Inspector General for the Department of Health and Human Services Office issued a “special fraud alert,” warning that such remittances could present “a substantial risk of fraud and abuse under the anti-kickback statute.”
HDL responded with a strong rebuttal to the WSJ story, issuing a statement and providing updated information on its website about its practices. It claimed that paying fees to physicians to help cover the costs of providing specimen handling and processing of blood samples for testing was a longstanding, industry-wide practice until the alert was issued, which the company considered to be new government guidance.
“HDL Inc. has been cooperating fully with the government investigation and has consistently complied with all applicable legal and regulatory requirements. In the event that the DOJ investigation results in legal action against HDL Inc., we are prepared to defend our business practices vigorously,” the company’s statement said.
Mallory has been recognized with many awards for her entrepreneurship. In 2012, she received the 2012 Ernst & Young Entrepreneur of The Year award in Greater Washington. In 2013, Virginia Business magazine named Mallory its Virginia Business Person of the Year.
Mallory started her company from a kitchen table plan, and it ramped up quickly. The private company had been one of the fastest growing in the region. In April, it opened its expanded 283,000-square-foot offices and laboratories in the Virginia Biotechnology Park in downtown Richmond, where it employs about 850 people.
Mallory’s mission was to revolutionize the practice of medicine in the U.S. by creating a comprehensive test menu of biomarkers of risk factors for cardiovascular disease, diabetes, and related diseases.
McConnell said in a statement: “It has been an honor to work with Tonya Mallory. She has been a vibrant and visionary leader who has dedicated herself to the well being of both the patients we serve and those of us in the company. We are very pleased that she will continue her relationship with the company via both her board membership and as a valued adviser.”
Mallory said of McConnell: “I am confident that HDL Inc. remains in good hands. Joe’s highly distinguished scientific career, including more than a decade of work at the Mayo Clinic and his in-depth knowledge as an HDL Inc. co-founder, leaves him well positioned to lead this company.”
Before joining HDL, Inc. in 2009, McConnell worked for the Mayo Clinic in Rochester, Minn., serving as its director of cardiovascular laboratory medicine and chair of the clinical chemistry fellowship program.