Health Diagnostic Laboratory says it is nearing a settlement with the Department of Justice

Published March 24, 2015 by Paula C. Squires

Health Diagnostic Laboratory Inc. (HDL) said Tuesday that it is close to reaching a settlement with the U. S. Department of Justice under which the  Richmond-based company would deny any wrongdoing while enrolling in a five-year corporate integrity agreement with a federal watchdog agency.

The statement from the company did not comment on the possibility of a $47 million fine, which the Wall Street Journal said in a Monday story was part of the tentative agreement.

“The Wall Street Journal obtained information about highly confidential discussions between HDL Inc. and the Department of Justice and in a March 23, 2015 article chose to publish that information prior to the Department’s planned formal announcement of the settlement,” HDL said in its statement.

HDL said it has cooperated with the Department of Justice since the inception of its investigation nearly seven months ago into various diagnostic laboratory industry practices. HDL has characterized many of those practices as common within the industry.

One of the key issues in the civil investigation was a $20-per-blood-sample fee HDL paid health-care providers for sending in blood samples for testing. The Justice Department challenged the fee, which has been discontinued, saying the practice could violate anti-kickback laws. The Wall Street Journal reported that HDL received $157 million in payments from Medicare in 2013 for tests ordered by doctors.

HDL, which focuses on advanced  testing for early markers of  heart disease and diabetes, defended  the fee, saying it covered costs to doctors’ offices for processing and handling blood samples.

“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,” HDL said in its statement. 

According to HDL, the settlement “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.”

The company also said HDL also will continue to be eligible for participation in federal health care programs, including Medicare, Medicaid and TRICARE. As part of the settlement, HDL said it will further develop and strengthen its compliance program as part of the five-year corporate integrity agreement with the Office of Inspector General of the U.S. Department of Health and Human Services.

“We are reaching this resolution in order to put the matter behind us and maintain our focus on our mission of fighting cardiovascular disease and diabetes with innovative, advanced testing.”
 

The Wall Street Journal’s story noted that other large laboratory companies such as Quest Diagnostics Inc. don’t pay such fees. However, other health diagnostic testing companies that are under investigation by the DOJ paid similar fees.

The last year has been tumultuous for HDL, once viewed as one of Richmond’s most successful startups.  The company’s co-founder and CEO Tonya Mallory stepped down suddenly last September, citing family reasons. Her departure came two weeks after the Wall Street Journal’s initial, front-page report about HDL’s reimbursement practices.

In October, Connecticut-based health insurer Cigna sued the company, seeking to recover $84 million in insurance claims paid to HDL.

Then in January, BlueWave HealthCare Consultants, an independent sales and marketing firm that worked with HDL, filed a $205 million breach of contract suit against HDLs after its new CEO ended its relationship with BlueWave.