Richmond’s HDL Inc. responds to The Wall Street Journal story

Published September 8, 2014 by Paula C. Squires

In a strongly worded rebuttal to a front-page story in today’s Wall Street Journal, Health Diagnostic Laboratory Inc. (HDL) in Richmond posted a statement on its website Monday defending its practices and describing the story as a “highly distorted picture of our company and our work. In particular, HDL Inc. vehemently disagrees with any insinuation that payments to doctors were an inducement, or that the payments were illegal or known to violate any law. “

The WSJ story details how HDL collected millions of dollars from Medicare while using a model — paying doctors a $20 fee per blood sample — now under review by federal investigators. According to the WSJ, $157 million, or 41 percent of HDL’s 2013 revenues of $383 million, came from Medicare.  According to its analysis of Medicare data, the company was a dominant biller for some forms of testing, far outpacing other rivals.

The story, described by the newspaper as part of a series on how payments are made in the country’s $600 billion Medicare system, says 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.”  The purpose of the statute is to protect patients from inappropriate medical referrals or recommendations by health-care professionals who may be unduly influenced by financial incentives. 

HDL says on its website 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.

“As we confirmed to The Journal, the Department of Justice (DOJ) is conducting what we understand to be an industry-wide review of certain clinical laboratory practices, many of which have been longstanding within the industry. 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 Journal’s story raises other issues about some of HDL’s testing. The company says in its statement that the story relies “on misleading accounts from two former disgruntled employees who have not been with the company in more than three years — one speaking anonymously and the other dismissed for cause, including her opposition to HDL Inc.'s zero-tolerance drug policies.

“We are proud of the work we have done to help revolutionize patient care by changing the way that cardiovascular disease, diabetes, and related diseases are diagnosed and treated. “

According to HDL, advancements in diagnostic testing have outpaced the country’s existing payment structure, which is grounded in the more traditional, reactive model of providing and paying for care only after a medical event.  The company’s says its comprehensive battery of testing gives doctors tools to detect major health issues before such events occur, improving patient health through preventative efforts.

HDL’s CEO Tonya Mallory co-founded the company in 2009, literally from a kitchen-table business plan. Since then, it has gone on to become one of the region’s fastest-growing companies. In November 2009, shortly after it started operations, HDL received about 30 blood samples a day, Mallory told Virginia Business in an earlier interview. By September 2012, that number had shot up to 70,000 to 80,000 samples per day. Virginia Business named Mallory its 2013 Business Person of the Year.

In April, the company opened its expanded 283,000-square-foot  offices and laboratories in the Virginia BioTechnology Research Park in downtown Richmond where it employs about  850 people. The expansion represented a capital investment of $100 million in building and equipment.

Since discontinuing processing and handling fees to referring providers in June, HDL company spokesman Jeff Kelley said the company has been placing phlebotomists in physician offices, setting up remote draw sites under the company's name, or contracting with draw site partners– in each case covering the cost of the collection. In the Richmond area, there are four company operated draw sites, which were formerly known as Hub centers. The company also has opened a draw site in Colorado.