Embattled Laboratory Files For Bankruptcy Reply

Health Diagnostic Laboratory, Inc., the embattled lab company, has filed for chapter 11 bankruptcy. The once high flying company, which was founded in 2009 and achieved annual revenue of more than $400 million in a few short years, has been beset by scandal and legal difficulties. Most recently, the US Department of Justice announced that it had reached a settlement with HDL which requires the company to make an initial payment of $47 million, though the final cost could be as high as $100 million.

The bankruptcy filing was a response to a notice of default sent to the company by its bank…

Click here to read the full post on Forbes.


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Inside The Scandal: Profit And Greed At An Embattled Laboratory Company Reply

How does a clinical laboratory company grow in a few short years from nothing to more than $400 million in revenue and over $100 million in profit? Since the same company just settled with the DOJ for as much as $100 million, it’s reasonable to suspect that growth was probably not entirely legitimate.

Now new information, gleaned from documents containing previously unreported details about the company, provides an inside look at the inner workings of the company and its rampant growth, fueled by greed and a massive disregard for law and industry standards. Except where otherwise indicated, the details of HDL’s finances reported below come from a financial statement and a spreadsheet prepared by the company and made available to me by a source. The details are consistent with information revealed by a former company employee with intimate knowledge of HDL’s finances.

Click here to read the full post on Forbes.


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Tonya Mallory, Former CEO and Co-Founder of Health Diagnostic Laboratory, Inc. in Richmond, Va. (PRNewsFoto/Health Diagnostic Laboratory, Inc.)

DOJ Settles With Embattled Lab, Criminal Charges For Executives Still Possible Reply

In line with reports last monthHealth Diagnostic Laboratory Inc, the embattled lab company, has reached a settlement with the Department of Justice following a lengthy investigation into the company’s business practices, which include giving kickbacks to physicians and additional illegal sales, marketing, and billing practices.

HDL will initially pay at least $47 million to the government.

Note to readers: I have received a document from an inside source that provides a detailed snapshot of HDL’s past financial status. I plan to report this information next week.

Click here to read the full report on Forbes.



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Embattled Lab Nears Settlement With Government Over Kickbacks Reply

Health Diagnostic Laboratory Inc, the embattled lab company, is nearing a $50 million settlement with the Justice Department, according to a Wall Street Journal story by  John CarreyrouAs previously reported here, the federal government is investigating HDL for giving kickbacks to physicians  who use  the company’s tests. Additional allegations suggest a broader pattern of serious misconduct based on questionable sales, marketing, and billing practices involving unnecessary testing.

Click here to read the full post on Forbes.


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Aegerion Warns About Negative Impact Of DOJ Investigation Reply

Earlier this week in its annual report Aegerion Pharmaceuticals provided an update on its ongoing problems with the FDA and the Department of Justice. As previously reported here and on The Street and on CNBC, the company landed in hot water with the FDA last year after its CEO made a series of off-label statements on the CNBC Fast Money show. (The company’s only product, Juxtapid (lomitapide) is a cholesterol-lowering drug indicated for the rare condition of homozygous familial hypercholesterolemia. It sells for $250,000 a year.) Now the company reports that by running “a corrective advertisement on CNBC” and by reviewing additional promotional material  it believes it will be able to resolve its problems with the FDA.

But the DOJ investigation may prove to be a bigger and more serious problem….

Click here to read the full post on Forbes.


DOJ Investigating Abiomed For Improper Marketing Of Impella Circulatory Support System Reply

Cardiovascular device maker Abiomed announced that the US Attorney’s Office was investigating the company’s marketing and labeling of the Impella 2.5 circulatory support device. The announcement confirmed rumors that had been circulating for at least two weeks, though in the press release the company said it had been informed of the investigation on October 26. (I first heard the rumor on October 18.) No details were disclosed about the investigation.

The company also said that it believed that the FDA would begin a review to possibly reclassify its Impella devices as Class III devices, which would require FDA clearance using the more stringent premarket approval (PMA) process instead of the current, less demanding 510(k) premarket notification process. Whether because of the DOJ investigation or the FDA announcement, the stock price of Abiomed dropped 25% with the news.

This is not the first time Abiomed has run into trouble with the FDA. In June 2011 Abiomed received a warning letter from the FDA about improper marketing of Impella for unapproved indications.

As previously reported here, in December 2010 the company issued a press release announcing– and spinning– the results of the PROTECT II trial comparing Impella to the intra-aortic balloon (IAB) in high risk PCI patients. Although the trial was stopped early for futility, the press release downplayed the negative findings and instead emphasized positive trends and encouraging subgroup analyses. Last month, when the trial was finally published in Circulation, the company issued a much more restrained press release, perhaps a reflection of the company’s efforts to avoid further problems with the FDA.

Here are the relevant paragraphs from Abiomed’s press release today:
Click to continue reading…

ICD Investigation: DOJ Sends Resolution Model To Hospitals 1

Hospitals across the country received emails from the US Department of Justice on Thursday containing a proposed “Resolution Model” that will allow the hospitals to begin to settle the long-standing and much-feared DOJ investigation into improper Medicare billing for ICDs. The action appears to confirm an article, published earlier in August in Report on Medicare Compliance, that summarized the key details of the novel program.

As reported by ModernHealthcare.com (free registration), the document sent to hospitals contains “instructions to examine questionable implantable defibrillator surgeries on Medicare patients and estimate potential penalties under the False Claims Act.” Some hospitals, according to the story, “have been asked to provide information of hundreds of cases each.”

Hospitals are being asked to perform audits on their cases and to estimate damages, “with the severity of penalties based on whether the hospital had medical reasons to violate CMS rules; if patient harm resulted; if the hospital had prior knowledge or a statistical pattern of non-guideline implants; and if a hospital compliance program was in place.”

Here is the DOJ Resolution Model Summary Chart (click to enlarge):

Guest Post: Feds Turn Corner in ICD Investigation; Hospital Liability Divided into Categories Reply

Editor’s Note: The following article is reprinted with permission from Report on Medicare Compliance, an independent publication not affiliated with hospitals, government agencies, consultants or associations and published by Atlantic Information Services, Inc. 

The Department of Justice is apparently about to take a big step forward in its national false claims investigation of Medicare billing for implantable cardiac defibrillator (ICD) procedures. After a year of debating the medical-necessity parameters of ICD implants, DOJ now has a blueprint for determining hospital liability, according to attorneys familiar with the case. Some ICD cases will be home free, while others will be the subject of repayment plus interest or triple damages, they say.

“There has been a breakthrough,” one attorney says.

As a result, DOJ will soon send letters to hospitals with instructions for resolving their potential ICD overpayments. Hospitals will be asked to self-audit ICD procedures using an audit tool the federal government developed in collaboration with defense counsel and Navigant Consulting, attorneys say. After the audits are completed, hospitals will report back to DOJ, which will spot check their findings. Then settlement talks presumably will begin, the attorneys say.

“They want to move forward and close these cases that have been pending for close to two years,” says another attorney. The U.S. Attorney’s Office for the Southern District of Florida, which is spearheading the case, had no comment.

The investigation of ICDs, which are small electronic devices that shock the heart back to a normal rhythm, focuses on hospital claims that ran afoul of Medicare’s national coverage decision (NCD 20.4). Initially, DOJ took the position that noncompliant billing for ICD implantation is within the realm of the False Claims Act, but it paused to consider that perhaps medical necessity in this area is not always black and white. “There will be cases that literally or technically are outside of the NCD but the government will not be demanding a repayment because there are just some scenarios that clearly were not contemplated by the authors of the NCD,” one attorney says.

The NCD for ICDs describes nine categories — “covered indications” — that trigger Medicare payment (RMC 10/31/11, p. 1). They are divided into indications for primary prevention, which means the patient did not experience prior episodes of an irregular heartbeat but is still at elevated risk for sudden death due to cardiac arrest, and secondary prevention, which means the patient had prior episodes of an irregular heartbeat.

Only the indications for primary prevention — three through nine — have “timing requirements.” Medicare won’t pay for a patient’s ICD implant within 40 days of an acute myocardial infarction (MI) or within three months of a coronary artery bypass graft (CABG) or percutaneous transluminal coronary angioplasty (PTCA). For example, Medicare covers ICDs for patients with non-ischemic dilated cardiomyopathy and for patients with coronary artery disease with a documented prior MI, as long as acute MI didn’t occur in the previous 40 days. The idea is to first give patients time to recover from the heart attack to determine whether the patient really is at elevated risk for cardiac arrest.

Hospitals May Not Be as Vulnerable

If hospitals billed Medicare for ICD procedures, they may be at risk in the national false claims enforcement action. But they may not take as big a hit as was feared when DOJ first sent out subpoenas and civil investigative demands, lawyers say. “There are some different categories where the hospitals and doctors have good things to say about the medical necessity of the decision to implant. And the government has now acknowledged the decision to implant and no demand for money will be made in those cases,” one attorney says.
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DOJ Investigating Interventional Cardiology Services At HCA Reply

The hospital giant HCA has disclosed that the US Attorney’s Office in Miami is investigating the company and has “requested information on reviews assessing the medical necessity of interventional cardiology services provided at any Company facility (other than peer reviews).” Following its own preliminary investigation, the company said it was aware of such reviews in about 10 of its hospitals, most of which are located in Florida. The company said it did not know the full extent or nature of the investigation. (The disclosure can be found on page 16 of the company’s quarterly report.)

In a likely-related development, HCA also announced that the New York Times “may be publishing one or more articles about the company. Based upon its questions, the Times appears to be making broad points concerning patient care provided at our company’s affiliated hospitals.” HCA said the articles may focus on “how physician decisions are made regarding when it is medically necessary to perform cardiac procedures, such as cardiac catheterizations and percutaneous coronary interventions (PCI).” The company added that the Times may also address “the volume of cardiac catheterizations and PCIs.”