On the heels of a $47 million settlement with the Department of Justice regarding questionable kickbacks, blood testing diagnostic company HDL has filed for Chapter 11 bankruptcy.
The company's revenue was cut in half in the latter part of 2014, and so were the number of blood samples it tested, The Wall Street Journal reports, citing court papers.
"While we regret the necessity of seeking protection under Chapter 11, it is the right path for us to take, and we see it as an opportunity to better position our company for continued growth and success," the company said in a statement, according to the WSJ.
In court papers, HDL cited the DOJ settlement and "certain payer issues and changes in billing practices in certain states that affected the fees earned by HDL from each sample test," as reasons for the bankruptcy filing, according to the WSJ.
The article says that by filing bankruptcy, HDL may be able to escape paying the entire settlement.
Following the settlement in March, HDL said the alleged kickbacks were meant to compensate doctors for their labor, but the feds disagree and said they represent "a substantial risk of fraud and abuse under the anti-kickback statute," the WSJ reported at the time. The payments to doctors exceeded $17 million in 2013.
In June 2014, the Department of Health and Human Services issued a fraud alert, leading to the resignation of former HDL CEO and co-founder Tonya Mallory. She wasn't included in the settlement agreement and can be targeted by prosecutors in civil court, along with two others involved in the scheme.
- read the article in the WSJ