Job Cuts Hit Health Diagnostic Laboratory Inc.
November 19, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Health Diagnostic Laboratory, Inc. (HDL), located in Richmond, Va., announced yesterday that it has laid off approximately 112 people, or about 18 percent of the company’s local workforce.
HDL is a CAP-accredited clinical diagnostic laboratory that focuses on testing for diabetes, hypertension, cholesterol, stress, obesity and smoking cessation. It reportedly performs about 200,000 laboratory tests daily. In particular, the laboratory offers a test menu of risk factors and biomarkers for various cardiovascular diseases.
The company has been facing strong headwinds after it was announced four months ago that the U.S. Department of Justice was reviewing the company’s reimbursement practices. Two months prior to that, insurance company Cigna filed a lawsuit for $84 million against HDL. Shortly afterwards the company’s co-founder and chief executive, Tonya Mallory, resigned.
The Cigna lawsuit charges HDL with fraud, suggesting the company was waiving co-pays, co-insurance and deductibles in order to lure patients, then billing Cigna “exorbitant and unjustified” fees for tests.
The lawsuit states, in part, “HDL has developed a business model designed to game the healthcare system by submitting grossly inflated, phantom charges to Cigna that do not reflect the actual amount HDL bills patients. The effect of HDL’s scheme is to deceive health benefit plans into paying far more for services than the plans are obligated to pay.”
The company had indicated that the lawsuit and the CEO leaving were not the reason for the job cuts. Rather, it was “a strategic decision to return to its core mission.”
“In recent years, HDL Inc. had become involved in a number of non-core business interests that required significant time, attention and resources,” said Joe McConnell, the company’s co-founder, president and CEO in a statement. “The need to reallocate our resources to return to our core mission is what led to the reduction in force.”
In 2010 HDL received an investment of $4.2 million from the state of Virginia, which created approximately 213 jobs. The funding came via the Virginia Economic Development Partnership with the City of Richmond, the Virginia Jobs Investment Program and the Virginia Department of Business Assistance (VDBA).
“We deeply regret the business necessity that made this reduction in force necessary and we are all mindful that this will pose difficulties and challenges for our former colleagues and their families,” McConnell said in a statement. “At the same time, these necessary changes provide us with the opportunity to re-energize our company — one with a sharp focus on our core mission as we forge a new future for HDL Inc.”