The founder of one of the biggest Richmond business success stories in recent years has stepped down as the company faces national scrutiny and a federal investigation.
Tonya Mallory, CEO of downtown-based Health Diagnostic Laboratory, resigned from her post on Tuesday, the company announced.
Mallory will remain a member of the company’s board of directors and will serve as an adviser. She’ll be succeeded by Joe McConnell, a co-founder of HDL and its chief laboratory officer.
An HDL spokesperson said Mallory’s resignation was unrelated to a recent Wall Street Journal exposé that called into question the company’s practice of paying doctors to use its services. The federal government is investigating HDL and several other medical lab companies for the payments.
HDL spokesperson Jeff Kelley said Mallory’s resignation was due to “personal family reasons” and only coincidentally came two weeks after the WSJ report was published.
In a letter to employees Tuesday, Mallory said she is proud of the work HDL has done but said she’s leaving to help her brother develop a company he started after his wife’s death two years ago.
“The new venture will permit him to keep his young kids in their supportive community,” Mallory wrote. “I am leaving HDL, Inc. to help him get his new company off the ground in an effort that we hope will give his family financial security in addition to allowing him more time with his children.”
A message left for Mallory was not returned by Tuesday evening. She had been scheduled to speak at an event at the University of Richmond this morning, but the event was postponed late Tuesday afternoon.
Founded in 2008, HDL offers blood test services it claims can help doctors predict illnesses like heart disease.
Its growth has been touted locally as it has expanded to 800 fulltime employees, about 700 of which are in the Richmond area.
Mallory has become a staple on the local speaking circuit in recent years and was named the Virginia Business Person of the Year for 2013 by Virginia Business magazine.
In June, HDL celebrated the completion of its new headquarters complex, a $100 million home in the Virginia Biotechnology Park.
According to the Wall Street Journal report on Sept. 8, HDL formerly paid $20 per blood sample to most doctors ordering the company’s blood tests, a payout higher than other labs. For some physician practices, payments totaled several thousand dollars a week, according to the report.
The Department of Health and Human Services, along with the Justice Department, is investigating doctor payments by HDL and several other labs, the Journal reported. The WSJ relied on former HDL employees and insider documents, including emails from executives, for its reporting.
HDL said the Journal story “paints a highly distorted picture” of the company and its work and that the report relies on “misleading accounts from two former disgruntled employees.”
“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 company said in a response to the WSJ report.
HDL said the payments, labeled P&H fees, helped cover the costs of specimen processing and handling and were a regular practice within the industry. The company discontinued the P&H fees in June “in light of recently issued government guidance,” it said.
HDL said it has been cooperating with the government investigation that it sees as “an industry-wide review of certain clinical laboratory practices, many of which have been longstanding within the industry.”
Taking the helm at HDL is McConnell, who joined the company in 2009. Prior to that, he worked at the Mayo Clinic in Rochester, Minn., for more than a decade, serving as its director of cardiovascular laboratory medicine and chair of the clinical chemistry fellowship program, HDL said in a press release. He has a Ph.D. in clinical chemistry from Cleveland State University.
In prepared statement, Mallory said she’s leaving HDL in good hands.
“Joe’s highly distinguished scientific career, including more than a decade of work at Mayo Clinic and his in-depth knowledge as an HDL, Inc. co-founder, leaves him well positioned to lead this company,” she said in the company’s release Tuesday.
McConnell said in his statement it has been an honor to work with Mallory.
“She has been a vibrant and visionary leader who has dedicated herself to the well-being of both the patients we serve and those of us in the company,” he said in the statement.