HDL, located on Fifth Street downtown, is facing another lawsuit from an insurance provider. Photo by Burl Rolett.
HDL’s days in court appear to be far from over.
Insurance giant Aetna sued Health Diagnostic Laboratory this month, alleging that the downtown-based medical lab company inflated charges to the insurer through a “fraudulent billing scheme” and owes it tens of millions of dollars in damages.
The case, filed in federal court in Pennsylvania on April 10, makes allegations similar to those in a suit filed five months ago by insurance carrier Cigna, which is seeking $84 million in damages from HDL.
The alleged scheme that’s the focus of both suits involves kickbacks to physicians to offer HDL’s tests; unlawful inducements to patients to agree to the tests; and inflation of the claims submitted to Aetna for reimbursement.
The federal government also targeted kickbacks to doctors when it extracted a massive civil settlement from HDL earlier this month that will result in at least $47 million in fines. Aetna’s suit was filed the day after the U.S. Department of Justice announced the settlement.
Read the suit (PDF)
Aetna, which also filed against HDL’s former sales contractor BlueWave Healthcare Consultants, alleges four counts of fraud, tortious interference with business and contractual relations, civil conspiracy and unjust enrichment.
The case claims HDL illegally paid doctors, inducing them to use HDL’s services rather than “less expensive but equally qualified laboratories.”
HDL also allegedly waived the co-payments that patients should have paid for the lab services, and then inflated the charges it sent to Aetna. That process “thereby caused Aetna to pay more for HDL’s services than Aetna would have otherwise paid had it known of the patient discounts,” the suit says.
HDL is not within Aetna’s network, so patients using HDL’s out-of-network services should have had higher co-payments than in-network providers, the suit claims.
But, the suit alleges, HDL got around the disincentive to refer patients out of the network by offering doctors payment.
The suit states that HDL and BlueWave worked together on the “kickback scheme” and that “Bluewave was fully aware of the effect that was caused by these kickbacks.”
HDL’s settlement with the federal government cleared it of any civil wrongdoing without admitting fault.
The Cigna case, meanwhile, continues to play out in federal court in Connecticut. HDL has argued that the case should be dismissed. Cigna then shot back with a lengthy filing to the contrary, calling HDL’s claims “misguided arguments.”
Doug Sbertoli, HDL’s general counsel, said the company does not comment on pending or threatened litigation.
Mark Schwemler, an attorney with Elliott Greenleaf & Siedzikowski who is representing Aetna, said his client and Cigna may not be the last insurers to come after HDL.
“Aetna was compelled to act for pretty much the same reasons as Cigna, and I would think that other companies would probably take action as well, either formal or informal,” Schwemler said.
HDL’s founder and former CEO Tonya Mallory may also face legal fallout from the saga.
HDL, located on Fifth Street downtown, is facing another lawsuit from an insurance provider. Photo by Burl Rolett.
HDL’s days in court appear to be far from over.
Insurance giant Aetna sued Health Diagnostic Laboratory this month, alleging that the downtown-based medical lab company inflated charges to the insurer through a “fraudulent billing scheme” and owes it tens of millions of dollars in damages.
The case, filed in federal court in Pennsylvania on April 10, makes allegations similar to those in a suit filed five months ago by insurance carrier Cigna, which is seeking $84 million in damages from HDL.
The alleged scheme that’s the focus of both suits involves kickbacks to physicians to offer HDL’s tests; unlawful inducements to patients to agree to the tests; and inflation of the claims submitted to Aetna for reimbursement.
The federal government also targeted kickbacks to doctors when it extracted a massive civil settlement from HDL earlier this month that will result in at least $47 million in fines. Aetna’s suit was filed the day after the U.S. Department of Justice announced the settlement.
Read the suit (PDF)
Aetna, which also filed against HDL’s former sales contractor BlueWave Healthcare Consultants, alleges four counts of fraud, tortious interference with business and contractual relations, civil conspiracy and unjust enrichment.
The case claims HDL illegally paid doctors, inducing them to use HDL’s services rather than “less expensive but equally qualified laboratories.”
HDL also allegedly waived the co-payments that patients should have paid for the lab services, and then inflated the charges it sent to Aetna. That process “thereby caused Aetna to pay more for HDL’s services than Aetna would have otherwise paid had it known of the patient discounts,” the suit says.
HDL is not within Aetna’s network, so patients using HDL’s out-of-network services should have had higher co-payments than in-network providers, the suit claims.
But, the suit alleges, HDL got around the disincentive to refer patients out of the network by offering doctors payment.
The suit states that HDL and BlueWave worked together on the “kickback scheme” and that “Bluewave was fully aware of the effect that was caused by these kickbacks.”
HDL’s settlement with the federal government cleared it of any civil wrongdoing without admitting fault.
The Cigna case, meanwhile, continues to play out in federal court in Connecticut. HDL has argued that the case should be dismissed. Cigna then shot back with a lengthy filing to the contrary, calling HDL’s claims “misguided arguments.”
Doug Sbertoli, HDL’s general counsel, said the company does not comment on pending or threatened litigation.
Mark Schwemler, an attorney with Elliott Greenleaf & Siedzikowski who is representing Aetna, said his client and Cigna may not be the last insurers to come after HDL.
“Aetna was compelled to act for pretty much the same reasons as Cigna, and I would think that other companies would probably take action as well, either formal or informal,” Schwemler said.
HDL’s founder and former CEO Tonya Mallory may also face legal fallout from the saga.