Tonya Mallory
Tonya Mallory is pushing back against the feds.
The founder and former CEO of Health Diagnostic Laboratory argued in a 44-page response filed in federal court on Tuesday that the federal government’s claims against her should be tossed out, on the stance that the case does not provide the appropriate evidence to defend the accusations that Mallory helped mastermind a massive kickback scheme.
The case stems from three whistleblower cases in South Carolina. Those cases led to a federal investigation into Mallory, HDL and others, and subsequent lawsuits centered on alleged kickback payments paid to physicians by HDL to encourage them to use its blood tests. The government claims the payments violate the False Claims Act and anti-kickback statutes and that Mallory knew of and encouraged the payments.
HDL, which was recently sold out of bankruptcy, agreed in April to pay a $47 million settlement to the government to settle the issue of alleged kickbacks and overpayments from Medicare and Tricare.
Between 2009 and 2014, HDL collected $333 million from the two federal programs, the government claims. Mallory, who resigned from the company in 2014, received substantial compensation during that time, including $26 million in salaries, bonuses and stock distributions.
Read the response (PDF)
Mallory argues in the response that her compensation doesn’t prove any of the government’s claims.
“Mallory, the CEO of HDL during the time of the alleged conduct, did not receive payments from the government payers,” the response reads. “She received compensation as CEO, just as all employees and shareholders of HDL did …There is nothing sinister about compensation.”
While Mallory insists the allegations are untrue, the crux of her argument for dismissal centers on her claims that the government does not provide enough evidence to support its case.
Her response argues that under the False Claims Act, the government must show that the defendant acted knowingly, which she says it fails to do. Moreover, under the anti-kickback statute, the government must show that the defendant acted “with an intent to obtain illegal referrals for federal health care monies.”
“Several of the statements referring to Mallory purport to set forth Mallory’s ‘knowledge’ but merely allege that she was the CEO of HDL and earned income in that role,” the motion states.
Her response argues that the government fails to provide information including the “who, what, when, where and how required by law,” related to a claim that she personally authorized payments to doctors in exchange for referrals of the company’s tests.
“None of these allegations provides an indication of exactly when, where, or how the alleged conspiracy to defraud the government was formed,” the motion states.
Mallory is represented in her case by Christopher Hall of Philadelphia-based law firm Saul Ewing. Neither Mallory nor Hall returned a request for comment by press time.
Since departing HDL, Mallory has gone to work with her brother at a company in Crewe, Virginia.
Several other individuals and businesses were also named as defendants in the government’s suit, including HDL’s former sales contractor BlueWave Healthcare Consultants and its founders Floyd Calhoun Dent and Robert Bradford Johnson. Berkeley Heartlab, which previously employed Mallory, Dent and Johnson, was also named. No defendant other than Mallory has yet filed a response.
Tonya Mallory
Tonya Mallory is pushing back against the feds.
The founder and former CEO of Health Diagnostic Laboratory argued in a 44-page response filed in federal court on Tuesday that the federal government’s claims against her should be tossed out, on the stance that the case does not provide the appropriate evidence to defend the accusations that Mallory helped mastermind a massive kickback scheme.
The case stems from three whistleblower cases in South Carolina. Those cases led to a federal investigation into Mallory, HDL and others, and subsequent lawsuits centered on alleged kickback payments paid to physicians by HDL to encourage them to use its blood tests. The government claims the payments violate the False Claims Act and anti-kickback statutes and that Mallory knew of and encouraged the payments.
HDL, which was recently sold out of bankruptcy, agreed in April to pay a $47 million settlement to the government to settle the issue of alleged kickbacks and overpayments from Medicare and Tricare.
Between 2009 and 2014, HDL collected $333 million from the two federal programs, the government claims. Mallory, who resigned from the company in 2014, received substantial compensation during that time, including $26 million in salaries, bonuses and stock distributions.
Read the response (PDF)
Mallory argues in the response that her compensation doesn’t prove any of the government’s claims.
“Mallory, the CEO of HDL during the time of the alleged conduct, did not receive payments from the government payers,” the response reads. “She received compensation as CEO, just as all employees and shareholders of HDL did …There is nothing sinister about compensation.”
While Mallory insists the allegations are untrue, the crux of her argument for dismissal centers on her claims that the government does not provide enough evidence to support its case.
Her response argues that under the False Claims Act, the government must show that the defendant acted knowingly, which she says it fails to do. Moreover, under the anti-kickback statute, the government must show that the defendant acted “with an intent to obtain illegal referrals for federal health care monies.”
“Several of the statements referring to Mallory purport to set forth Mallory’s ‘knowledge’ but merely allege that she was the CEO of HDL and earned income in that role,” the motion states.
Her response argues that the government fails to provide information including the “who, what, when, where and how required by law,” related to a claim that she personally authorized payments to doctors in exchange for referrals of the company’s tests.
“None of these allegations provides an indication of exactly when, where, or how the alleged conspiracy to defraud the government was formed,” the motion states.
Mallory is represented in her case by Christopher Hall of Philadelphia-based law firm Saul Ewing. Neither Mallory nor Hall returned a request for comment by press time.
Since departing HDL, Mallory has gone to work with her brother at a company in Crewe, Virginia.
Several other individuals and businesses were also named as defendants in the government’s suit, including HDL’s former sales contractor BlueWave Healthcare Consultants and its founders Floyd Calhoun Dent and Robert Bradford Johnson. Berkeley Heartlab, which previously employed Mallory, Dent and Johnson, was also named. No defendant other than Mallory has yet filed a response.