HDL, headquartered on 5th Street, is working through a federal investigation into its payments of doctors.
A local medical lab company broke ties last week with its longtime sales contractor, becoming the latest firm to do so since coming under federal investigation for paying doctors to use its lab services.
Richmond-based Health Diagnostic Laboratory said it has terminated its contract with BlueWave Healthcare Consultants and is now looking to build its own national sales force.
The company’s list of job openings has been updated to include sales positions in various states, including North Carolina, Florida, Pennsylvania, Texas and Illinois. Fifty-two sales positions are currently open.
The call for new hires comes a few months after HDL laid off 132 workers.
The move marks a shift in strategy for HDL and makes it the second company to distance itself from BlueWave since reports of a federal inquiry became public last year. The investigation questions whether the practice of paying doctors presented a substantial risk of fraud and amounted to kickbacks.
HDL has said it stopped paying those fees last year.
Singulex, one of the other lab companies under investigation, terminated its contract with BlueWave in October 2014. A Singulex representative did not return requests for comment.
A Wall Street Journal report this week said HDL has entered into settlement talks with the Justice Department.
The WSJ report also stated that HDL has tried to distance itself from BlueWave and steer allegations of misconduct toward the Alabama-based sales contractor.
“The circumstances surrounding HDL’s termination of our contract with BlueWave will become much clearer in the days and weeks ahead,” HDL spokesperson Jeff Kelley said Tuesday.
Beyond that, Kelley referred only to a release the company issued on Monday with a prepared statement from President and CEO Joe McConnell.
“We are going to be much more hands-on when it comes to sales. HDL, Inc. will be directly training and supervising the new sales force,” McConnell’s statement said. “That puts us in a much better position to monitor their marketing activities than with the limited control inherent in using independent sales reps. Direct engagement with the sales force is critical to achieving compliance with all applicable federal and state law requirements, and that’s our primary goal.”
In addition to HDL and Singulex, Quest’s Berkeley HeartLab, Boston Heart Diagnostics Corp. and Atherotech Diagnostics Lab are also included in the investigation, according to the WSJ.
Parting ways with BlueWave hasn’t been without consequences.
The company fired back by suing HDL for $205 million in federal court on Jan. 9, claiming that HDL owes BlueWave commissions amounting to $25 million, as well as $180 million to compensate for the remaining 60 months of the sales agreement.
The companies signed a 10-year sales agreement on Jan. 4, 2010 designating BlueWave as HDL’s independent contractor in the southeast territory, ranging from North Carolina to Texas.
BlueWave was promised about 16.8 percent of the sales revenue collected by HDL from physicians in that territory, the lawsuit states.
“The letter of termination sets no grounds for the termination, and it’s wholly inconsistent with the language in the contract,” said John Galese of Galese & Ingram, the law firm representing BlueWave. “It constitutes a breach of the agreement.”
BlueWave did not file a suit against Singulex after the firm terminated its existing agreement, Jeffrey Ingram of Galese & Ingram said. Ingram couldn’t say how much time was left on the Singulex contract.
The origins of the relationship between BlueWave and HDL extend well beyond 2010.
Tonya Mallory, HDL’s founder and former CEO, worked with BlueWave’s founders, Cal Dent and Brad Johnson, at Berkeley HeartLab before all three left to start their respective companies.
Berkeley eventually sued HDL, accusing it of stealing Berkeley’s business. The case was settled for $7 million, according to the WSJ.
Mallory abruptly resigned from her position in September.
Galese said he is under the impression that HDL is claiming BlueWave was responsible for establishing the doctor fees that are under federal scrutiny.
“The reality is that the contract that required us to promote our services with their fees was backed by HDL,” Galese said. “HDL promised us, with legal opinion from its own layers, that the P&H (processing and handling) fees were lawful.”
He said HDL had an audit conducted by an independent entity that concluded the fees were consistent with the processing costs for doctors.
“I find it disingenuous that HDL, in avoiding a due debt, is coming up with an inappropriate, improper and certainly false basis not to pay,” Galese said.
This is the second multimillion-dollar lawsuit filed against HDL in the last four months.
HDL, headquartered on 5th Street, is working through a federal investigation into its payments of doctors.
A local medical lab company broke ties last week with its longtime sales contractor, becoming the latest firm to do so since coming under federal investigation for paying doctors to use its lab services.
Richmond-based Health Diagnostic Laboratory said it has terminated its contract with BlueWave Healthcare Consultants and is now looking to build its own national sales force.
The company’s list of job openings has been updated to include sales positions in various states, including North Carolina, Florida, Pennsylvania, Texas and Illinois. Fifty-two sales positions are currently open.
The call for new hires comes a few months after HDL laid off 132 workers.
The move marks a shift in strategy for HDL and makes it the second company to distance itself from BlueWave since reports of a federal inquiry became public last year. The investigation questions whether the practice of paying doctors presented a substantial risk of fraud and amounted to kickbacks.
HDL has said it stopped paying those fees last year.
Singulex, one of the other lab companies under investigation, terminated its contract with BlueWave in October 2014. A Singulex representative did not return requests for comment.
A Wall Street Journal report this week said HDL has entered into settlement talks with the Justice Department.
The WSJ report also stated that HDL has tried to distance itself from BlueWave and steer allegations of misconduct toward the Alabama-based sales contractor.
“The circumstances surrounding HDL’s termination of our contract with BlueWave will become much clearer in the days and weeks ahead,” HDL spokesperson Jeff Kelley said Tuesday.
Beyond that, Kelley referred only to a release the company issued on Monday with a prepared statement from President and CEO Joe McConnell.
“We are going to be much more hands-on when it comes to sales. HDL, Inc. will be directly training and supervising the new sales force,” McConnell’s statement said. “That puts us in a much better position to monitor their marketing activities than with the limited control inherent in using independent sales reps. Direct engagement with the sales force is critical to achieving compliance with all applicable federal and state law requirements, and that’s our primary goal.”
In addition to HDL and Singulex, Quest’s Berkeley HeartLab, Boston Heart Diagnostics Corp. and Atherotech Diagnostics Lab are also included in the investigation, according to the WSJ.
Parting ways with BlueWave hasn’t been without consequences.
The company fired back by suing HDL for $205 million in federal court on Jan. 9, claiming that HDL owes BlueWave commissions amounting to $25 million, as well as $180 million to compensate for the remaining 60 months of the sales agreement.
The companies signed a 10-year sales agreement on Jan. 4, 2010 designating BlueWave as HDL’s independent contractor in the southeast territory, ranging from North Carolina to Texas.
BlueWave was promised about 16.8 percent of the sales revenue collected by HDL from physicians in that territory, the lawsuit states.
“The letter of termination sets no grounds for the termination, and it’s wholly inconsistent with the language in the contract,” said John Galese of Galese & Ingram, the law firm representing BlueWave. “It constitutes a breach of the agreement.”
BlueWave did not file a suit against Singulex after the firm terminated its existing agreement, Jeffrey Ingram of Galese & Ingram said. Ingram couldn’t say how much time was left on the Singulex contract.
The origins of the relationship between BlueWave and HDL extend well beyond 2010.
Tonya Mallory, HDL’s founder and former CEO, worked with BlueWave’s founders, Cal Dent and Brad Johnson, at Berkeley HeartLab before all three left to start their respective companies.
Berkeley eventually sued HDL, accusing it of stealing Berkeley’s business. The case was settled for $7 million, according to the WSJ.
Mallory abruptly resigned from her position in September.
Galese said he is under the impression that HDL is claiming BlueWave was responsible for establishing the doctor fees that are under federal scrutiny.
“The reality is that the contract that required us to promote our services with their fees was backed by HDL,” Galese said. “HDL promised us, with legal opinion from its own layers, that the P&H (processing and handling) fees were lawful.”
He said HDL had an audit conducted by an independent entity that concluded the fees were consistent with the processing costs for doctors.
“I find it disingenuous that HDL, in avoiding a due debt, is coming up with an inappropriate, improper and certainly false basis not to pay,” Galese said.
This is the second multimillion-dollar lawsuit filed against HDL in the last four months.