Pathology Blawg News Roundup for July 2, 2015


Health Diagnostic Laboratory asks court for permission to sell itself

Embattled clinical laboratory Health Diagnostic Laboratory (HDL) has filed a motion with the court overseeing its bankruptcy proceedings that asks for approval to sell itself.  According to the company’s press release, it “intends to continue normal operations throughout the sale process, which is expected to maximize the value of the company and provide a platform for future growth.”

HDL’s president and CEO, Dr. Joseph McConnell, says numerous parties have already expressed interest in purchasing HDL.

Readers will recall HDL filed for Chapter 11 bankruptcy on June 7, 2015, approximately two months after the formal announcement that it had agreed to pay $47 million to settle allegations it provided kickbacks to physicians. According to the Richmond Times-Dispatch, HDL owes its thirty largest unsecured creditors $73.469 million.

A hearing on HDL’s motion is scheduled for July 14.

I reached out to HDL for comment, but did not hear back.

NYT uses Renaissance RX to discuss genetic testing fraud concerns

The New York Times uses Renaissance RX, the New Orleans-based pharmacogenetics laboratory that went from startup lab with a handful of employees to the darling of Louisiana politicians to the focus of a federal Medicare fraud investigation in just three years, as a backdrop for a brief discussion about the explosive growth in genetic tests nationwide, and how fraud may be playing a role.

Many thanks to Dr. Bruce Quinn over at Discoveries in Health Policy for alerting me to this article.

Theranos gets The Economist treatment

The Economist recently published a relatively superficial article about the opaque clinical laboratory company Theranos.  I am still amazed how many articles are written about this company that has yet to demonstrate its proprietary methodology/technology can actually do what the company claims it can do.

Aurora Diagnostics teams up with University of Nevada School of Medicine

Aurora Diagnostics and the University of Nevada School of Medicine announced last week they have formed a public-private partnership that will serve to “enhance the anatomic pathology services available in northern Nevada and to serve as a platform for future clinical research partnerships.”

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Pathologist’s discrimination and retaliation lawsuit so far unsuccessful

Dr. Jotica Talwar filed a lawsuit against Staten Island University Hospital (SIUH), Anthony Ferreri, SIUH's President and CEO, and Dr. Henry Simpkins, chair of SIUH's pathology department, that alleged discrimination and retaliation under federal, state and municipal law.  So far, all but the municipal claims have been dismissed. Background The background information I provide here is contained in the District court's Memorandum and Order on the defendant's motion for summary judgment, as I … [Continue reading]

Pathology Blawg News Roundup for June 26, 2015

Theranos inks deal with Carlos Slim foundation to offer testing in Mexico The mysterious clinical laboratory Theranos has inked a deal with the "Instituto Carlos Slim de la Salud", or Casalud for short, to provide clinical laboratory testing in Mexico.  Casalud is a non-profit foundation "devoted to generate solutions aimed to help solve the main health issues afflicting Latin America and Mexico’s most vulnerable population" that was started by billionaire Carlos Slim. American Board … [Continue reading]

OPKO Health/Bio-Reference Laboratories deal makes Barron’s “uneasy”

Barron's recently published an article on the acquisition of Bio-Reference Laboratories (BRLI) by OPKO Health (NYSE:OPK) that says the deal makes Barron's "uneasy" and "only those who believe that [OPKO CEO Phillip] Frost can work miracles should own Opko stock." The purchase, which is valued at $1.47 billion, financed solely through OPKO stock, and took me completely by surprise, was announced on June 5, 2015.  I felt better after I talked to a couple of my sources—one a BRLI insider … [Continue reading]

American Society for Clinical Pathology 2013 financial information

Last year I published a summary of the information contained within the Form 990 filed by the American Society for Clinical Pathology (ASCP) for financial year 2012.  The ASCP’s 2013 Form 990 is now available, and I have provided a summary below which essentially follows last year’s.  For ease of comparison, I have included the corresponding 2012 numbers in parentheses (if available). Disclosed Executive Salaries (2012 compensation) E. Blair Holladay, Executive Vice … [Continue reading]

Pathology Blawg News Roundup for June 19, 2015

Another Medicare Administrative Contractor issues ancillary stain draft LCD First Coast Service Options (FCSO), the Medicare Administrative Contractor (MAC) for Jurisdiction N (Florida, Puerto Rico and the U.S. Virgin Islands) has issued DL36234, a draft local coverage determination policy (LCD) on immunohistochemistry and special stains that appears to be identical to the LCD finalized by Palmetto GBA in January 2015. By my count, FCSO is the third MAC (Noridian and CGS … [Continue reading]

Millennium Health may pay $250 million to settle whistleblower allegations

Urine drug toxicology giant Millennium Health (MH) is reportedly negotiating a settlement with the federal government for as much as $250 million according to the Wall Street Journal.  In addition, another outlet has reported MH is meeting with restructuring consultants and bracing for potential additional lawsuits from its lenders and private payors. A source told me about a month ago that MH and the federal government were working on a settlement that could reach $250 million, but I was … [Continue reading]

Class action monopoly lawsuit against Quest Diagnostics dismissed

A US District judge has dismissed with leave to amend a class action lawsuit filed against Quest Diagnostics that alleged Quest had achieved and maintained a monopoly on clinical diagnostic testing in northern California. Allegations The three plaintiffs are patients who made co-payment and deductible payments for routine outpatient testing Quest performed that they allege were higher than they should have been.  Quest was able to charge higher monopolistic prices by paying kickbacks to … [Continue reading]

Pathology Blawg News Roundup for June 12, 2015

Terrible JAMA breast biopsy study still receiving media attention The Wall Street Journal just published an article that used the recent JAMA breast biopsy study as the basis for continuing to generate public suspicion of diagnostic accuracy in breast pathology. Readers will recall I had three main criticisms of the JAMA study: The authors assumed the diagnoses rendered by the expert panelists were all “correct”.  This despite the fact there was initial unanimous agreement amongst … [Continue reading]

Health Diagnostic Laboratory files for bankruptcy

Health Diagnostic Laboratory (HDL) filed for Chapter 11 bankruptcy late in the evening on June 7, 2015.  Dr. Joseph McConnell, HDL's President and CEO, says HDL is "confident these actions will enable us to quickly restructure and emerge better positioned for continued growth and success." Contents of bankruptcy filing The entire filing is well over 200 pages long, and I admittedly did not go through it all.  What follows is merely a brief summary of the declaration of HDL's Chief … [Continue reading]

Kickback allegations against LabCorp in Georgia whistleblower suit dismissed

A US district court judge in Atlanta has dismissed the federal kickback allegations made against LabCorp in a whistleblower suit filed by Chris Riedel, former owner of Hunter Laboratories.  At the same time, the judge remanded the suit's state law claims back to Georgia state court. Background Mr. Riedel originally filed the current whistleblower suit against both LabCorp and Quest Diagnostics in January 2008, and alleged the two lab giants made false claims to Georgia Medicaid by … [Continue reading]

Pathology Blawg News Roundup for June 5, 2015

OPKO Health to buy Bio-Reference Laboratories It was announced yesterday that OPKO Health has agreed to purchase Bio-Reference Laboratories (BRLI).  BRLI shareholders will receive 2.75 shares of OPKO stock for every one share of BRLI common stock owned.  Based on OPKO's closing price of $19.12 per share on June 3, 2015, the deal is valued at $1.47 billion.  The Boards of Directors for both companies have already approved the transaction. OIG to analyze 2014 Medicare clinical laboratory … [Continue reading]

BlueWave Healthcare Consultants refiles $205 million lawsuit against Health Diagnostic Laboratory

BlueWave logo

BlueWave Healthcare Consultants, the former sales contractor for Health Diagnostic Laboratory (HDL) that recently filed, and then withdrew, a $205 million breach of contract lawsuit against HDL, has re-filed a nearly identical lawsuit. Background BlueWave filed its original lawsuit against HDL on January 9, 2015, and alleged HDL owed almost $25 million in back commission payments.  In addition, BlueWave claimed HDL violated the Termination provisions in the Sales Agreement in January 2015 … [Continue reading]

California Clinical Laboratory Association lawsuit regarding local coverage determinations dismissed

A federal judge in the District of Columbia has dismissed the lawsuit the California Clinical Laboratory Association (CCLA) filed against the secretary of the Department of Health and Human Services (HHS) that argued, among other things, delegation of rule-making authority to Medicare Administrative Contractors (MACs) to develop and apply local coverage determinations (LCDs) regarding clinical laboratory tests is unconstitutional. Background The CCLA and an 82 year old retired registered … [Continue reading]

Two pain docs arrested for urine drug toxicology testing fraud


"We are committed to the highest standard of patient care."  That is a quote from the website of Dr. John Patrick Crouch and Dr. Xiulu Ruan of Physicians' Pain Specialists of Alabama (PPSA), who were arrested on May 20, 2015 by federal agents after being indicted on charges of unlawful distribution of controlled substances and healthcare fraud related to urine drug toxicology (UDT) testing. Unfortunately, not many details are available in the indictment, Department … [Continue reading]