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Federal lawsuit against Richmond business alleges $80 million ‘kickback scheme’

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Posted at 12:39 PM, Aug 11, 2015
and last updated 2015-08-11 12:39:08-04

RICHMOND, Va. — The feds got what they wanted out of HDL. Now they’re going after the former face of the embattled blood testing firm.

Tonya Mallory, the co-founder and former CEO of downtown-based Health Diagnostic Laboratory was sued Friday by the United States, which alleges that her involvement in a massive kickback scheme caused the federal government to pay hundreds of millions of dollars in improper reimbursements from Medicare and Tricare.

Three whistleblower cases filed several years ago in South Carolina led to a federal investigation, which spurred Friday’s 48-page lawsuit that names Mallory and four other defendants.

Also named as defendants in the suit are BlueWave Healthcare Consultants, HDL’s former third-party sales contractor; BlueWave’s co-founders Floyd Calhoun Dent and Robert Bradford Johnson; and Berkeley Heartlab, which had employed Mallory, Dent and Johnson before the three founded their respective companies.

The government’s case centers on kickback payments – which the defendants called process and handling fees – paid to physicians by HDL, California lab company Singulex and Berkeley Heartlab to encourage them to use those labs’ services. The government claims those payments violate the False Claims Act and anti-kickback statutes.

The lawsuit alleges that the defendants between them paid $80 million in “improper” process and handling fees to doctors. That resulted in false claims to government healthcare programs that ultimately sent back $500 million in reimbursements to HDL, Singulex and Berkeley, according to the lawsuit.

The government claims that BlueWave paid physicians $68 million in kickbacks on behalf of Mallory and HDL between 2010 and 2014.

And between 2009 and 2014, HDL collected $333 million from Medicare and Tricare, the two federal programs mentioned in the case.

Mallory resigned abruptly as CEO last year.

HDL and Singulex were not named as defendants in the case. They each entered into settlements with the federal government earlier this year to resolve a similar kickback inquiry. HDL agreed to pay $47 million as part of that settlement.

The allegations could force Mallory to pay millions of dollars in civil penalties and are the latest chapter in the HDL saga, in which the once fast-growing company and all-star of the Richmond startup scene became a bankrupt firm on the verge of being sold off in an auction.

Mallory, a VCU grad, founded HDL in 2008 after leaving Berkeley. The company became a sudden success story that, publicly, was built on the benefits its blood tests offered in predicting ailments like heart disease and diabetes.

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