Health Diagnostic Lab Inc. files for Chapter 11 bankruptcy

Health Diagnostic Lab Inc. files for Chapter 11 bankruptcy

RICHMOND, VA (WWBT) - Richmond-based Health Diagnostic Laboratory Inc. filed for Chapter 11 bankruptcy on Sunday, according to court filings.

The bankruptcy filing in the Eastern District of Virginia shows more than $73 million in contract, trade debt and legal fees owed to 30 debtors, including nearly $50 million to the U.S. Department of Justice. The company also lists more than $450,000 in tax debt to the City of Richmond and $250,000 in trade debt to the Washington Redskins.

A hearing is set for 2 p.m. Monday in front of Judge Huennekens to review the filing.

HDL laid off 132 employees in November at its Richmond headquarters. President and CEO Dr. Joe McConnell said the company was making the "strategic decision to return to its core mission: fighting cardiovascular disease and diabetes with innovative cutting-edge, advanced laboratory testing that can lead to earlier diagnosis and treatment," at the time.

HDL's CEO Tonya Mallory stepped down in late September and faces a $83 million lawsuit by Cigna insurance over kickbacks and fraud. Mallory is now serving as only an advisor and board member at the company and Dr. McConnell has taken over her former roles as President and CEO.

Cigna sued HDL in federal court in October, claiming HDL was involved in a scheme to collect "exorbitant reimbursement rates for thousands of claims," reported Forbes. The federal investigation, reported by the Wall Street Journal, focuses on $20 kickbacks HDL offered doctors to order tests. HDL has denied the allegations.

As recently as 2010, HDL was rapidly expanding its Richmond operations, with a $4.2 million investment in the Virginia BioTechnology Research Park near downtown. Mayor Dwight Jones and then-governor Bob McDonnell trumpeted the move as a project which would bring more than 200 new jobs to the city.The company's work helps physicians work with patients to understand chronic disease through comprehensive testing of risk factors and biomarkers for cardiovascular and related diseases.

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