Health Diagnostic committee’s $77.4 million Aetna settlement approved

By Caroline Salls

Pittsburgh, May 3 – Health Diagnostic Laboratory Inc.’s official committee of unsecured creditors obtained court approval of a $77.4 million settlement with Aetna Inc., according to an order filed Tuesday with the U.S. Bankruptcy Court for the Eastern District of Virginia.

Aetna filed a complaint in April 2015 alleging fraudulent, illegal and tortious conduct against Health Diagnostic, its former chief executive officer LaTonya Mallory, BlueWave Healthcare Consultants, Inc. and BlueWave’s owners Floyd Calhoun Dent III and Robert Bradford Johnson.

Specifically, the committee said Aetna alleged that it suffered significant damages as a result of Health Diagnostic and its agents improperly inducing Aetna’s participating physicians to refer laboratory testing services to Health Diagnostic as an out of network provider. Aetna also alleged that Health Diagnostic induced physicians to “up-code” claims and order excessive tests, and that the company waived Aetna members’ financial responsibility payments.

According to the complaint, these alleged practices resulted in Aetna overpaying on claims. The committee said Aetna calculates that it paid $77.4 million to Health Diagnostic since 2010 for services allegedly performed on behalf of Aetna members, not including Aetna’s potential damages related to alleged up-coding and potentially excessive tests allegedly performed, billed and paid, or potential punitive damages.

The committee and Health Diagnostic’s chief restructuring officer claimed that a large portion of the $77.4 million in payments would have occurred even without the alleged improper inducements.

Under the settlement, Aetna will have a $49.5 million claim against Health Diagnostic, comprised of $34 million for the in-network/out-of-network payment rate dispute and $15.5 million for other alleged damages.

Aetna will also have a $27.9 million subordinated claim.

Health Diagnostic, a Richmond, Va.-based blood testing company, filed for bankruptcy on June 7, 2015 under the Chapter 11 case number 15-32919.

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