Zombie Laboratory Company Sics Bill Collectors On Patients Promised Free Tests

(Updated)

In several short years Health Diagnostic Laboratory (HDL) achieved spectacular growth partially on the promise to customers that they would never be responsible for the high costs of the company’s tests. Now, after bankruptcy and a forced sale of the company following multi-million dollar lawsuits by the Federal government and large private insurance companies, those same patients are receiving threatening notices from a debt collection agency.

Health Diagnostic Laboratory (HDL) was started in 2009 and by 2012 had reached revenue of $417 million, $138 million of which was profit. The rapid growth, according to charges by the US DOJ and others, was achieved by giving kickbacks to physicians ordering a battery of unproven cardiovascular diagnostic tests. Patients were never billed for the tests. The company billed Medicare and insurance companies several thousand dollars for each battery of tests, and recommended that physicians repeat the tests every three months.  (It is also important to recognize that there is no current medical justification for the routine use of the vast majority of these tests, though it turns out that this is largely immaterial to the business and legal issues at play in the story.)

In 2014 the government filed suit against HDL, eventually settling with the company in 2015 for at least $47 million. The company might have survived at that point, but then it was dealt a second blow when it was sued by two large insurance companies, Aetna and Cigna.  A third insurance company, UnitedHealthcare, withheld millions of dollars in payments to HDL. As a result of the lawsuits, the bad publicity, and a precipitous drop in revenue, HDL filed for bankruptcy in 2015.

HDL Receivables LetterIn September 2015 a federal bankruptcy judge approved the sale of HDL to a new lab company, True Health Diagnostics, for $37.1 million. By many accounts, True Health has a business model that closely copies HDL’s and is owned by some of the same players who helped create and run HDL.

But now, months after the sale, some HDL patients– who agreed to get HDL tests because they were told by their doctor, and assured by the company, that they would never be billed for the tests– are receiving threatening letters from a collection agency. The letters, from Accelerated Receivables Management, a debt collection company in Jacksonville, Florida, urge payment of the debt in order to “possibly prevent this from affecting your credit” and warns the recipients that if they don’t respond to the letter within 30 days “this office will assume this debt is valid.”

The letter, signed by Natonya Suitzer, “Collection Supervisor,” offers advice to the recipient to “please govern yourself accordingly.”

HDL Brochure large extractThe language of the letter is in striking contrast to HDL’s promotional literature distributed by physicians to their patients. “Lab costs and bills are worry-free with HDL, Inc.” the brochure promises. “If it turns out your insurance company does not cover a specific test, HDL, Inc. assumes all the risk… For patients with Medicare/Medicaid, the entire cost of services performed by HDL, Inc is covered under current Medicare/Medicaid requirements.”

Jason Shumake is a patient who received two batteries of HDL tests in June of 2014 and December 2014. He was told by his doctor that there would be no charge for the tests and he never received a bill. But then he was shocked to receive a letter in December from from Accelerated Receivables Management. Here is what he wrote me:

I am hoping that once the debt collector receives my written notice disputing the validity of the debt, this will simply go away. But I worry about what I will do if they persist and how this may affect my credit, and I am angry that I have to waste any time and energy at all dealing with this. And I worry about the exploitation of other patients with less knowledge and fewer resources. This whole thing is just despicable.

I have asked Fran Landau, the president of Accelerated Receivables Management, for an explanation of the situation. No response has been forthcoming, despite repeated efforts to contact her company, True Health Diagnostics, and Douglas Sbertoli, who was an executive vice president and general counsel at HDL, and who is now a consultant on the HDL bankruptcy.

Update:

“The discovery that a collection agency is billing patients tested more than a year ago by HDL—and who were promised by HDL that they would not see a bill—is just the latest twist in the saga of HDL,” stated Robert L. Michel, Editor-in-Chief of The Dark Report, an intelligence service covering the clinical laboratory industry. “This new development also comes just a few months after many of HDL’s assets were sold in a bankruptcy court auction.”

“Thus, who decided to engage a collection agency to contact HDL patients and demand payment for a sizeable bill they may have never seen before?” asked Michel. “Who owns this debt? Are HDL’s patient accounts receivables still owned by HDL? Or did they remain in the bankruptcy, as an asset for eventual recovery by the court on behalf of HDL’s creditors, for example?”

“There are estimates that HDL generated between $1 billion and $1.5 billion of revenue during the years 2010 and 2014, preceding its settlement of a federal whistleblower lawsuit in April 2014,” he continued. “Given details about the case that are in federal court documents, it may be that the current owner of HDL’s patient accounts receivables believes that it can collect tens of millions of dollars by turning those accounts over to collection agencies.”

“There are three ways this may backfire on the owner of HDL’s patient debt,” noted Michel. “First, if it is determined the debt holder is violating federal and state laws with the collection methods, regulators may step into this case, particularly if alerted by irate patients who have been dunned by collection agencies. Second, in today’s litigious society, it would be no surprise if one or more of the patients getting collection notices decided to file a class action suit.”

“The third way this may backfire is if a substantial number of patients go to their physicians with these collection notices and complain,” concluded Michel. “This happens frequently when patients believe they have been overcharged or improperly charged by the clinical laboratory. When physicians get these complaints, they are quick to contact the laboratory and complain. Often, too many patient complaints will cause the physician to drop that laboratory and begin using another clinical lab provider.”

Comments

  1. Shelley M. says:

    Accelerated Receivables Management collection scam on Health Diagnostic Laboratory is impacting my family. Very upset about this. Contacted the ordering physician and received some guidance on how to resolve. Very fraudulent. $3,700.00 bill from July 2015 and just being notified Dec/22/2015. If anyone is looking to start a CLASS ACTION LAWSUIT against these irresponsible people, count me in!

    • I am waiting to hear back from my doctor on how to respond. Looking for guidance myself, as I received a collections letter for $3,150 after being told HDL assumes all cost and risk for these labs!

    • May I ask what type of guidance you received as to how to word the letter? My doctor hasn’t given me much guidance, and they were not able to write a letter backing me up.

    • I am interested in starting a class action lawsuit! However, the pysicians are at fault too! They were ordering medically unnecessary tests and receiving kickbacks from HDL. I have spoken with the Texas Attorney General’s office and the Secretary of State. They have informed me that Accelerated Receivables Mgmt does not have a license in the state of TX and therefor, cannot attempt to collect any debt from residents in TX. Also, the company that is the umbrella over ARM, has not paid their taxes since 2009.

  2. Jennifer Thompson says:

    I would like to know what the outcome to this was. i also received a letter from the collections agency (and have never received a bill). I sent a certified letter disputing the charge and faxed a letter and have not heard back.

    • Shelley M. says:

      I have not heard from the scammers. I sent email to the owner, certified mail, regular mail, and fax. No response after 2 weeks.

  3. Crystal L. says:

    I received one of these letters in late Feb 2016 for lab work done in Oct of 2014. My insurance company confirmed that HDL never submitted the claim, but that they would process the claim still as long as there was an itemized statement. It took an additional week to receive an electronic copy of the itemized statement from the collections agency. It appears they are trying to wait until after the insurance reimbursement period (18 months for my insurance) so that the claim will be denied and the patient will be required to pay a larger sum (insurance always pays less). Like Shelley says above, count me in for any lawsuit against these guys!

  4. Lisa S. says:

    I am in California and had tests performed around May 2014. I just received a collections notice from a California based company named “Monterey Collections”. I intend to file a consumer complaint with the California Department of Justice and also notify the Bankruptcy court of Virginia where HDL filed for bankruptcy.

  5. Jerry (Orlando, FL) says:

    I just received a collection letter from Monterey Collections out of Oceanside, Ca. claiming that my account has been referred to their agency for collection on the unpaid insurance portion of treatment with HDL, Inc. for $2774.01! I recall the day the doctor actually ordered this lab work, he specifically told me that I may receive a bill but not to worry about it and call the office when and if I did. I have to admit, I thought it was a tad strange but didn’t put too much thought into it. Now, two years later (labs were drawn in May 2014) I receive this letter! Thing is, I never ordered or asked for this blood work. Why should I be responsible for this when I didn’t authorize or ask for it? I’m freaking out a bit because I’m a stickler with my credit and have stellar credit. The thought of something out of my control dinging my record is infuriating! What is our recourse? Are we liable? What should we do? I don’t want to pay this just to keep it off of my record and shut them up but am afraid I just may to end this nightmare! UGH!!! What would happen if we do nothing and just ignore it? How can they do this???

    • Lisa S. says:

      Hi Jerry –
      I don’t think it would be a good idea to ignore the letter. I intend on sending a USPS certified letter with return receipt explaining HDL guaranteed no cost to patient outside of insurance coverage.

      I really am not sure the appropriate agency to contact is but since I am in CA and Monterey Collections is in CA I will file a complaint with the state Department of Justice. Here is a link https://oag.ca.gov/consumers/general/collection_agencies10#file to CA website.

      I am not sure but maybe a complaint with the Federal Trade Commission as well as they enforce the federal Fair Debt Collection Practices Act.

      • Dawn Martella says:

        Lisa,

        Thank you for the link. I also just received a letter from Monterey ($5030.00!!!!) and will be responding via registered mail and also filing a complaint. I have a call in to my doctor and am hoping to get some support from that end. Will update you all. Thanks again.

      • Walter Shelton says:

        My doctor’s office says that it appears that HDL is only looking to recuperate payments that patients may have received from insurance companies. So sending the EOB should resolve the issue. Except in my case I do not have a copy of an invoice or EOB because nothing was submitted to my insurance company. I did the registered letter thing and filed a complaint with the State of CA .

  6. Ashley says:

    We are dealing with the exact same situation. Just received a letter from Monterey Collections, and we plan on sending back a response disputing the validity of the debt being claimed. We too will be sending our response via certified mail, and will escalate things from there if we end up getting a response. Hoping they will drop it after receiving our response as I am nearly certain they cannot provide the needed proof to verify that this debt is legitimate and that we are the ones responsible to pay it even if it is.

  7. My wife got one of these same love letters yesterday and I expect mine will be following soon. Like everyone else we are concerned about our credit rating. We are having a hard time deciding how to handle this as well. We did contact our MD office and they will be getting back to us later next week with some answers. The MD’s secretary stated that they have been getting calls from patients all day. In the meantime I have made a story suggestion to “60 minutes” sharing this article. I would think if thousands of people all over this country does the same thing 60 minutes would do a story on this company and set the record straight and get HDL off our backs.
    We are also going to be contacting our state Attorney General to file a complaint as well. Again, numbers talk and the more folks that file a complaint will get their attention and get action. I am sure that nobody out there wants a state attorney general or 60 minutes breathing down their back. Even thou this company deserves this for their underhanded action against us all !

  8. I just received a debit collectors letter for 1000’s of dollars. So what is the best way to get rid of it? Do I have to go to court? This is crazy! any help would be appreciated!

  9. For those of you still dealing with this issue, I found a Reddit thread that contained some useful links, including one for a pdf of the patient information brochure that clearly states HDL, inc.’s pricing overview. I’ve highlighted the following quote and will be sending this to along with a few other documents to the collection agency to continue contesting this debt. “For patients with PPO/POS/HMO insurance, HDL, Inc. will accept the amount your insurance company allows for each diagnostic. In other words, your “out of pocket” cost is ZERO for Initial and Follow-Up testing. (HDL, Inc. takes all the risk if your insurance company does not pay for the ordered diagnostics.)” Here is the link to that Reddit thread: https://www.reddit.com/r/personalfinance/comments/47omsh/unexpected_medical_debt_from_company_involved_in/. If anyone has more updates on what has been helpful, we would appreciate hearing them as we continue to deal with this bullshit.

  10. Yes, what Ashley says on May 16th! I can assure you that HDL (and HDL’s sales reps) promised that HDL would never “balance bill”. I have this in writing, but as Ashley writes above, this was widely known and promised. They cannot, now, “go back” on what they promised. Don’t ever pay an HDL bill unless your insurance company sent you a check and you never forwarded that check to HDL per the original documented procedure. You can’t keep “free money” if your insurance company paid you, but in all other cases HDL stated in writing that they write off copays or unapproved charges.

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