The Real Losers In The Zombie Versus Vampire Lab Company Court Battle

(Updated)

Right now a dead, bankrupt and corrupt laboratory company is suing an active, morally bankrupt lab company. No matter who eventually wins the court battle all of us– patients, Medicare, insurance companies, not to mention our entire health and legal systems– will lose.

Health Diagnostics Laboratory (HDL) is the zombie lab company. After raking in hundreds of millions of dollars in a few short years for its owners and others, HDL went out of business last year. The reason: the company’s business model was illegal and unethical. The company bribed doctors to order unnecessary tests– lots of unnecessary tests. Then it told patients that they would not be billed for the tests. This is also illegal. But the company raked in hundreds of millions of dollars from the portions of the bills paid by Medicare and insurance companies.

True Health Diagnostics is the vampire lab company. When HDL went out of business this new company bought its remaining assets and adopted its business model of bribing doctors to order their tests and not collecting the patients’ portion of the bill. (Despite the company’s denials, True Health appears to have close connections with at least some of the major figures involved with HDL.)

Late last year the surviving legal remnant of HDL began efforts to collect from patients on some of those bills the company had promised, in writing, never to collect. Patients panicked when they suddenly found themselves faced with thousands of dollars in bills. Naturally many of them called their doctors to complain, and many of the doctors complained to their True Health sales reps, since in many cases this was the same person.

True Health in turn panicked. It threatened to sue HDL. If doctors and patients believed that there was even a small chance that patients would be held responsible for thousands of dollars for their tests then their entire sleazy business model would topple like a house of cards. So the company sent letters to doctors, telling the doctors to tell their patients to ignore the letters.

So HDL sued True Health. (You can read a great account of the lawsuit in Richmond BizSense by Katie Demeria.)

I have no idea how the legal issues here will be resolved. I don’t know if patients who were promised they would never receive a bill can be held responsible for those bills because those promises were illegal. This kind of situation is exactly why we have so many lawyers but so little justice.

Because the one thing missing in the battle of the zombie lab versus the vampire lab is justice. The responsible figures– the HDL leaders, its salesmen, and, especially, the doctors who ordered and profited from all these unnecessary tests– are not being held responsible. Many of the same doctors and salesman who participated in the earlier HDL scheme are now participating in the True Health scheme.

More than 30 doctors and lab employees have gone to jail in a similar case in New Jersey centering around a lab called Biodiagnostics Laboratory. As far as I can tell the HDL case involves far greater sums of money and more widespread fraud. But not a single criminal charge has been brought by the government against any of the figures in this case.

We’ll probably never know how many hundreds of millions of dollars were made by the HDL executives and salesmen and the doctors who participated in their scheme. And unless people start going to jail there will be no incentive to stop more schemes like this. Civil suits, by the government or by private insurance companies, will simply be viewed as the cost of doing business.

In this legal swamp it’s easy to lose sight of an important point about both HDL and True Health. There is absolutely no medical justification for their tests. The core business of both companies is a broad panel of cardiovascular lab tests costing thousands of dollars. There is not a single respectable medical organization that recommends clinical use of all these tests. Many of these tests have never been proven to have any value in routine clinical practice. (Some play an important role in research.) There is no evidence to support the combination of all these tests, and there is even less evidence to support the common practice of repeating these tests on a regular quarterly or yearly basis. In fact, there is a far greater chance that these tests will lead to harm than benefit. (Here’s one example of the kind of harm I’m discussing.)

So that’s where we are today. A US federal bankruptcy court will expend precious resources untangling the monster mash of HDL and True Health. And no one, it seems, is doing anything to make sure this sort of thing doesn’t keep happening.

Update, February 17– 

Last week a federal judge upheld the temporary restraining order against True Health, “requiring it to stop interfering with HDL’s collection efforts and to revoke cease-and-desist letters sent to HDL and its collections agency, as well as letters sent to former HDL customers,” reports Katie Demeria in Richmond BizSense.

 

CardioBrief Stories About HDL and True Health Diagnostics:

 

 

 

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