Joel R. Glucksman
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Millennium Health LLC Preparing to File for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Date: November 19, 2015
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Millennium Health prepares for bankruptcy
On Oct. 19, Millennium Health LLC, the largest U.S. drug-testing lab, announced that it had prepared to file for Chapter 11 bankruptcy protection by Nov. 10. According to a Bloomberg report, Millennium Health’s decision to seek bankruptcy protection came after it reached an agreement to pay a $256 million settlement to resolve claims made by the federal government that the company misrepresented the need for certain drug testing procedures and offered doctors gifts in exchange for company referrals.
Millennium Health falls into debt over federal government investigations
The company has been involved in federal investigations for over four years, which have tied up its finances and substantially hindered its future earnings outlook as a result. According to a Wall Street Journal report, Millennium Health has been in negotiations to hand over control of the company to its senior lenders throughout the federal investigations. In turn, the company’s creditors have been embroiled in their own fights against one another to determine how much each is owed and how much each will receive in Millennium Health’s shares. Until these financial terms are agreed upon, Millennium Health may not be able to produce an agreed restructuring plan, which could delay its filing for Chapter 11 bankruptcy protection.
The federal government’s case against Millennium Health
The federal government investigations against Millennium Health involved allegations that the company inaccurately billed the Centers for Medicare & Medicaid Services. The case was filed in 2014 by the federal government, as well as 29 states and the District of Columbia, while Omni Healthcare Inc. was also was named as a plaintiff. According to the Wall Street Journal, the case was filed against Millennium Health over allegations that it violated the False Claims Act by requiring doctors to order urine, drug and genetic testing that was deemed unnecessary. The federal government alleged that the company misrepresented to doctors the necessity of a $1,800 genetic test for pain management patients. Further, the government also accused Millennium Health of offering free urine drug testing cups to doctors so that the physicians would return the urine to the company for hundreds of dollars of free testing, which violates the Stark law and anti-kickback statute.
Millennium Health’s reorganization plan calls for handing over control
As part of its debt restructuring proposal, Millennium Health plans to hand over control of the company to its senior lenders. According to Bloomberg, the company also plans to reach agreement with its lenders on its $1.8 billion term loan, and sent a copy of the restructuring proposal to the U.S. Department of Justice.
In turn, as part of the settlement, Millennium Health must pay its founder James Slattery and TA Associates, its majority shareholders, $50 million. This number is based on the proportion of equity each entity owns in Millennium Health.
The company’s creditors are also required to vote on the proposed bankruptcy plan by Nov. 8. This decision on the company’s Chapter 11 reorganization plan would be confirmed by Dec. 21. Following this decision, Millennium Health would pay the federal government’s $256 million settlement on Dec. 30.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights
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Millennium Health LLC Preparing to File for Chapter 11 Bankruptcy Protection
Author: Joel R. Glucksman
Millennium Health prepares for bankruptcy
On Oct. 19, Millennium Health LLC, the largest U.S. drug-testing lab, announced that it had prepared to file for Chapter 11 bankruptcy protection by Nov. 10. According to a Bloomberg report, Millennium Health’s decision to seek bankruptcy protection came after it reached an agreement to pay a $256 million settlement to resolve claims made by the federal government that the company misrepresented the need for certain drug testing procedures and offered doctors gifts in exchange for company referrals.
Millennium Health falls into debt over federal government investigations
The company has been involved in federal investigations for over four years, which have tied up its finances and substantially hindered its future earnings outlook as a result. According to a Wall Street Journal report, Millennium Health has been in negotiations to hand over control of the company to its senior lenders throughout the federal investigations. In turn, the company’s creditors have been embroiled in their own fights against one another to determine how much each is owed and how much each will receive in Millennium Health’s shares. Until these financial terms are agreed upon, Millennium Health may not be able to produce an agreed restructuring plan, which could delay its filing for Chapter 11 bankruptcy protection.
The federal government’s case against Millennium Health
The federal government investigations against Millennium Health involved allegations that the company inaccurately billed the Centers for Medicare & Medicaid Services. The case was filed in 2014 by the federal government, as well as 29 states and the District of Columbia, while Omni Healthcare Inc. was also was named as a plaintiff. According to the Wall Street Journal, the case was filed against Millennium Health over allegations that it violated the False Claims Act by requiring doctors to order urine, drug and genetic testing that was deemed unnecessary. The federal government alleged that the company misrepresented to doctors the necessity of a $1,800 genetic test for pain management patients. Further, the government also accused Millennium Health of offering free urine drug testing cups to doctors so that the physicians would return the urine to the company for hundreds of dollars of free testing, which violates the Stark law and anti-kickback statute.
Millennium Health’s reorganization plan calls for handing over control
As part of its debt restructuring proposal, Millennium Health plans to hand over control of the company to its senior lenders. According to Bloomberg, the company also plans to reach agreement with its lenders on its $1.8 billion term loan, and sent a copy of the restructuring proposal to the U.S. Department of Justice.
In turn, as part of the settlement, Millennium Health must pay its founder James Slattery and TA Associates, its majority shareholders, $50 million. This number is based on the proportion of equity each entity owns in Millennium Health.
The company’s creditors are also required to vote on the proposed bankruptcy plan by Nov. 8. This decision on the company’s Chapter 11 reorganization plan would be confirmed by Dec. 21. Following this decision, Millennium Health would pay the federal government’s $256 million settlement on Dec. 30.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.