Pulitzer Prize-Winning Series Exposed Richmond Firm

Stories dealt with Health Diagnostic Laboratory and Medicare.

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A Wall Street Journal series on Medicare abuses that included Richmond’s Health Diagnostic Laboratory was awarded a Pulitzer Prize for investigative journalism April 20.

The Journal’s series was based on Medicare data to which the newspaper gained access after a court fight. A front-page story Sept. 8 detailed how quickly Health Diagnostic Laboratory grew by tapping the Medicare program for money for its testing.

Shortly after the story, Tonya Mallory, HDL’s chief executive and co-founder, resigned her position. Earlier this month, HDL agreed to a $47 million settlement with the federal government for allegedly paying kickbacks to doctors if they used HDL’s blood testing for their Medicare patients. In the settlement, the firm acknowledged no wrongdoing.

In their story, reporters John Carreyrou and Tom McGinty wrote:

“A fast-growing Virginia laboratory has collected hundreds of millions of dollars from Medicare while using a strategy that is now under regulatory scrutiny: It paid doctors who sent it patients' blood for testing.

“Health Diagnostic Laboratory Inc. transformed itself from a startup incorporated in late 2008 into a major lab with $383 million in 2013 revenues, 41% of that from Medicare.”

The story was one of a series that exposed how health care firms across the country profited from the Medicare system by inflating charges and paying doctors if they chose their firms for services.

Upon winning the Pulitzer, the Journal stated:

“In the investigative category, Wall Street Journal staff won for the paper’s 'Medicare Unmasked' series that provided Americans unprecedented access to previously confidential data on the motivations and practices of their health care providers. The Journal’s stories came after a prolonged legal fight that led the government to release the data.

“This was an important piece of work that has shed light on information Washington wanted to keep hidden from Americans about how this vast government program is distorted by fraud and waste,” said Gerard Baker, editor in chief of The Wall Street Journal, in a note to the paper’s staff. “Our reporting has sparked congressional inquiries and criminal charges and changed public attitudes towards Medicare.”

The stories in the Journal series, including the one about HDL, were based in part upon data that the newspaper was permitted to review after a court battle. Journal lawyers won their fight to lift a 33-year-old injunction that made some Medicare records off-limits to public review because of privacy concerns.

After analyzing the data, the Journal wrote:

“Tax dollars helped fuel HDL. It collected $139 million from Medicare in 2012, according to federal data released in April after a legal effort by the Journal. HDL's Medicare receipts rose to $157 million in 2013, a company document shows.”

HDL stopped paying fees to doctors for using their blood tests last summer after receiving complaints from the U.S. Department of Health and Human Services.

Joe McConnell, who replaced Mallory as HDL chief executive in September has ended the company’s contract with an Alabama marketing company that involved Mallory. As part of the $47 million settlement, HDL will be monitored in a special program by federal regulators for five years.

Reporters Carreyrou and McGinty were part of a seven-person reporting team that produced the Medicare fraud series.

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