Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Millennium Health LLC Preparing to File for Chapter 11 Bankruptcy Protection

Author: Joel R. Glucksman

Date: November 19, 2015

Key Contacts

Back

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.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Corporate Consolidation and Antitrust Issues in Mergers post image

Corporate Consolidation and Antitrust Issues in Mergers

Corporate consolidation involves two or more businesses merging to become a single larger entity. The result is often a stronger and more competitive company that can better navigate today’s competitive marketplace. What Is Corporate Consolidation? Corporate consolidation closely resembles a basic merger transaction. The primary difference is that a consolidation creates an entirely new business […]

Author: Dan Brecher

Link to post with title - "Corporate Consolidation and Antitrust Issues in Mergers"
What is Business Law and Why Is it Important? post image

What is Business Law and Why Is it Important?

Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]

Author: Dan Brecher

Link to post with title - "What is Business Law and Why Is it Important?"
Corporate Transactions: Best Practices for Successful Deals post image

Corporate Transactions: Best Practices for Successful Deals

Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]

Author: Dan Brecher

Link to post with title - "Corporate Transactions: Best Practices for Successful Deals"
How to Conduct a Fair and Legal Employee Termination in 2025 post image

How to Conduct a Fair and Legal Employee Termination in 2025

Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]

Author: Angela A. Turiano

Link to post with title - "How to Conduct a Fair and Legal Employee Termination in 2025"
Admin Dissolution for Annual Report: What You Need to Know post image

Admin Dissolution for Annual Report: What You Need to Know

While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]

Author: Dan Brecher

Link to post with title - "Admin Dissolution for Annual Report: What You Need to Know"
What Is Antitrust Litigation Law? post image

What Is Antitrust Litigation Law?

Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]

Author: Robert E. Levy

Link to post with title - "What Is Antitrust Litigation Law?"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!