Frisco Diagnostic Firm Lays Off Workers, Files for Bankruptcy After Feds Yank Payments

A Frisco blood testing company laid off 80 workers and filed for bankruptcy this week after the federal government suspended its Medicare reimbursements.True Health Diagnostics LLC said it could be forced to shut down completely and lay off the rest of its 400-person workforce.Federal regulators first halted payments to the company in 2017, citing instances of fraud. True Health later sued the Centers for Medicare and Medicaid Services in federal court, claiming it was wrongly accused of submitting reimbursements after a provider's death. That lawsuit was thrown out this month.True Health claimed in the lawsuit that the Medicare agency withheld more than $20 million in reimbursements since May 2017. That's when regulators first flagged the suspicious coverage claims and stopped all payments. The agency later reduced the suspension to 35% of payments.Almost 20% of True Health's 335,000 yearly patients are Medicare beneficiaries, the company said.Clerical errors caused some of the flawed claims, the company said. True Health maintains the Centers for Medicare and Medicaid Services never gave it a chance to challenge the fraud allegations."This Kafka-esque system ... has left True Health in financial ruin," the complaint against the federal officials said.A third of employees who lost their jobs Monday worked at a laboratory in downtown Richmond, Va. The company also has an office near Parkwood Boulevard and Warren Parkway in Frisco.Lots of debt, little fundingThe firm's parent company, True Health Group LLC, filed for Chapter 11 bankruptcy protection Tuesday in Delaware, a day after the layoffs. It owes between $100 million and $500 million to creditors, including the city of Richmond, Va., and Irving-based McKesson Corp. It listed assets of less than $50 million.True Health testing covers more than 300 biomarkers, from thyroid hormones to diabetes risk factors. In June, the company launched an in-home testing service, complete with a house visit by a phlebotomist.  Continue reading...