Millennium Health files for bankruptcy after $256M settlement : News : Money Times

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Millennium Health files for bankruptcy after $256M settlement

Millennium Health filed for bankruptcy under Chapter 11 of US bankruptcy laws in the District Court in the state of Delaware.

The filing took place less than a month after it agreed on a settlement with the Department of Justice (DOJ) to pay $256 million to resolve allegations of breach of the False Claims Act for billing Medicare, Medicaid, and other federal health care programs for unnecessary medical tests, and for providing kickbacks to doctors for referring lucrative laboratory testing business to it.

"Millennium allegedly promoted indiscriminate and unnecessary testing that increased medical costs without serving patients' real medical needs," said US Attorney Carmen M Ortiz of the District of Massachusetts. " reported DOJ Justice News.

"A laboratory that promotes and knowingly conducts medically unnecessary drug testing operates unlawfully and squanders our precious federal health care resources." Carmen M Ortiz added.

The claims resolved by the settlement are allegations only and there has been no determination of liability, stated the Department of Justice.

Millennium Health issued a statement Tuesday stating that it filed a voluntary prepackaged Chapter 11 case in the US Bankruptcy Court for the District of Delaware to implement its previously announced financial restructuring plan.

The statement said that the terms of the financial restructuring were reached with near unanimous support of its debt holders and that the agreement among others a reduction in the company's debt by more than $1.15billion and a contribution of $325 million by current equity holders.

The statement notes that there should be no disruption to Millennium's business or employees.

CEO of Millennium Health Brock Hardaway stated that they are pleased to have achieved such strong support for a consensual restructuring that dramatically improves our balance sheet.

He added that this is excellent news for their customers, suppliers and employees because it paves the way for a promising future for Millennium Health.

The statement also noted that since only the existing lenders and current equity holders are expected to be affected all other creditors including vendors, suppliers, trade partners and other counterparties are expected to receive all payments due to them in the ordinary course of business.

The statement also added that in light of the overwhelming support received for the plan, the Company is seeking confirmation of its plan of reorganization on an expedited basis and anticipates emerging from Chapter 11 as soon as possible after December 15, 2015.

Meanwhile, HighYieldBond stated that Standard and Poor had lowered Millenium Health's corporate credit last month and that Moodys had also in October 2015 downgraded Millennium Health's CFR to Ca and rating outlook negative.