TA's Millenium Health settles for $256m

The drug testing lab business has settled claims and is preparing for a possible Chapter 11 filing.

Speciality diagnostics laboratory Millennium Health, a portfolio company of Massachusetts private equity firm TA Associates, has agreed to pay $256 million for allegedly improperly billing Medicare for unnecessary drug tests, as well as improper gift practices involving physicians, according to the US Department of Justice (DOJ).

There has been no determination of liability. The company issued a statement last week that said the majority of its existing debt holders and equity investor had approved the company’s restructuring in order to satisfy the terms of its settlement with the DOJ and reduce its $1.8 billion debt burden. It said it would begin soliciting votes on a restructuring plan, including a possible pre-packaged Chapter 11 bankruptcy filing or out of court workout with its lenders in the coming weeks.

“This agreement represents a major milestone toward achieving our goal of substantially reducing our debt burden and concluding the settlement with the DOJ announced in May,” Millennium chief executive Brock Hardaway said in the statement.

Officials from TA Associates and Millennium Health declined to comment further about the timeline for the company’s Chapter 11 filing or out of court restructuring.

TA invested in Millennium in 2010. Last year, the fund manager realised a partial return on its investment through a $1.8 billion debt recapitalisation led by JPMorgan which reportedly paid out a $1.2 billion dividend to minority-stake owner TA and the company’s management team

This story originally appeared on sister title Private Healthcare Investor