Millennium Health LLC filed for bankruptcy protection after the largest U.S. drug-testing lab settled a federal probe of alleged billing practices covering tests on the urine of dead people and checking samples from senior citizens for angel dust.

Millennium faced claims from the U.S. Justice Department and the Centers for Medicare & Medicaid Services, 29 states and the District of Columbia. A federal complaint filed in March alleged the company, which looks for prescription drugs and illegal substances, encouraged excessive testing including those for drugs patients weren’t suspected of taking.

The Centers for Medicare & Medicaid Services had threatened to revoke the company’s access to federal funds because of the alleged irregularities. According to the U.S. complaint, filed in a Massachusetts court, Millennium received more than $630 million from Medicare for drug testing from 2007 to 2014.

The San Diego-based company has said it will use the bankruptcy process to carry out a lender-supported restructuring plan after paying $256 million to settle the government claims. A “substantial majority” of loan-holders have signed off on the plan, the company has said. The agreement should enable Millennium to complete its reorganization through a Chapter 11 bankruptcy by the end of the year.


Improper Practices


Alleged improper practices included billing Medicare more than $15 million to test for PCP, or angel dust, the U.S. said. Use of the hallucinogen is “virtually non-existent” among Medicare patients, according to the U.S. The company also billed $55 million to test for certain antidepressants that aren’t widely abused, the U.S. said.

“Millennium Health is currently a very different organization than we were in the past,” Chief Executive Officer Brock Hardaway said in an Oct. 16 statement announcing the settlement and restructuring plan. He said the company may have debated some of the U.S.’s allegations but respects the government’s role in health oversight.

The case is In re Millennium Lab Holdings II LLC, 15-12285, U.S. Bankruptcy Court, District of Delaware (Wilmington).