Millennium Health, the largest U.S. drug-testing lab, has filed for Chapter 11 bankruptcy protection to ease a debt burden that includes the $256 million it agreed to pay to settle charges it billed the federal government for unnecessary tests.
Under the company’s reorganization plan, its obligations under a 2014 credit agreement would be reduced to $600 million from $1.75 billion. Those creditors would also receive ownership of Millennium when it emerges from bankruptcy.
“We are pleased to have achieved such strong support [from lenders] for a consensual restructuring that dramatically improves our balance sheet,” CEO Brock Hardaway said in a news release. “This is excellent news for our customers, suppliers, and employees because it paves the way for a promising future for Millennium Health.”
The company said it was seeking judicial approval of the reorganization plan and anticipates emerging from Chapter 11 as soon as possible after Dec. 15.
Millennium last month agreed to pay $256 million to settle allegations by federal agencies that it improperly billed the government for, among other things, running urine tests on dead people and checking senior citizens for angel dust.
The agencies threatened to revoke the company’s access to federal funds because of the alleged irregularities. According to a complaint filed in a Massachusetts court, Millennium received more than $630 million from Medicare for drug testing from 2007 to 2014.
The company could lose lender support for its restructuring if it doesn’t meet certain milestones or pay the government by Dec. 30.