(Bloomberg) — Millennium Health LLC, the largest U.S. drug-testing lab, is contending with more legal fallout after reaching a tentative deal to settle a government probe over alleged billing irregularities.
Humana Inc. (NYSE:HUM) has sought monetary damages tied to allegedly unlawful insurance claims made by the drug tester, according to two people with knowledge of a private disclosure Millennium made to its lenders in June. Humana sought the damages, along with injunctive relief, through a demand for arbitration dated May 29, the people said.
Millennium has come under fire in the debt market for not disclosing to prospective lenders that it knew federal authorities were investigating it while it was marketing a $1.78 billion loan last year. Millennium and the agent for the loan, JPMorgan Chase & Co., didn’t disclose the information after the lab company said it wasn’t material, a person with knowledge of the matter said in July.
The loan has since plunged to less than half of face value, prices compiled by Bloomberg show. Millennium has said the probe was disclosed to “pertinent parties” and was cited in media reports and legal filings.
Millennium said in a separate disclosure to lenders last week that it faced “potential commercial settlement payments” that were still to be determined, the people said. It didn’t name any specific company seeking damages.
“We cannot comment on any claims or counterclaims that are pending in any private arbitration with Humana,” Nicole Beckstrand, a spokeswoman for San Diego-based Millennium, said in response to a request for comment on the insurer’s arbitration demand.
Alex Kepnes, a spokesman for Louisville, Ky.-based Humana, said the company doesn’t “comment on pending litigation.” Megan Griffin, a spokeswoman at BackBay Communications for TA Associates, the private-equity firm that partly controls Millennium, also declined to comment, as did Tasha Pelio, a spokeswoman for JPMorgan.
Millennium’s credit agreement requires it to disclose any litigation or legal proceedings that threatens to create a liability of at least $15 million, the people said.