Former CEO of Virginia lab company sues law firm for $150M in damages: 7 things to know

Tonya Mallory, co-founder and former CEO of bankrupt Health Diagnostic Laboratory in Richmond, Va., sued the law firm LeClairRyan Dec. 29 for at least $150 million in damages, alleging the firm provided her with "incorrect legal advice" that led the laboratory to shutter, according to the Richmond Times-Dispatch.

Here are seven things to know about the lawsuit.

1. According to the lawsuit, which Ms. Mallory filed in Richmond Circuit Court Friday, several lawyers at LeClairRyan allegedly provided her with "incorrect legal advice" between 2008 and 2013 that led to "catastrophic results" for Ms. Mallory and the institution.

2. Ms. Mallory co-founded HDL in 2008 to test blood samples for early signs of heart disease and diabetes. She resigned in 2014 following a federal investigation to discern whether the company's practices of paying physicians to take their patients' blood samples violated anti-kickback laws.

3. The lawsuit claims LeClairRyan repeatedly affirmed HDL's practice of paying "process and handling" fees to physicians as reimbursement for the cost of collecting patients' blood samples. The lawsuit also alleges LeClairRyan "did not waver from its prior opinions and confirmed to [Ms.] Mallory it was correct" when the U.S. Department of Justice subpoenaed HDL in 2013 to obtain records of its payments to physicians.

4. HDL agreed to a $47 million settlement deal with the federal government in April 2015, and filed for Chapter 11 bankruptcy in June of the same year. The company was also forced to lay off hundreds of employees, according to the report.

5. The law firm agreed to provide a $20.375 million settlement to HDL's bankruptcy estate. Three former LeClairRyan executives also agreed to pay $28.8 million to the laboratory's bankruptcy estate while not admitting any wrongdoing, the report states.

6. Ms. Mallory claimed in the lawsuit the law firm terminated its agreement with her in February 2016 after she requested legal assistance from another firm about an issue not related to HDL.

7. "We are disappointed that she elected to proceed in this fashion, and we flatly reject any notion that our firm is responsible to Ms. Mallory for her decisions," LeClairRyan said in a statement. "We stand by the legal counsel that we gave to our client, HDL, and we have already resolved all matters relating to HDL with the bankruptcy trustee of HDL."

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