Damon Laboratories, Mitt Romney, and Politics

IT IS SELDOM THAT THE CLINICAL LABORATORY INDUSTRY HITS THE RADAR SCREEN during a presidential election. So it is with some interest that I report to you that Mitt Romney recently touted the lessons he learned while serving on the board of Damon Clinical Laboratories, Inc., as useful for guiding the nation.

Romney, now the Republican Party’s official candidate for President, wrote an opinion piece for The Wall Street Journal that was published on August 23. It was titled “Mitt Romney: What I Learned at Bain Capital.” The paragraphs of most interest to pathologists and laboratory executives are these:

Running a business also brings lessons in tackling challenges. I was on the board of a medical diagnostic laboratory company, Damon, when a competitor announced that it had settled with the government over a charge of fraudulent Medicare billing. I and fellow Damon outside board members joined together and immediately hired an independent law firm to examine Damon’s own practices.

The investigation revealed a need to make some changes, which we did. The company, along with several other clinical laboratory companies, ended up being fined for billing practices. And a Damon manager who was responsible for the fraud went to jail. The experience taught me that when you see a problem, run toward it or it will only get worse.

It was 1990 when Bain Capital made an investment in Damon. The $111 million settlement between the federal government and National Health Laboratories, Inc. (NHL), was announced in 1992. Damon was sold to MetPath, Inc., (now Quest Diagnostics Incorporated) the following year. It was in 1996 when the Damon case was settled for a total of $119 million in civil and criminal penalties.

The 1990s were the days of the Department of Justice’s LabScam campaign that netted more than $1 billion in penalties and civil settlements from both independent clinical labs and hospital labs. It is fascinating to learn that Mitt Romney was serving as a director for a public laboratory company during the time when the 1992 settlement with NHL unleashed federal prosecutors on the lab testing industry. A wider question for Mr. Romney is this: Did he learn how the complexity of federal Medicare and Medicaid regulations—along with uneven enforcement of the law—can make any healthcare provider a law-breaker on any given day, almost at the whim of a federal regulator?


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