JPMorgan Chase & Co. is among four banks sued by a trustee for investors in the debt of Millennium Health LLC, alleging the lenders failed to inform them of a probe into the billing practices of what was once the largest drug-testing laboratory in the U.S.
In December 2014, just eight months after Millennium sold a $1.8 billion loan to investors through JPMorgan, the Justice Department told Millennium managers that they were joining lawsuits filed by whistle-blowers relating to its billing, according to the complaint filed this week in New York state court. Three months later, two federal health-care agencies threatened to revoke the company’s ability to bill Medicare based on allegations that Millennium falsely charged the program, the trustee claims.
JPMorgan, who was an agent on the loan, “failed to notify” investors about the problems, according to the complaint. When the investors found out in May, the loan’s value started dropping. It tumbled to just over half of face value by June as investors grappled with what the disputes would mean for a company that received much of its revenue from the government.