Health Diagnostic Laboratory — Reputation

In 2014, I was hired by a national law firm to provide crisis communication counsel.  The assignment involved a troubled and controversial blood testing company, Health Diagnostic Laboratory. The company was facing a Department of Justice investigation (DOJ) on its sales practices, with allegations, among other things, that it was providing kickbacks to doctors in order to build market share. The company CEO was also under investigation, along with HDL’s outside sales force. In addition, the Wall Street Journal’s reporter John Carreyrou, a seasoned and knowledgeable journalist, had been on the trail of HDL and other companies in the blood testing business for a few months before I was retained.

Since the company had inexperienced communications personnel in the HDL PR department, its initial course of action prior to my hire was to avoid Carreyrou and not answer any of his inquiries or provide any access to senior HDL executives. Since the CEO was also under investigation by the DOJ,  our day-to-day contact inside HDL was its general counsel, who was charged with protecting the company’s market share, reputation, and business relationships.

The first order of business from me was getting Jonathan Karush, a digital strategist (and now a member of my agency team) and his company, Liberty Concepts, to build a microsite with functional web-based tools and technology designed to protect reputation. We did not want the company’s main website to become contaminated with negative comments and Google-directed searches.

The microsite was also an important part of the legal defense and reputation strategy since it was crucial to maintain the company’s liquidity while the DOJ investigation was underway. Continued attacks on HDL’s reputation would have jeopardized legitimate sales and the company’s relationships with doctors across the country.

As the microsite was being constructed with all the functional crisis tools, I engaged with John Carreyrou of the Journal, developing the company’s answers to his questions and working to establish a relationship of mutual trust. The scope of the Journal’s investigation covered company sales practices, decision making by the CEO and senior executives and adherence to the applicable Center for Medicaid Services regulations. All of these topics were also the basis for the DOJ investigation.

The Journal’s initial story on September 7th of 2014 was tough, but, more important, it was accurate and fair. On the day that the Journal story ran, the microsite site was up and running, complete with the necessary facts, crisis tools and analytic capabilities that provided relevant company information to media, HDL employees, investors, and other important outside constituencies. HDL was ready for the media onslaught.

Working close with me, Jon Karush was able to provide the general counsel and outside counsel with important information on who visited the microsite (a list that included the DOJ, the largest competitors in the industry, and other media besides the Journal).

We were able to deflect some of the negative publicity the company received in mainstream media from the company’s primary website, with the microsite intercepting much of the negative information. Having these tools in place was invaluable to the general counsel and the outside law firm and also allowed us the time necessary to plan for responses to the media.

Close collaboration with Jon Karush and Liberty Concepts gave company counsel and its outside lawyers real-time and sophisticated information and advice.

The company’s former general counsel, Doug Sbertoli, now in private law practice with Williams Mullen in Richmond, Virginia, sent me an email after HDL was sold, stating me that our collective work was best in class. He also said he would gladly recommend us to anyone in need of an experienced crisis team.

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