Health Care and Health Care Businesses and Health Care & Life Sciences and Health Care & Insurance

Once-rising star AIT Laboratories now cutting jobs

January 11, 2012

AIT Laboratories, one of the area’s fastest-growing companies in recent years, confirmed Tuesday that it is eliminating jobs.

The Indianapolis-based forensics and clinical testing company won’t say how many people it fired this month or whether other cuts are coming.

President and CEO Michael Evans said in a prepared statement issued Tuesday that AIT is looking to “restructure our business.”

Evans did not return a phone call from IBJ seeking comment about the cutbacks.

“AIT remains a vigorous life sciences company,” he said in the prepared statement.

But the job cuts are a turnabout from 2010, when AIT said it planned to create as many as 160 jobs by 2014 and invest $74 million to equip a 90,000-square-foot building at Woodland Corporate Park as a new headquarters and lab. The Indiana Economic Development Corp. offered AIT up to $1.8 million in performance-based tax credits to help with the expansion.

Employment at AIT, founded in 1990, grew to nearly 500 people in recent years, but Evans said conditions are worsening in the health care sector.

“AIT has seen reimbursement from government and private payers reduced throughout 2011, which has had a negative financial impact on the company,” he said in the statement issued Tuesday.

In recent days, some pharmacy industry websites have been buzzing with talk about “massive” job cuts at AIT, with claims of as many as 100 furloughs. Company officials would not confirm or deny the numbers.

“This is the only statement that AIT Laboratories will be making. There will be no interviews,” said Raquel Bahamonde, company spokeswoman.

AIT had been a rising star in an otherwise depressed economy. In 2009, the company awarded $3 million in profit-sharing money to employees. Later that year, Evans transferred full ownership of the company to employees through an employee stock ownership plan, or ESOP.

At the end of 2010, AIT’s ESOP had 273 employee participants, according to federal records. The plan is intended to provide retirement benefits to eligible employees. The plan borrowed nearly $90 million to acquire company stock.

AIT is privately owned and does not report earnings. In 2009, company officials estimated revenue would rise to nearly $60 million, from $16 million in 2008.

Evans, who founded AIT as the American Institute of Toxicology Inc., has done well with the business. Last year, he donated $48 million to help construct the Marian University College of Osteopathic Medicine, prompting the Indianapolis college to name its medical school building after him.   

Last year AIT was named in a lawsuit, that has since been dismissed, by a Rhode Island competitor. The competitor, Dominion Diagnostics, alleged that AIT and two other laboratories submitted false and fraudulent claims for payment to Medicare and Medicaid.

The allegation involved enzyme immunoassay tests on urine samples sent by doctors to laboratories, which are then billed to the federal health care programs.

Dominion alleged the labs were providing the doctors urine-collection cups that typically cost about $7 for free to induce the doctors to use their labs. Dominion alleged the labs violated an anti-kickback statute.

Dominion said it provided information to the U.S. government, on whose behalf it also sued the labs.

Last March, the federal government filed a response to the suit, saying it would not intervene at the time because its “investigation has not yet been completed.”

The Justice Department has in recent years been taking a closer look at some laboratories, including Texas-based Ameritox, which was named along with AIT in Dominion’s lawsuit.

In 2010, the government reached a $16.3 million settlement with Ameritox to resolve allegations that Ameritox made cash payments to doctors to induce the referral of drug-testing services.

Dominion withdrew its lawsuit against AIT and competitors last April.
 

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