Elizabeth Holmes ‘blood testing company Theranos put patients in “immediate danger” and failed to address regulators’ concerns about its laboratory practices and staff training, according to a government report released Wednesday regarding with his trial for criminal fraud.
The U.S. Centers for Medicare and Medicaid Services, which regulate labs, noted in a 2016 letter to Holmes and his former Theranos president, Sunny Balwani, that they had found serious deficiencies in the Bay Area lab. of the firm and that the company’s responses to the alleged violations were insufficient or credible. Patients using Theranos blood tests, the letter said, were still in “immediate danger” where serious harm or death could result.
Holmes, who founded Theranos at age 19 in 2003, is accused of allegedly defrauding investors out of hundreds of millions of dollars and defrauding doctors and patients with false claims that the company’s machines could perform a wide range of tests. using only a few drops of blood. She and Balwani, Holmes’s romantic ex-partner facing the same charges, they have denied the allegations.
The letter notified Holmes and Balwani that federal certification for the Newark laboratory would be withdrawn in two months and that Theranos would be fined for each day the laboratory failed to comply with federal rules.
The agency’s letter stated that in 2015, it investigated and inspected Theranos laboratory in Newark and found “numerous” instances of non-compliance with federal regulations on more than 30 issues, including quality control, test errors, and results. abnormal operating procedures such as temperature. controls and training of laboratory personnel. Although Theranos responded to the agency’s findings, CMS wrote that it found that the company’s compliance claims were not “credible.”
Theranos began commercial blood testing in 2013. In a letter responding to the CMS findings, Theranos said there had been no “patient impact” from the alleged training issues; However, the company overturned all 2014 and 2015 patient test results from a version of its blood analyzer device that made it impossible for federal researchers to evaluate potential effects on patients, according to CMS.
The agency’s letter also said that Theranos response “did not address why staff were allowed to analyze patient samples without being fully trained,” noting that when CMS inspectors visited the lab, a Theranos staff member she told them she had been “informally trained.”
During trial testimony Thursday, jurors were shown text messages that Holmes and Balwani exchanged while conducting the agency inspection at Newark, with Balwani present in the lab. “Very hostile so far,” Balwani wrote. “They say (they) have complaints.” Holmes replied, “Praying literally non-stop.”
Former Theranos laboratory director, Dr. Sunil Dhawan, a Balwani dermatologist who accepted a short-term position overseeing the Newark laboratory, said he spent five to 10 hours in total working for the company in 2014 and 2015. Three days before the CMS inspection, he said that Balwani asked him to approve the reports that validated nearly 60 of the company’s tests. Dhawan testified that he signed the reports despite never having seen a Theranos machine run a test.
When questioned by an attorney for Holmes, Dhawan, a bald, bespectacled man wearing a dark blue jacket and black loafers, testified that he understood that Balwani, a software entrepreneur, ran Theranos lab operations and that he had only met Holmes once to greet him.
Holmes’s legal team is fighting to prevent the prosecution from presenting the CMS letter to the jury, arguing that the details about the sanctions against Theranos would be damaging and “not relevant to Ms. Holmes’s intent.”
“It’s hard to imagine anything more damaging to a criminal defendant than the agency’s seemingly authoritative views on ‘credibility,'” Holmes’s attorneys said in a document Wednesday.
The filing claimed that Theranos appealed the CMS sanctions, but reached a settlement with the agency. before the appeal was resolved. Theranos closed in 2018.
Holmes faces maximum sentences of 20 years in prison and a $ 2.75 million fine if convicted, plus possible restitution, the Justice Department said.