Holmes Trial Ignites a Legacy of Deceit and Financial Treachery

Conduct yields looming regulatory questions.

EDITOR’S NOTE: Bryan Nordley is the MedLearn Publishing healthcare writer and editor

In January, the saga of Elizabeth Holmes and her company Theranos, which once courted global publicity and wooed elite investors to the height of $9 billion, reached the end of a legal avalanche with multiple convictions for the former CEO, entrepreneur, and criminal conspirator. The length of time and red flags beg the question, why wasn’t she caught sooner? What are the long-term ramifications? The true consequences could not only rattle the regulatory processes governing labs and technology innovation but blasts a glaring spotlight on the legal responsibilities labs may have during criminal inquiries. So how did Holmes and her enterprise put everyday patients at risk who were simply looking to find answers to health concerns in a more optimized manner?

Theranos claimed to revolutionize testing through an analyzer device nicknamed the Edison. Holmes and the company knowingly and fraudulently mislead investors boasting that the analyzer could execute a complete range of clinical tests using nothing more than a small blood sample taken from a finger prick, with more accuracy and speed than standard procedures. None of that was ever true, to the extent that even patient results were falsified harming lives.

The saga of Theranos also revealed rifts in regulatory oversight. In a Forbes article, physician Scott Gottlieb, MD, offered important commentary on some of the regulatory flaws that, if corrected, could have halted the Theranos scheme far earlier. The article alleges that the FDA places too much emphasis on the diagnostic platform itself, which it includes more on the medical device spectrum. Gottlieb asserts that “when it comes to diagnostics like the blood testing platform that Theranos developed, FDA focuses mostly on the tools, and not the conduct of the lab, or how the many aspects of a diagnostic service are executed.”

Gottlieb suggests that a prior FDA review had indicated problems with the blood testing machines. In addition to claiming that Holmes played the system by hiding and “camouflaging” within the limited scope of FDA policy, he stated that “The agency’s actions may have prevented broader use of the platforms” as far back as 2016, a grave mishandling that helped to tarnish the development of potentially innovative products that everyday patients desperately need.

Beyond scrutinizing the FDA, Gottlieb also says Medicare and CLIA share the blame. Regulators working for Medicare under the direction of CLIA policy found Theranos labs to be improperly run. In 2016, CMS acted to revoke the CLIA certification for the Theranos lab in Newark, Calif., and prohibited Holmes from “owning, operating, or directing a laboratory for a minimum of two years.” The CMS investigation concluded that the lab’s conduct held an “immediate jeopardy to patient health and safety.” Theranos paid a $30,000 fine and ceased operations of the lab for two years.

The chief objective of CLIA is to probe how laboratories operate their services to achieve regulatory compliance and safety, to analyze and enforce how the tests are created while monitoring for accurate and consistent results. According to Gottlieb, “This distinction— between the diagnostic tool and the lab service—peaks to a more fundamental question when it comes to the proper oversight of diagnostics.”

CLIA operations, he acknowledges remain far from perfect. “The agency gets short shrift inside the Medicare program, and is chronically understaffed. …But for those who advocate for giving FDA a greater role in overseeing laboratory services and diagnostic tests—and use Theranos as a proof point—underestimate the complexity of running a lab company, and the difference between building a diagnostic tool and performing that test as a broad service.”

The Theranos scandal serves as a stark reminder that the government must prioritize patients’ lives when it sees red flags while remaining vigilant when it comes to conspiratorial schemes, big or small. As the Food and Drug Administration states, “The FDA’s Office of Criminal Investigations (OCI) will continue to investigate and help bring to justice individuals and companies responsible for putting the public health at risk.”

 Sick patients usually require a vast array of testing to facilitate their medical needs at every point in the journey, something that the Edison device, if operational, may have done while proving to eliminate hurdles and barriers, making testing much more streamlined and accessible. But the Edison was a mirage just like the alternative reality Elizabeth Holmes attempted to contrive. This saga impacts every day vulnerable patients who would benefit from advancements in healthcare but are likely to see even more legal strife as a consequence of the fraud, slowing, and scrutinizing of technological innovation.

Facebook
Twitter
LinkedIn

Bryan Nordley

Bryan Nordley is a seasoned professional writer, strategist, and researcher with over a decade’s worth of combined experience. Bryan launched his professional health writing career at the University of British Columbia’s Faculty of Medicine, one of the top 30 faculty of medicine programs in the world, working under the School of Public Health as a communications assistant. From there, he expanded his expertise and knowledge into private healthcare and podiatry before taking the role of healthcare writer at MedLearn Media. Bryan is the lead writer for the MedLearn Publishing brand previously producing both the acclaimed radiology and laboratory compliance manager newsletter products, while currently writing the compliance questions of the week which reach over 10,000 subscribers, creating the MedLearn Publishing Insights blogs and collaborating with operations and nationally renowned subject matter experts, in addition to serving as an editor for a variety of MedLearn publications along with marketing initiatives. Bryan continues to keep his pulse on the latest healthcare industry news, analyzing and reporting with strategic insight.

Related Stories

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Enhancing Outcomes with CDI-Coding-Quality Collaboration in Acute Care Hospitals

Enhancing Outcomes with CDI-Coding-Quality Collaboration in Acute Care Hospitals

Join Angela Comfort, DBA, MBA, RHIA, CDIP, CCS, CCS-P, as she presents effective strategies to strengthen collaboration between CDI, coding, and quality departments in acute care hospitals. Angela will also share guidance on implementing cross-departmental meetings, using shared KPIs, and engaging leadership to foster a culture of collaboration. Attendees will gain actionable tools to optimize documentation accuracy, elevate quality metrics, and drive a unified approach to healthcare goals, ultimately enhancing both patient outcomes and organizational performance.

November 21, 2024
Comprehensive Inpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Comprehensive Outpatient Clinical Documentation Integrity: From Foundations to Advanced Strategies

Optimize your outpatient clinical documentation and gain comprehensive knowledge from foundational practices to advanced technologies, ensuring improved patient care and organizational and financial success. This webcast bundle provides a holistic approach to outpatient CDI, empowering you to implement best practices from the ground up and leverage advanced strategies for superior results. You will gain actionable insights to improve documentation quality, patient care, compliance, and financial outcomes.

September 5, 2024
Advanced Outpatient Clinical Documentation Integrity: Mastering Complex Narratives and Compliance

Advanced Outpatient Clinical Documentation Integrity: Mastering Complex Narratives and Compliance

Enhancing outpatient clinical documentation is crucial for maintaining accuracy, compliance, and proper reimbursement in today’s complex healthcare environment. This webcast, presented by industry expert Angela Comfort, DBA, RHIA, CDIP, CCS, CCS-P, will provide you with actionable strategies to tackle complex challenges in outpatient documentation. You’ll learn how to craft detailed clinical narratives, utilize advanced EHR features, and implement accurate risk adjustment and HCC coding. The session also covers essential regulatory updates to keep your documentation practices compliant. Join us to gain the tools you need to improve documentation quality, support better patient care, and ensure financial integrity.

September 12, 2024

Trending News

Featured Webcasts

Patient Notifications and Rights: What You Need to Know

Patient Notifications and Rights: What You Need to Know

Dr. Ronald Hirsch provides critical details on the new Medicare Appeal Process for Status Changes for patients whose status changes during their hospital stay. He also delves into other scenarios of hospital patients receiving custodial care or medically unnecessary services where patient notifications may be needed along with the processes necessary to ensure compliance with state and federal guidance.

December 5, 2024
Navigating the No Surprises Act & Price Transparency: Essential Insights for Compliance

Navigating the No Surprises Act & Price Transparency: Essential Insights for Compliance

Healthcare organizations face complex regulatory requirements under the No Surprises Act and Price Transparency rules. These policies mandate extensive fee disclosures across settings, and confusion is widespread—many hospitals remain unaware they must post every contracted rate. Non-compliance could lead to costly penalties, financial loss, and legal risks.  Join David M. Glaser Esq. as he shows you how to navigate these regulations effectively.

November 19, 2024
Post Operative Pain Blocks: Guidelines, Documentation, and Billing to Protect Your Facility

Post Operative Pain Blocks: Guidelines, Documentation, and Billing to Protect Your Facility

Protect your facility from unwanted audits! Join Becky Jacobsen, BSN, RN, MBS, CCS-P, CPC, CPEDC, CBCS, CEMC, and take a deep dive into both the CMS and AMA guidelines for reporting post operative pain blocks. You’ll learn how to determine if the nerve block is separately codable with real life examples for better understanding. Becky will also cover how to evaluate whether documentation supports medical necessity, offer recommendations for stronger documentation practices, and provide guidance on educating providers about documentation requirements. She’ll include a discussion of appropriate modifier and diagnosis coding assignment so that you can be confident that your billing of post operative pain blocks is fully supported and compliant.

October 24, 2024
The OIG Update: Targets and Tools to Stay in Compliance

The OIG Update: Targets and Tools to Stay in Compliance

During this RACmonitor webcast Dr. Ronald Hirsch spotlights the areas of the OIG’s Work Plan and the findings of their most recent audits that impact utilization review, case management, and audit staff. He also provides his common-sense interpretation of the prevailing regulations related to those target issues. You’ll walk away better equipped with strategies to put in place immediately to reduce your risk of paybacks, increased scrutiny, and criminal penalties.

September 19, 2024

Trending News

Happy National Doctor’s Day! Learn how to get a complimentary webcast on ‘Decoding Social Admissions’ as a token of our heartfelt appreciation! Click here to learn more →

CYBER WEEK IS HERE! Don’t miss your chance to get 20% off now until Dec. 2 with code CYBER24