Theranos will appeal CMS sanctions

Elizabeth Holmes
Theranos CEO Elizabeth Holmes

Update: This story was corrected to reflect the amount Walgreens lost when it terminated its partnership with Theranos. The amount is $50 million and not $50 billion as previously stated.

Theranos, which has come under fire over the validity of its fingerprick blood tests, announced Friday that it plans to appeal sanctions served last month by the Centers for Medicare & Medicaid Services. These include the suspension of its Newark, CA, lab and the barring of CEO Elizabeth Holmes from operating a lab for two years.

A November 2015 survey of the Newark lab turned up 5 major infractions that posed “immediate jeopardy to patient health and safety.” While Theranos submitted a plan to address the issues at the time, CMS was less than impressed and sent the company a letter threatening the above sanctions.

In addition to revoking the Newark lab’s CLIA certificate, which suspends the owners and operators of the lab from operating any lab for at least two years, the sanctions include a civil money penalty and the cancellation of the lab’s approval to receive Medicare or Medicaid payments for all of its services.

Theranos has made “substantial progress” toward addressing the deficiencies raised in the CMS letter, the company said in a statement. It has filed a notice of intent to appeal the sanctions, according to the statement. “While the appeal is pending, Theranos intends to continue communicating with CMS regarding the possibility of reaching a mutually agreeable resolution to this matter,” Theranos said.

Theranos has been making headlines since last fall when reports questioning the legitimacy of its technology came to light. Its partner and main technology validator, Walgreens ($WBA) exited its partnership with Theranos in June, closing all 40 of the Theranos Wellness Centers in its Arizona stores. The drugstore giant lost $50 million by investing in Theranos.

Theranos has since taken steps to prove its legitimacy, including filling out a new scientific advisory board with pathology and lab experts and finally presenting data at a scientific conference. But this last move fell short, as the presentation delved into new technology rather than explaining how Theranos’ existing blood tests worked.

- here's Theranos' statement

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