Theranos test-takers win $44M settlement from Walgreens in class-action case

Patients who underwent Theranos’ fraudulent blood tests at the startup’s dozens of outposts in California and Arizona Walgreens stores are finally getting refunds from the drugstore chain.

Walgreens has reached a settlement with the plaintiffs in a yearslong class-action case, according to documents filed in Arizona district court last week.

Under the terms of their agreement—which is still subject to final approval by an Arizona judge—Walgreens will pour $44 million into a non-reversionary settlement fund. After court fees and other administrative costs are subtracted from the fund, each eligible plaintiff will receive a base payment of $10, plus reimbursement for double the cost of the original Theranos tests they received between the fall of 2013 and mid-2016.

Meanwhile, members of a subclass who underwent “tiny” blood draws—which Theranos claimed would be analyzed by its Edison machines—at the Walgreens Theranos Wellness Centers between November 2013 and March 2015 will receive an additional payment of $1,000 to settle that group’s claims of battery and medical battery against the retail chain.

All of the Arizona-based class members’ payouts will subtract any previous reimbursement they received from Theranos itself in a 2017 consent decree (PDF) from the state’s attorney general’s office, in which the company agreed to pay $4.65 million to cover the costs of all of its blood tests purchased by Arizonans.

Though it agreed to the settlement, Walgreens stopped short of admitting any fault in the case. According to the filing, “Walgreens denies and continues to deny all allegations of wrongdoing or liability, and contends that neither the plaintiffs nor the class members are entitled to relief from Walgreens.”

The class-action suit dates back to 2016, as evidence came to light showing that Theranos’ technology could not, in fact, accurately conduct dozens of tests on just a few drops of blood, as the company had claimed.

The lawsuit named Walgreens and Theranos as defendants as well as the startup’s CEO and founder Elizabeth Holmes and Chief Operagting Officer and President Ramesh “Sunny” Balwani. All were accused of having “aggressively” promoted Theranos’ tests while knowingly concealing “material information about the unreliability of all of the testing services and about the grossly deficient nature of the testing facilities and equipment.”

Theranos had in 2016 voided two years’ worth of results from its Edison blood-testing devices, sending out tens of thousands of amended reports that either corrected previously issued “findings” or nullified them altogether.

Before that, however, because of the inaccurate results, “many consumers have been subjected to unnecessary or potentially harmful treatments, and/or have been denied the opportunity to seek treatment for treatable conditions,” the plaintiffs claimed in the lawsuit.

Alongside the settlement with Walgreens, the claimants also announced that they’ve reached an agreement with Balwani.

As Theranos was dissolved in 2018, Balwani filed a pair of claims against its remaining assets, seeking repayment for certain litigation costs and a payout of his equity interest in the company. The estate holding those remaining Theranos assets has said that it won’t be able to cover all claims against it and that Balwani’s claim, in particular, could delay and diminish the amount ultimately paid out in other claims, including one filed by Walgreens.

Because that could in turn affect Walgreens’ subsequent payment in the class-action suit—and because Balwani has said that he’s unable to pay any charges that may be levied against him in the lawsuit due to “substantial debt”—the class members reached a settlement with Balwani under which he’s agreed to release his claims against the Theranos estate, and the plaintiffs will in turn release their own claims against him.

The class-action filers were unable to reach a settlement with Holmes, despite working “diligently for months,” according to last week’s court documents.

“Given that Ms. Holmes does not have material personal resources to contribute to a settlement or to pay any judgment against her, plaintiffs will separately ask the court to dismiss the claims against her without prejudice, so that any class member who wishes to continue pursuing such claims against Ms. Holmes may do so,” their legal team wrote.