SAN FRANCISCO - The saga of embattled blood test startup Theranos took another thorny turn Wednesday, as the company was hit by a potential class-action fraud lawsuit.
McCuneWright, a law firm based in Redlands, Calif., filed in the U.S. District Court for Northern California for an unidentified Arizona man going by the initials M.P.B.
The suit contends that Theranos falsely marketed its fingerprick testing method, which promised to disrupt the $75 billion blood testing industry by asking patients to provide mere drops, and not vials, of blood to be processed by its innovative if secretive Edison machine.
The lawsuit comes a week after Theranos told federal regulators that it was voiding two years of test results garnered from its fingerprick method. Theranos told officials from the Center for Medicare and Medicaid Services that it was issuing tens of thousands of corrected blood work results to patients and doctors, according to a Wall Street Journal report citing anonymous sources.
CMS officials started investigating Theranos after the agency found deficiencies in its California lab testing facilities, and had suggested Holmes and her recently departed president, Sunny Balwani, be banned for two years from any lab testing enterprise.
"As a result (of the newly voided results), tens of thousands of patients may have been given incorrect blood-test results, been subject to unnecessary or potentially harmful treatments, and/or been denied the opportunity to seek treatment for a treatable condition," reads the complaint, which was provided to USA TODAY. "Plaintiff M.P.B., for himself, and all others similarly situated, brings this action for damages, including reimbursement of the purchase price of the tests as well as an order enjoining Theranos from engaging in further deceptive advertisements."
McCuneWright partner Joseph Sauder told USA TODAY: “Blood testing is a serious business with potential life or death consequences. It appears that Theranos focused more on convincing the market that they possessed a breakthrough technology than bringing reliable health care services to consumers. This is evident from the multiple deficiencies at the labs, voided tests, proposed sanctions and erroneous results that are all now in the public record."
Theranos spokesperson Brooke Buchanan called the suit "without merit (and) the company will vigorously defend itself against these claims.”
Once the subject of reporting that hailed the innovative and revolutionary nature of Silicon Valley tech, Theranos has become an example of how a lack of oversight and unchecked funding can undermine an enterprise.
Launched more than a decade ago by then teen-age Stanford dropout Elizabeth Holmes, Theranos grew to amass both millions in venture capital funding and a board of advisors that was a who's who of Washington, D.C., politica, ranging from former secretary of state Henry Kissinger to Sen. Bill Frist. In 2014, Theranos was valued at $9 billion, half of which belonged to Holmes, now 32.
In its heady early days, when Holmes graced countless business magazine covers, Theranos forged ambitious partnerships with Walgreens and other outlets with a mission to install its Theranos Wellness Centers within miles of every American. Theranos' pilot program was conducted in dozens of Walgreens locations in Arizona.
The company's fortunes began to decline after a fall 2015 investigative report by Journal writer John Carreyrou cited anonymous voices who argued that Theranos' groundbreaking tech has serious flaws. Holmes repeatedly denied the accusations, both through the company's blog and in live appearances, charging the Journal with reckless reporting.
In the past eight months, Theranos has been hit with a ceaseless barrage of bad news, ranging from the FDA calling the company's small blood "nanotainer" an "uncleared medical device," to Walgreens deciding to put its partnership plans on hold.
Follow USA TODAY tech reporter Marco della Cava on Twitter: @marcodellacava
