Theranos Practices ‘Pose Immediate Jeopardy to Patient Safety,’ Government Says

January 27, 2016, 9:59 PM UTC

The laboratory practices of Theranos, the embattled blood-testing startup led by entrepreneur Elizabeth Holmes, “pose immediate jeopardy to patient safety,” according to a letter from the U.S. Department of Health and Human Services on Monday.

The Theranos lab was surveyed on November 20 by the Centers for Medicare and Medicaid Services, the primary federal regulator of clinical labs, for compliance with the Clinical Laboratory Improvement Amendments of 1988.

The lab was found deficient for hematology (the study of blood), analytic systems, and other practices. The Wall Street Journal first reported the inspectors’ findings on Sunday.

“The laboratory has 10 CALENDAR DAYS from the date of receipt of this notice to provide CMS’ Central Office and San Francisco Regional Office with a credible allegation of compliance and acceptable evidence of correction documenting that the immediate jeopardy has been removed and that action has been taken to correct all of the Condition-level deficiencies in question,” wrote Karen Fuller, a CMS state manager.

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The 13-year-old startup, valued at $9 billion, rose to fame on its claims that it could test blood for diseases with technology that required far less blood than conventional tests. But the company weathered substantial criticism after it was discovered that many of the blood tests it provided were using conventional testing technology.

The Theranos lab, located in Newark, Calif. and led by Sunil Dhawan, was last inspected by regulators in December 2013; at that time, regulators cited the company for several problems, which Theranos said it swiftly addressed.

If the lab does not address these new issues, Theranos could be subject to a civil money penalty of up to $10,000 per day, onsite monitoring, the suspension of its CLIA certificate, and the cancellation of its approval for Medicare payments.

“This survey of our Newark, CA lab began months ago and does not reflect the current state of the lab,” Theranos said in a statement reacting to the letter. “As the survey took place we were simultaneously conducting a comprehensive review of our laboratory’s systems, processes and procedures to ensure that we have best-in-class quality systems.”

It added: “We are still reviewing the report, but we addressed many of the observations during the survey and are actively continuing to take corrective action. A full plan of correction will be submitted to CMS within days.”

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