The blood-testing startup Theranos has been hit with a consumer fraud class action lawsuit, a week after the company voided two years’ worth of Edison blood test results.
The suit, which was filed today in the district of Northern California, alleges that Theranos’ proprietary blood-testing device, Edison, "did not work" and that Theranos’ tests weren’t accurate. So patients who used Theranos’ services were subject to "unnecessary or potentially harmful treatments" or may not have been notified about a treatable condition, according to a complaint.
"The lawsuit filed today against Theranos is without merit," Theranos spokesperson Brooke Buchanan told The Verge. "The company will vigorously defend itself against these claims."
The lawsuit is "without merit"
This is the first class action suit against Theranos — but it’s not yet clear if it will stand up to a judge’s scrutiny. For the suit to move ahead, the judge has to certify the class saying there is evidence that there are a number of similarly situated people who suffered the same damage. Even if the suit moves ahead, it’s not clear how plaintiffs will show that they’ve suffered damages because of Theranos’ tests. A single Theranos customer is bringing this lawsuit on behalf of himself and two other potential classes of consumers — people who bought Theranos tests in Arizona as well as nationwide. The suit attacks Theranos’ practices on multiple fronts. For instance, although Theranos advertised proprietary technology, the company didn’t use its own blood-testing device, Edison, for most laboratory testing, the suit says. It also says that the company shared incorrect information with the public to attract customers. Finally, Theranos didn’t conduct its testing according to federal guidelines, according to the complaint.
The lawsuit seeks damages payments to compensate customers for the injury it says Theranos caused. In addition, the plaintiffs want to be reimbursed for the tests, and are requesting a court order to tell Theranos to stop making "further deceptive advertisements."
The lawsuit seeks damages payments and reimbursements for the tests
Theranos was once touted as a blood-testing company that could change the world in outlets like The New Yorker and Forbes. In October, The Wall Street Journal reported that Theranos hadn’t been using its proprietary technology to carry out most of its tests. The Verge later reported that Theranos’ proprietary machines hadn’t been vetted by federal inspectors for two years after the company first started testing patients. Then, in January, the US Centers for Medicare and Medicaid Services told Theranos that its Newark, California lab posed immediate jeopardy to patient safety. In the report that led to the letter, government inspectors slammed Theranos for employing unqualified personnel and failing to perform proper quality control for a number of tests. Because of this, CMS told Theranos that it wanted to ban CEO Elizabeth Holmes from owning and operating a lab for a least two years.
Theranos has since made a number of changes to its operations in an effort to convince CMS to go easier on the company. It is nonetheless under federal criminal investigation, according to The Wall Street Journal. Then, last week, Theranos issued tens of thousands of corrected reports to patients and doctors who had used the company’s services in the past two years. And today, the WSJ revealed that when the drugstore chain Walgreens made a deal with Theranos in 2013 — a deal that lead to the opening of around 40 Theranos clinics inside Walgreens locations — it didn’t make sure the company’s technology worked first. CMS hasn’t yet said what actions it will definitely take against Theranos. But given the rate at which reports about Theranos’ questionable practices are being published, it’s not at all surprising that a customer has decided to take legal action against the company.