The Theranos trial brought plenty of media attention, but beneath the hype, laboratory managers have lessons to ponder
Editor’s note: This is a special edition of Dark Daily brought to you by The Dark Report.
The conviction of disgraced Theranos founder and former CEO Elizabeth Holmes brings a close to one of the most infamous healthcare and high-tech trials ever.
But the high-profile case should not camouflage critical, everyday lessons for clinical laboratories.
Holmes was found guilty on Monday of four charges: three for defrauding investors and one for conspiracy to commit wire fraud (i.e., fraud perpetrated using electronic communications). The jury said she was not guilty of four other fraud charges related to patients who received blood testing, and it deadlocked on three charges related to defrauding other investors.
Look for more details about the trial’s conclusion on Monday from Dark Daily and a full analysis of what the verdict means for clinical laboratory directors and anatomical pathologists in a future issue of The Dark Report.
The trial of former Theranos CEO Elizabeth Holmes concluded this week with conviction on four charges. For clinical laboratory directors, the trial’s media hype should not obscure important lessons to be learned.
Two Lessons for Laboratories to Evaluate Following the Trial
The average lab director likely will never face the media buzz and scandalous nature of the Holmes trial. Nonetheless, laboratory leaders should take lessons from aspects of the court proceedings.
The biggest one? The director listed on a lab’s license under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) holds responsibilities that have legal sway.
Such ramifications were clear during the Holmes trail given that four of Theranos’ former lab directors took the witness stand. However, it won’t take a high-profile case to bring up CLIA licenses in court. Laboratory teams should carefully review what their legal responsibilities are under the regulation.
Another important facet for lab managers to consider is adding a policy to their operations manual (if not already present) about properly dealing with whistleblower complaints.
No one will ever know if Theranos’ trajectory would have changed had executives, including Holmes, heeded the warnings of whistleblowers regarding inaccurate test data from the Edison machines. Instead, they shrugged the whistleblowers off, likely because they were young and Theranos was the subject of significant positive media coverage. The whistleblowers ended up being powerful sources of information for regulators and prosecutors.
Subscribers to The Dark Report can check out past coverage of the trial, which analyzed developments during the proceedings to explain how they should influence lab directors moving forward:
In Theranos’ Trial, CLIA Laboratory Director Has a Starring Role (Nov. 29, 2021)
CLIA Lab Director Testimony Shows Risks to Pathologists (Nov. 8, 2021)
Third CLIA Lab Director Testifies in Trial of Elizabeth Holmes (Nov. 8, 2021)
Former Theranos Lab Director Makes News at Elizabeth Holmes Trial (Oct. 18, 2021)
Medical laboratory company’s patients in Southwest England previously had tested positive for COVID-19 ona Lateral Flow Device
If providing accurate test results is key to maintaining trust with healthcare consumers, a private COVID-19 testing laboratory in the United Kingdom (UK) may have permanently damaged its reputation after reporting an estimated 43,000 false negative COVID-19 RT-PCR (polymerase chain reaction) test results over a five-week span between September 8, 2021, and October 12, 2021.
For now, Immensa Health Clinic Ltd., a subsidiary of DNA testing company Dante Labs, had its testing operations suspended on October 15 while the UK Health Security Agency (UKSA) investigates the cause of false negative PCR test results from the company’s lab in Wolverhampton, England. The test results went out to people who previously had tested positive for COVID-19 on a lateral flow device (LFD).
“We have recently seen a rising number of positive LFD results subsequently testing negative on PCR. As a result of our investigation, we are working with NHS Test and Trace and the company to determine the laboratory technical issues which have led to inaccurate PCR results being issued to people. We have immediately suspended testing at this laboratory while we continue the investigation,” said Will Welfare, MBChB, Public Health Incident Director, UK Health Security Agency, in a UKHSA statement.
“There is no evidence of any faults with LFD or PCR test kits themselves and the public should remain confident in using them and in other laboratory services currently provided,” he added.
UK Government Officials Question How Lab Won Lucrative COVID-19 Testing Contracts
Immensa was awarded a £119 million (US$163.37 million) coronavirus testing contract by the British government in October 2020, just months after it was founded by Andrea Riposati, owner/CEO of Dante Labs, which has clinical laboratories in the UK, Italy, and the United Arab Emirates. The company’s corporate headquarters are in New York City while its scientific operations are based in the UK.
“Serious questions have to be asked about how this private firm—[which] didn’t exist before May 2020—was awarded a lucrative £120 million (US$164.64 million) contract to run this lab,” Member of Parliament (MP) Jonathan Ashworth (above), Labor Party Shadow Health Secretary, told The Guardian. “From duff PPE [personal protective equipment] to failing test kits, ministers have sprayed around tax money like confetti and utterly failed to deliver the service people deserve,” he added. (Photo copyright: The Mirror.)
NHS Test and Trace, the government program to track and help prevent the spread of COVID-19, has advised people who received the false test results, but who may still be infectious, to be retested.
In responding to the UKHSA’s action, Riposati pointed to Immensa’s track record and reiterated the laboratory’s emphasis on quality.
“We are fully collaborating with UKHSA on this matter. Quality is paramount for us,” Riposati said in the UKHSA statement. “We have proudly analyzed more than 2.5 million samples for NHS Test and Trace, working closely with the great teams at DHSC and UKHSA. We do not wish this matter or anything else to tarnish the amazing work done by the UK in this pandemic.”
Clinical Laboratories Not Accredited to Perform COVID-19 Testing
However, on October 18, 2021, The Guardian reported that the Immensa Health Clinic was not accredited by the UKAS, the UK’s independent accreditation service, before being appointed to perform COVID-19 testing. Dante Labs also has not been awarded UKAS accreditation, according to the newspaper report.
Government officials previously maintained that Immensa was “accredited to all of the appropriate standards.”
Immensa first made headlines in January 2021 when The Sun published an expose´ that included video of employees fighting, drinking, and bragging about watching porn while working at the clinical laboratory.
News of the testing failure at Immensa caused Tory MP Nigel Mills to tell The Sun, “This place should have been shut down for good when The Sun ran its [original] story. It is shocking it has been allowed to remain open and now there is an enormous mess.
“It’s a disgrace,” he added. “If shortcomings have emerged in the process here—which I strongly imagine they have—then heads should roll. The investigation should widen out and an audit should be carried out into other testing companies.”
Dante Labs Under Other Investigations
Immensa’s parent company, Dante Labs, is also under investigation in the UK due to concerns the company “may be treating its customers unfairly.”
A statement from the UK Competition and Markets Authority (CMA), outlined the UK government’s probe into Dante Labs. The statement cited the lab for:
Potentially not delivering PCR tests and/or results on time or at all,
Failing to respond to complaints or provide proper customer service,
Refusing or delaying refunds when requested, and
Providing terms and conditions that may unfairly limit consumers’ rights.
According to The Guardian, Dante Labs’ US operation also faced scrutiny in 2018 after the company admitting it had sent five used DNA test kits to people containing the saliva of other people. Dante Labs maintained its shipping company was the cause of the error.
US Labs Also Face Scrutiny over False Negative Test Results
Since the outbreak of SARS-CoV-2 in early 2020, there have been only a limited number of news accounts about clinical laboratories that reported a substantial number of inaccurate COVID-19 test results, either in the United States or the United Kingdom. In the US, there has been more news coverage of the federal Department of Justice (DOJ) prosecuting lab owners and related parties for submitting fraudulent claims for COVID-19 tests.
But the absence of those news accounts does not mean that there have been no incidents in the US where a lab testing company reported significant numbers of inaccurate COVID-19 test results.
In 2020, for example, Dark Daily reported on how Abbott Lab’s ID NOW COVID-19 rapid molecular test faced scrutiny over false negatives resulting in the FDA issuing a public warning about the point-of-care test’s accuracy after receiving 15 “adverse event reports” indicating some patients were receiving “false negative results.”
Then on June 22, 2020, KHN reported that the FDA had “received a total of 106 reports of adverse events for the Abbott test, a staggering increase. The agency has not received a single adverse event report for any other point-of-care tests meant to diagnose COVID-19.”
The UK lab’s failures are simply the latest example of how inaccurate test results erode the trust of healthcare consumers and draw the ire of politicians and government regulators. In this case, however, poor government oversight of a newly minted COVID-19 testing laboratory should face equal scrutiny.
Self-insured and campus health markets are contract opportunities for small and midsize clinical laboratories through investment in data infrastructure and management
Bordenave spoke this week at the Executive War College in San Antonio. During two intriguing presentations, she shared that the self-insured employer and campus health markets are areas of opportunity for small and midsize clinical laboratories. This is because employer groups and college campuses are busy communities of covered individuals, and these population health groups are well-suited for proactive care models.
In fact, she said, some clinical laboratories may already be well-positioned to serve these customers.
Self-Insured Employer Groups and Campus Health Markets as New Clinical Laboratory Customers
According to CMS national health expenditure data, in 2020, a whopping $4 trillion was spent on healthcare in the US. In the middle of all that are people living, going to school, and working who have high blood pressure, rising lipid levels, lower-back pain, migraines, and other health conditions waiting to be diagnosed and flagged for follow-up.
And as pathologists and clinical laboratory managers know, 80% of those healthcare encounters result in lab test data.
Clinical laboratories, therefore, can gain customers among self-insured employer groups and similarly functioning campus health markets that serve students.
During her presentations at the 2021 Executive War College in San Antonio, Kristine Bordenave, MD, FACP (above), a strategic consultant in precision medicine, population health, Medicare compliance, and cost management, noted that “just about all paths forward post-COVID will require the data infrastructure of clinical laboratories to achieve an advanced level of functionality.” (Photo copyright: The Dark Intelligence Group.)
In one example she gave during her presentation, Bordenave noted that self-insured employer groups “were more than willing to contract directly, and they were contracting for care that directly relates to lab. Anything that would help reduce presenteeism and absenteeism with their employees.”
Presenteeism and Absenteeism
For years, presenteeism and absenteeism have plagued employee productivity in organizations large and small. Both have been attributed to numerous individual health and wellness factors among individuals. At some point, these issues culminate into various forms of reactive healthcare services and safety issues, she added.
The cost of presenteeism is estimated at between $150 billion and $225 billion. Meanwhile, at least 60% of employees are now covered in fully-funded or partially-funded self-insured plans, Healthcare Finance reported.
The way a campus health system operates is similar to a self-insured model but more of an integrated delivery system, Bordenave said. Among the priorities are controlling the spread of infectious diseases, such as COVID-19 and measles.
Clinical Laboratory Data Valuable in Treating-to-Goal and Closing Care Gaps
During two featured Executive War College general session discussions, Bordenave explained the focus of her work: aligning primary care with the clinical laboratory to treat-to-goal and close care gaps.
“There was a lot of focus on us taking laboratory information and treating people to goal, and that was with respect to diabetes, cholesterol, and hypertension, because those are three common diseases that exist within their [employee] populations. [Primary care doctors] know [that] if they [can] maximize the care in those patients—so that the patient is maximally treated—that patient performs. There’s a lot of literature around this.”
In the state of New Mexico where Bordenave’s project evolved, a culture of innovation prevails, where like-minded people have an opportunity to “do the unique,” she explained. The state’s population is spread out, there is a shortage of healthcare providers, and people generally lack access to health services and other social determinants of health. The liberty to think outside the box—to ensure care in creative ways—was essential to the success of Bordenave’s project.
“Blue Cross Blue Shield paid handsomely for improving healthcare outcomes in diabetes,” she said, adding, “and we never did a standard visit with any of those patients, ever. Then we got paid by a big employer group to do the same thing for them.”
Future of Clinical Laboratory Functionality
Bordenave noted that just about all paths forward post-COVID will require the data infrastructure of clinical laboratories to achieve an advanced level of functionality. Dark Daily will cover more opportunities for labs to capitalize on their structured data in future ebriefings.
Executive War College is scheduled to reconvene April 27-28, 2022, in New Orleans. In the meantime, recordings of this year’s presentations will be available for download, including:
A Roundtable Discussion on Current Activity Involving Clinical Laboratory and Pathology Mergers and Acquisitions.
Taking a Deeper Dive into How Artificial Intelligence Analyzes a Digital Pathology Image: What Current Technology Can and Cannot Do, Steps to Implement, and Understanding How the FDA Views AI in Digital Pathology.
Open Conversation About the Healthcare Data Aggregation Hub Model.
And more.
To learn about Executive War College’s complete program package, send an email request to info@darkreport.com.
Speakers at this week’s Executive War College in San Antonio explained that the way records are collected and stored plays a large part in the long-term usefulness of clinical laboratory data
Data structure as a term may not flow off the lips of clinical laboratory and pathology laboratory managers, but it should be top-of-mind. Well-structured data improves reimbursements and, in aggregated form, can be an enticing avenue to partnerships with outside parties.
Data structure refers to the makeup of digital records—in other words, how data is collected, stored, and accessed. Structured information offers consistency and is easier to analyze and share.
“You have to make sense of all that messy data, and that’s a heavy lift,” she said. “Results are not standardized.”
Appeals Payments Increase with More Clinical Data
Data quality can improve claim reimbursement appeals, Goede noted. When a more complete clinical record is provided to payors, they are more likely to reimburse for services.
According to information Goede covered along with Julie Ramage, Director of Precision Medicine Quality Initiatives and Partnerships at biopharmaceutical company AstraZeneca, when appealing a denied claim for a colon cancer molecular test, for example, the average appeal payment was $318 without cross-specialist clinical records.
Meanwhile, payment for a similar claim appeal which included that added data jumped to $612!
This information is often available, but may not be structured in a way that makes it easy to share with a payer. “You really have to be thinking about what elements you need,” Goede said.
Market for Structured, Anonymized Lab Data
Clinical laboratories that want to provide or sell anonymized, aggregated data to outside parties—such as research firms or pharmaceutical companies—also need to pursue efficient data structure. The re-use of existing, high-quality lab data can create a new business revenue stream.
“But it has to be more than that vanilla, male/female, date-of-birth stuff,” Ramage noted.
For example, she said, genetic testing builds up data registries, and that’s what pharma is looking for to find patients early on.
“If you don’t have a way to structure your data, you’re not going to be able to play in the sandbox,” she added.
Co-presenters Julie Ramage (left), Director of Precision Medicine Quality Initiatives and Partnerships at AstraZeneca Pharmaceuticals, and Patricia Goede, PhD (right), Vice President of Clinical Informatics at XIFIN, Inc., answer attendee questions about data structure during their presentation at this week’s Executive War College Conference on Laboratory and Pathology Management in San Antonio. To register for EWC 2022 and receive a special early-bird rate, click here by November 6.
How Clinical Laboratories Can Improve Clinical Data Structure
Here are some tips for clinical laboratory executives to consider as they tackle data structure:
Standardize how to enter patient information and test results. A common problem with data input is that the same information is entered differently over time. For example, various patient records might refer to dates in different ways: November 1, 2021, can also be entered as 11/1/21, 11/1/2021, or 11-01-21. Structured data uses a single way to list dates in records. This lesson applies to all similar clinical data.
Use dropdown menu choices instead of free-typing, open fields. An online box to enter a test result can create a variety of entries that affect data structure. While not perfect, drop-down options create a consistent set of entries, Goede said.
Ask patient advocacy groups about common nomenclature. Clinical laboratory data should reflect how patients speak, Ramage said. For example, do patients refer to genomic and genetic testing as the same thing? Establishing more consistency improves data structure as records are updated.
Enlist your organization’s IT or research team for help. Tech workers and principal investigators can easily look at clinical laboratory data and tell what information is missing or inconsistent, said Cheryl Schleicher, Director of IT Strategy at Northwell Health Labs in Lake Success, NY. Schleicher attended this week’s Executive War College.
Look Further into Clinical Laboratory Data Structure
Data structure can help clinical laboratories and pathology laboratories grab more reimbursement dollars and potentially sell anonymized data to external partners.
It is an area many lab executives are not familiar with and need to investigate more, particularly following the accelerated move to digital lab services during the COVID-19 pandemic. Your organization’s IT department or Chief Information Officer can be a useful ally.
If you could not make it to this week’s Executive War College, then join us for our next Executive War College on April 27-28, 2022, in New Orleans. Click here to take advantage of special early-bird pricing for this critical event.
WSJ reporter affirms that the pathologist was his “first and most important source” in confirming the problems at the now-defunct medical lab testing company
During the federal fraud trial of Theranos Founder and former-CEO Elizabeth Holmes, no one has spent more days on the witness stand than ex-Theranos Laboratory Director Adam Rosendorff, MD, the pathologist who testified for the prosecution that he repeatedly warned Holmes about problems with Theranos’ flawed Edison blood-testing device.
Dark Daily’s previous ebrief on the ongoing Holmes’ fraud trial reported that Rosendorff, who is board certified in clinical pathology, had testified, “I told her that the potassium was unreliable, the sodium was unreliable, the glucose was unreliable, [and] explained why. She was very nervous. She was not her usual composed self. She was trembling a bit, her knee was tapping, her voice was breaking up. She was clearly upset.”
It should come as no surprise that in response Holmes’ lawyers attempted to paint Rosendorff as an “incompetent” lab director with a resume littered with failures at other biotech companies. According to court documents, Holmes faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud for allegedly misleading investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing technology.
But the many clinical laboratory professionals closely watching the Holmes trial will be equally interested to learn that outside of the courtroom former Wall Street Journal (WSJ) reporter John Carreyrou confirmed on Twitter that Rosendorff was the main source for his 2015 investigative reporting—which first called into question Theranos’ claim that it could run more than 200 blood tests using a finger-prick of blood—as well as for his subsequent book, “Bad Blood: Secrets and Lies in a Silicon Valley Startup.”
Carreyrou Declares Ex-Theranos Lab Director Adam Rosendorff a Hero
“So, I’ve been fielding queries from reporters asking me to confirm that former Theranos lab director Adam Rosendorff, who is currently testifying at Elizabeth Holmes’ trial, was my source. I can now confirm it. Alan Beam = Adam Rosendorff,” Carreyrou tweeted.
“I’ll add this: Adam was my first and most important source. Without him, I wouldn’t have been able to break the Theranos story. Hats off to his courage and integrity. He’s one of the real heroes of this story,” Carreyrou added in a subsequent Tweet.
Inside the San Jose, Calif., courtroom, pathologist Rosendorff took centerstage, completing six days on the witness stand as Holmes’ defense attorney Lance Wade, JD, sought to undermine Rosendorff’s earlier testimony for the prosecution and question his competence as a laboratory leader.
Former Wall Street Journal reporter John Carreyrou (above) has revealed via Twitter that ex-Theranos laboratory director Adam Rosendorff, MD, was the “first and most important source” for his 2015 investigative reporting on Theranos. “Hats off to his courage and integrity,” Carreyrou tweeted. “He’s one of the real heroes of this story,” (Photo copyright: Penguin Random House Speakers Bureau.)
Rosendorff Testifies About Another CMS Investigation at Lab Where He is Medical Director
Rosendorff acknowledged during cross examination that he risked losing his license as a lab director after the CMS inspectors uncovered testing deficiencies at PerkinElmer’s Valencia (California) Branch Laboratory as well, where Rosendorff currently serves as Laboratory and Medical Director.
According to the WSJ, Rosendorff testified that most of the CMS inspection involved reviewing documents. During cross examination, it was revealed that the same CMS inspectors who investigated Theranos also conducted the PerkinElmer lab investigation.
Defense attorneys also had hoped to question Rosendorff about his previous work at uBiome Inc., a startup that was the target of a 2019 federal probe into its lab test billing practices, CNBC reported.
The Mercury News reported that during an October 5 hearing to determine the extent to which Holmes’ legal team could cross examine Rosendorff about his past employment, Wade told US District Judge Edward Davila that Rosendorff had a failed record as a lab leader. The Holmes defense lawyer alleged a link between “unreliable test results” at the biotechnology company Rosendorff went to after leaving Theranos and claimed that Rosendorff’s work at PerkinElmer resulted in the CMS notice of “serious deficiencies” at the lab.
“[Rosendorff] pointed the finger at many other people, including my client,” Wade told Davila. “He appears to almost never have competently done his job. He was incompetent at Theranos, too, and that is the reason many of the failures happened. He’s the person who’s ultimately responsible in the laboratory,” he added.
Nevertheless, Judge Davila prohibited questions regarding Rosendorff’s employment at uBiome and limited the scope of questions about his current role at PerkinElmer.
The graphic above depicts Holmes’ defense attorney Lance Wade, JD, cross examining former Theranos CLIA laboratory director Adam Rosendorff, MD. During his testimony, Rosendorff claimed he warned Holmes about the unreliability of Theranos’ Edison blood-testing device. Pathologists and clinical laboratory leaders will recall that Walgreens had contracted with Theranos to place testing devices in its in-store pharmacies. (Graphic copyright: The Wall Street Journal/Vicki Behringer.)
Holmes’ Attorneys Challenge Rosendorff’s Testimony During Cross Examination
After leaving Theranos, Rosendorff’s LinkedIn profile shows he served as Laboratory Director at San Francisco-based Invitae from December 2014 to September 2017 before moving to Millennium Health in San Diego as Medical Director from December 2017 to January 2021. He joined PerkinElmer in January.
The WSJ reported that Rosendorff’s ties to uBiome showed up in Theranos court records.
The WSJ also noted that during the multiday cross examination of Rosendorff, the Holmes defense team scored points by “pointing to contradictions in his testimony and challenging his assertions that he wanted to expose Theranos’ testing practices to the government.”
In making his point, Wade read aloud from a deposition Rosendorff gave during a separate case in which he claimed that Theranos did not have a greater number of anomalous test results than other labs where he had previously worked.
“And that’s 180 degrees from what you answered in your direct testimony,” Wade said to Rosendorff during cross examination.
“Yes, it seems to be different,” Rosendorff replied, but also noted that Theranos should have fewer errors than a lab with a much higher volume of tests.
Wade also introduced a November 2014 email in which Rosendorff told a colleague he knew of only one time when Theranos provided to a patient an obviously incorrect test result. Rosendorff had previously testified that he alerted Holmes on numerous occasions about his concerns with ongoing testing errors.
Wade also questioned whether Rosendorff had a financial motive for considering a whistleblower lawsuit against Theranos, pointing out that Rosendorff would be entitled to a portion of any damages recovered. Rosendorff responded that he did not have a profit motive in mind when he forwarded more than 150 Theranos emails to his personal account.
Former WSJ Reporter Carreyrou May Be Called to Testify
Clinical laboratory managers and pathologists will be fascinated with another twist that surfaced as this trial continued. Former WSJ reporter Carreyrou became personally intertwined with the Holmes’ trial after it came to light that the investigative reporter—whose podcast “Bad Blood: The Final Chapter” spotlights the ongoing fraud trial—is on Holmes’ potential witness list.
The motion, The Mercury News reported, states that “Placing Carreyrou on the witness list was done in bad faith and was designed to harass him,” and calls his placement on the list “a cynical ruse” that violates Carreyrou’s First Amendment rights.
CNN reported that Carreyrou’s attorneys are asking that the exclusion order (which prevents some witnesses from being inside the courtroom during other witness testimonies) or the gag order (which allows witnesses to discuss their testimonies only with their attorneys) not be applied to Carreyrou.
For clinical laboratory scientists awaiting the next installment in the now six-week-old trial, former Safeway CEO Steven Burd (now founder and CEO of Burd Health) will continue his testimony on the failed partnership between the grocery store chain and Theranos.
The Theranos agreement with Safeway is not as well-known as the Theranos-Walgreens deal. This was another news story written by Carreyrou and published by the WSJ on Nov. 10, 2015, titled, “Safeway, Theranos Split after $350 Million Deal Fizzles.”
As part of that agreement, Safeway spent $350 million to remodel 800 of its grocery stores to have a patient service center (PCS) and laboratory space where the unproven Edison device would be used to perform the clinical laboratory tests.
The testimony in this next phase of trial about the Safeway agreement with Theranos, and Holmes’ role in convincing the Safeway executive team to invest a third of a billion dollars to build 800 PSCs and lab spaces in 800 stores, should be as interesting as the witness testimony given earlier in this trial.
Romantic musings between the now-defunct Theranos’ CEO and COO may be introduced to undercut Holmes’ claims of ‘intimate partner abuse’
Medical laboratory professionals did not have to wait long for the first prosecution bombshell to explode during the opening week of the federal criminal fraud trial of former Theranos CEO Elizabeth Holmes.
In court filings leading up to the September 8 trial in San Jose, Calif., Holmes’ defense team revealed plans to claim “intimate partner abuse” by Holmes’ then boyfriend, Theranos Chief Operating Officer Ramesh “Sunny” Balwani. The plan was for Holmes to testify that Balwani threw “sharp” objects at her and controlled how she ate and dressed, impacting her “state of mind” at the time of the alleged crimes.
But prosecutors countered that claim by releasing six pages of text messages between the former couple, which took place between May 2015 and July 2015, as Theranos became the target of whistleblower accusations and a company employee who began secretly speaking to the Wall Street Journal (WSJ). Later that year, the WSJ published an investigative report that brought to light questions about Theranos’ blood-testing technology and the faulty clinical laboratory test results it reported to physicians and patients.
Holmes and Balwani kept their relationship hidden from the public, but their private text messages reveal intimate exchanges that likely will be introduced by prosecutors to undercut Holmes’ claims of abuse.
Within the 164 text messages were these exchanges:
“You are breeze in desert for me” [Holmes]
“My water” [Holmes]
“And ocean” [Holmes]
“Meant to be only together tiger” [Holmes]
“Madly in love with you and your strength” [Holmes later that day]
The following day:
“On route to dinner. Missing you” [Holmes]
“Missing you too” [Balwani]
“You more” [Holmes]
Balwani then turned his attention to the whistleblower within Theranos:
“I’m narrowing this down in CLIA. Down to 5 people. Will nail this mother [explicative omitted]” [Balwani]
“Who do u think” [Holmes]
“Now we have legal grounds” [Holmes]
“Yes” [Balwani]
Later Holmes texted:
“Feel like the luckiest person in the world BC I have you” [Holmes]
“We will come up with good responses to the questions and we will turn this around” [Balwani]
“Love” [Balwani]
“Transcend” [Holmes]
“We will” [Balwani]
The following month:
“Onboard. Love.” [Balwani]
“Taking off baby” [Balwani]
“Missing you” [Holmes]
“Missing you too baby. Just arrived at the office. Will prepare” [Balwani]
“Xxx” [Holmes]
Prosecutors in the federal fraud trial of former Theranos CEO Elizabeth Holmes (above, left) have included in a court filing 180 text messages sent between Holmes and former Theranos COO Ramesh “Sunny” Balwani (above, right) that reveal their romantic involvement and efforts to unearth the whistleblower within the failed blood-testing company. (Photo copyright: Yichuan Cao/NurPhoto via Getty Images [Holmes], Justin Sullivan/Getty Images [Balwani].)
Does Affection Rule Out Abuse?
In San Francisco, KPIX 5 television reported that legal experts predict the texts may not have the impact in the trial that outside observers expect, since, they said, expressions of affection do not rule out the possibility of an abusive relationship, which is expected to be one aspect of Holmes’ defense strategy.
Holmes, 37, who according to court documents faces 10 counts of wire fraud and two counts of conspiracy to commit wire fraud, is alleged to have misled investors, clinical laboratories, patients, and healthcare providers about Theranos’ proprietary blood-testing technology, which Holmes claimed could perform hundreds of medical laboratory tests using only a finger-prick of blood. If convicted, Holmes could face up to 20 years in prison, fines, and payment of restitution. She has pleaded not guilty.
Testimony of Theranos’ Corporate Controller
The prosecution opened the trial with questioning of Theranos’ longtime corporate controller Danise Spivey Yam. According to The Wall Street Journal, Yam testified she provided revenue projections to a company hired to value Theranos stock that ranged from $50 million in 2013 to nearly $132 million in 2016. Those numbers were much more modest than company projections of $140 million in revenue in 2014 and $990 million in 2015, which were given to investors.
“No,” Yam replied, adding that she hadn’t helped prepare it.
Former Theranos employee Erika Cheung, who according to court testimony worked in the company’s laboratory testing blood samples, testified that she left Theranos after six months because of concerns over Theranos’ blood-testing practices and data manipulation when machines failed quality tests.
Cheung ultimately alerted federal regulators to the company’s failure to meet industry standards and expressed her concerns about Theranos’ Edison mini-blood-lab machine.
“You’d have about the same luck flipping a coin as to whether your results were right or wrong,” Cheung testified about the accuracy of the Edison, CNBC reported. “It was concerning to see this degree of failure; this was not typical for a normal lab.”
During cross examination, CNBC noted that one of Holmes’ defense attorneys highlighted the professional qualifications of Theranos lab directors and other scientists at Theranos, including 52 scientists with PhDs and 10 medical doctors. He also noted that the validation reports for assays that Cheung had testified were problematic had been approved for lab use by a lab director and vice president, not Holmes.
With more than 200 witnesses expected to testify, the ongoing Holmes fraud trial is estimated to last three to six months. Pathologists and clinical laboratory scientists who are following the Theranos fraud trial with keen interest can look forward to more Dark Daily coverage. Click here to read our previous coverage of the Holmes/Theranos medical laboratory fraud saga.
