Regulators have banned Elizabeth Holmes, founder of embattled blood testing startup Theranos, from owning or operating a laboratory for at two years.
In a statement issued late last night, Theranos announced that the Centers for Medicare & Medicaid Services (CMS) imposed a number of sanctions after concluding its investigation of a lab in Newark, California. In addition to Holmes’ sanctions, CMS revoked the Newark lab’s CLIA certificate, prohibited the company from accepting Medicare and Medicaid payments, and imposed monetary penalties. The sanctions take effect in 60 days.
In March 2016, CMS issued a warning letter to Theranos, giving the company 10 days to address concerns, including faulty blood tests. The New York Times reports:
The government scrutiny stemmed from questions about the effectiveness of Theranos’s technology and the way it operates its labs. Authorities who reviewed its practices last year found that all 81 patient results they inspected were inaccurate in a test of blood clotting used on patients who take the blood thinner warfarin.
Theranos responded to CMS’s letter, but the regulators found their response lacking. And so concludes the latest chapter in the ongoing drama of Theranos and its founder—a kind of melodrama about Silicon Valley’s fetish about the next big thing and funders eager to invest in budding tech moguls with a particular image, the kind who drops out of college and has a sizable collection of black turtlenecks. Holmes, who founded Theranos in 2003, was practically ready-made for the tech industry’s self-published romance.
It’s unclear whether or not Theranos will appeal CMS’s decision. In a statement, Holmes said, “We accept full responsibility for the issues at our laboratory in Newark, Calif., and have already worked to undertake comprehensive remedial actions.” She added that the company will shut down the Newark lab and “rebuild” from the “ground up.”
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