CMS sanctions Theranos, prohibits CEO from operating a lab for two years

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The Centers for Medicare & Medicaid Services (CMS) revoked Theranos’s certification for a blood testing laboratory in California and prohibited the embattled company’s CEO Elizabeth Holmes from owning, operating or directing a laboratory for at least two years.

Theranos announced the sanctions July 7 and disclosed that CMS had fined the company an unspecified amount. CMS also suspended Theranos from receiving Medicare and Medicaid payments for providing hematology services and forbade the company from receiving Medicare and Medicaid payments for all laboratory services.

Theranos, a privately-held testing laboratory that Holmes founded in 2003, has come under scrutiny for the past year. On March 28, an analysis found that tests for cholesterol at Theranos were on average 9.3 percent lower than those performed at Quest Diagnostics and LabCorp.

Quest and LabCorp collects blood through venipuncture, while Theranos collects blood samples through a finger prick.

The penalties announced on July 7 stem from a visit CMS made to Theranos’s laboratory in Newark, Calif., last fall for an inspection. In late March, CMS released a 121-page report, in which it detailed its findings.

CMS said that 29 percent of the quality-control checks it performed on Theranos’s blood-testing devices were outside the range that the company considered acceptable, according to the Wall Street Journal. The newspaper also reported that CMS found Theranos had unqualified lab personnel, stored blood samples at wrong temperatures and took a long time to notify patients of incorrect test results.

In June, Forbes estimated that Holmes’s net worth had decreased from an estimated $4.5 billion last year to zero this year.

Democrats in the U.S. House of Representatives recently sent a letter to Theranos requesting more information on its issues, Bloomberg reported. The lawmakers asked for a response by July 14.

“We accept full responsibility for the issues at our laboratory in Newark, California, and have already worked to undertake comprehensive remedial actions,” Holmes said in a news release. “Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures. While we are disappointed by CMS’ decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance.”