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May 31 — Theranos, Inc., defrauded patients when it claimed that its blood tests were accurate when they clearly weren't, according to three proposed class action suits filed in late May in federal district court in California ( R.G. v. Theranos, Inc., N.D. Cal., No. 5:16-cv-02891, filed 5/30/16 ; Jones v. Theranos, Inc., N.D. Cal., No. 3:16-cv-02835, filed 5/26/16 ; M.P.B. v. Theranos, Inc., N.D. Cal., No. 3:16-cv-02810, filed 5/25/16 ).
The filings in the U.S. District Court for the Northern District of California, which ask for actual and punitive damages, come as Theranos waits for the Centers for Medicare and Medicaid Services to decide whether to implement sanctions it threatened against the company on April 14.
The sanctions could include suspending Medicare payments, shutting down Theranos's California laboratory and barring its chief executive from owning or operating a laboratory for two years (10 LSLR 09, 4/29/16).
“The class action suits are really not surprising and often happen when there's been a regulatory action such as the one by the CMS, which the litigations cite,” said Mark Mansour of Mayer Brown, Washington. “They represent the individuals who claim to have been affected, and they are one more thing in the mix.”
He added, “The next big event, the next shoe to drop, will be what the CMS does.”
The proposed class action suits were filed by three Arizona residents who said they had purchased Theranos blood tests from Walgreens through the pharmacy chain's joint venture with Theranos, which is based in Palo Alto, Calif.
One plaintiff is identified only by the initials R.G.; another as M.P.B., and the third as Casey Jones. The litigations were instituted on behalf of the named plaintiffs and all similarly situated individuals.
The complaints by R.G. and M.P.B. were filed on May 30 and May 25, respectively, by McCune Wright LLP, Redlands, Calif., and Berwyn, Pa., and are identical. Jones's complaint was filed May 26 by Hagens Berman Sobol Shapiro, Berkeley, Calif., Seattle and Phoenix.
R.G., M.P.B. and Jones alleged that Theranos advertised that through its testing procedure, a hand-held device would be used that takes just a few drops of blood from a patient, and from that sample Theranos's proprietary Edison machine could conduct hundreds of blood tests.
But the Edison machines didn't work and Theranos's tests weren't accurate, M.P.B. and R.G. wrote. Theranos conceded the inaccuracy of the results, the two plaintiffs contended, by informing regulators it was voiding all of the companies' test results, both those run on the Edison machines and those run on traditional machines that Theranos employed when it stopped using the Edisons.
Jones said that when he went to the Walgreens, rather than having just a few drops of his blood withdrawn by a hand-held device as Theranos had advertised, he was subjected to having large vials of blood drawn in the traditional manner.
M.P.B. and R.G. asserted causes of action of fraud; negligent misrepresentation; violation of California Civil Code §§1710 (Deceit) and 1750 (Consumer Legal Remedies Act); violation of the Arizona Consumer Fraud Act, A.R.S. §44-1521; and violation of California Business & Professions Code Sections 17200 (Unfair Business Practices Act) and 17500 (false advertising laws).
Jones asserted causes of action of breach of contract; unjust enrichment; Arizona consumer fraud; violation of California Business & Professions Code Sections 17200 and 17500; and violation of California Civil Code Section 1750.
The three asked the court for certification of the class action; disgorgement of all profits obtained as a result of violations of laws, statutes and regulations; damages; punitive damages; interest; and attorneys' fees and costs.
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