Theranos Agrees to Exit Clinical Lab Business But Keeps Certificates


Blood-testing company Theranos Inc. recently announced a settlement with the Centers for Medicare & Medicaid Services in which it agreed to stay out of the clinical laboratory business for two years.

Theranos had been in hot water after Medicare inspectors found serious quality control problems at its lab in Newark, Calif., that resulted in the accuracy of tens of thousands of Theranos’s blood testing results being called into question.

Interestingly, under the company’s settlement, the CMS withdrew its earlier revocation of Theranos’s certificates under the Clinical Laboratory Improvement Amendments (CLIA) even though the company agreed to a two-year clinical laboratory participation ban.

Why Maintain Certificates?

Theranos didn’t respond to inquiries about why it wanted to maintain the certificates, but Andrew B. Wachler of Wachler & Associates, P.C., in Royal Oak, Mich., told me the reason may be that revocations remain on a company’s record and have the potential for some collateral consequences.

“Sometimes,” Wachler said, “we will settle a case where our client agrees to do something voluntarily rather than have a mark (i.e., CLIA revocation) on their record.” In addition, Wachler said, a company may be motivated to maintain their certificates because sometimes there is a period of time before a company can reapply after a revocation.

Wachler & Associates is a health-care law firm with experience in all areas of laboratory regulation and compliance.

Bloomberg BNA contacted the CMS for a copy of the settlement, but the records aren’t releasable and would have to be obtained through a Freedom of Information Act request, the CMS said.

Read my full story on Theranos’s settlement with the CMS here.

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