WASHINGTON — Theranos founder and ex-CEO Elizabeth Holmes is banned from federal health programs for nine decades, the health department announced Friday.
Holmes was sentenced in November 2022 to 11 years in prison following a trial that determined she knew her blood-testing startup, which was founded in 2003 and which claimed to be able to test for a range of diseases and risks with one finger prick, produced inaccurate and faulty results. Before government probes, Theranos raised hundreds of millions of dollars, named prominent former U.S. officials to its board, and explored a partnership with the U.S. military to use its tests on the battlefield.
The Health and Human Services Department can exclude anyone convicted of certain felonies from Medicare, Medicaid, and Pentagon health programs.
Excluded individuals cannot receive payment from federal health programs for any services or products, essentially barring them from working in the broader health care system.
The minimum ban in such cases is five years, however HHS said that with “certain aggravating factors” like the longevity of Theranos’ fraud and Holmes’ imprisonment, “a longer period of exclusion is justified.”
HHS has already barred former Theranos President Ramesh Balwani from federal programs for 90 years. Balwani was also convicted for wire fraud related to Theranos’ claims. Holmes began her sentence last May.
“Accurate and dependable diagnostic testing technology is imperative to our public health infrastructure,” said Inspector General Christi Grimm. “False statements related to the reliability of these medical products can endanger the health of patients and sow distrust in our health care system.”
Before the company’s downfall, Theranos rolled out testing services in Walgreens pharmacies and plans to install machines in Safeway grocery stores. The former CEOs from both companies testified at Holmes’ trial, saying they did their due diligence but were convinced by Holmes’ claims. Walgreens settled last year for $44 million with patients who received faulty results.
Following a Wall Street Journal investigation into the tests’ reliability in 2015, the Centers for Medicare and Medicaid Services inspected Theranos labs and cited numerous violations. The agency in July 2016 banned Holmes from owning or running a lab for at least two years.
