Theranos is now facing a lawsuit alleging consumer fraud
The one-time hot start-up Theranos is in even more hot water.
The blood-testing company is facing a lawsuit that alleges consumer fraud and false advertising. An Arizona resident identified in the lawsuit as M.P.B. is suing the company, alleging that he purchased the Theranos test under the mistaken belief that the company's Edison blood-testing device would provide accurate results.
The lawsuit comes on the heels of Theranos' announcement that it had voided or corrected tens of thousands of results from machines including its Edison device, which were designed to test blood from just a pinprick. It's the latest twist for a company plagued with problems, including a January report from the Centers for Medicare and Medicaid Services that said Theranos' practices "pose immediate jeopardy to patient health and safety."
"Theranos assured its customers that these tests were highly accurate, industry leading in quality, and developed and validated under, and compliant with, federal guidelines," the complaint states. "Thousands of people, including plaintiff M.P.B., believed the Company's representations and paid for Theranos's tests."
It added, "However, the Edison machines did not work, and Theranos's tests were not accurate."
There may be thousands of people who could join the lawsuit, given that company performed about 6.1 million tests, according to the complaint.
In a statement emailed to CBS MoneyWatch, Theranos said the lawsuit "is without merit. The company will vigorously defend itself against these claims."
The complaint focuses on marketing materials published by both Theranos and Walgreens Boots Alliance, which had an agreement to sell blood testing from Theranos' machines including the Edison device in about 40 wellness centers in Walgreen's Arizona stores.
Walgreen's sales materials "assured that Theranos was 'industry leading in quality and its tests were highly accurate and developed and validated under and to Federal guidelines,'" the complaint says. "Thousands of people, including Plaintiff believed the Company's representations, and paid for blood testing at Walgreen Wellness Centers."
But the statements about Theranos' testing in Walgreens' Wellness Centers "were false," the complaint alleges.
While Walgreens isn't named as a defendant in the lawsuit, the complaint may raise questions about whether the drugstore chain adequately vetted Theranos' testing device. Walgreens officials apparently failed to fully vet the service before signing the deal with Theranos, according to a report published Wednesday in The Wall Street Journal.
When the chain was considering the partnership, scientists at Johns Hopkins University planned to test the Edison device to verify its accuracy for Walgreens, but the drugstore company signed a deal before the researchers could validate the Edison machine and its results, according to the report, which is based on about 20 interviews with former and current Walgreens employees and advisers as well as ex-Theranos employees.