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As Theranos drama unwinds, former patients claim inaccurate tests changed their lives

Theranos founder Elizabeth Holmes has been indicted on wire-fraud charges. The company's testing centers located inside Walgreens stores all have closed. And the company, once reportedly valued at $9 billion, has laid off nearly all employees.

While federal prosecutors have charged Holmes and former Theranos President Ramesh "Sunny" Balwani with wire fraud, former patients are pursuing cases on their own in federal and state courts. Nine ex-Theranos customers are plaintiffs in a federal class-action lawsuit against Theranos and Walgreens in U.S. District Court in Phoenix.

One woman, identified as D.L., claimed that Theranos' inaccurate results indicated she tested positive for an autoimmune disease, Sjögren's syndrome, that prompted her to consult with a doctor and be checked for food allergies. After she was tested by another lab company, her doctor determined that she did not have the autoimmune condition.

The lawsuit states another woman identified as L.M. was diagnosed with a thyroid condition called Hashimoto's disease based on inaccurate Theranos test results. Her doctor ordered testing from another lab company that showed she did not have that condition.

The initial diagnosis based on inaccurate lab tests was "devastating to her" because it prompted her to change her lifestyle, make unnecessary medical appointments and take medication she did not need, the lawsuit states.

Both Theranos and Walgreens have denied wrongdoing and filed separate motions to dismiss the federal class-action lawsuit. In April, a federal judge agreed to toss out 7 categories of claims but allowed 13 to move ahead for the plaintiffs in the case, now in discovery. One plaintiff, R.C., who alleged that he had a heart attack one month after getting an inaccurate blood test, voluntarily dropped his claims.

Political leaders in metro Phoenix welcomed Theranos with open arms five years ago and the area served as testing grounds for its unproven finger-stick blood draws.

At its peak, Theranos operated 40 centers inside Walgreens stores in metro Phoenix and sold more than 1.5 million blood tests that yielded 7.8 million test results for nearly 176,000 consumers.

But court documents state slightly more than 1 in 10 test results were voided or corrected, and some patients claim in lawsuits that they were harmed by inaccurate test results.

Others chose not to sue but worry that there's little to safeguard consumers from another medical technology company making similar mistakes.

Peoria, Arizona resident Steve Hammons visited a Theranos clinic five times in September and October 2015 to monitor the results of a blood-thinning drug. Based on the results of those tests, a doctor ordered him to discontinue warfarin and switch to another drug.

One test included inaccurate results that were later revised, Hammons said. Theranos did not return a USA TODAY query about Hammons' test results.

He had heart surgery and a followup procedure to drain blood from the pericardial sac, which contains the heart. He does not know whether more accurate test results would have prompted his doctors to change his course of care and potentially avert the second operation to drain blood.

However, he said it made him realize how little protection consumers get from federal and state government regulators overseeing the lab business.

“That makes me very concerned and worried for the safety of other Arizonans,” said Hammons, who once worked in the medical services division of a private health insurance company. “Government had a role in patient safety. The powers that be dropped the ball.”

'An American success story'

Theranos operated only one center not far from its Palo Alto, California headquarters when it chose Arizona for its ambitious expansion in the fall of 2013. At the time, company officials cited Arizona's high uninsured rate and business-friendly environment.

Arizona also had a state law that allowed labs to sell a limited number of tests directly to consumers without a doctor's orders.

Theranos pumped up its marketing with media interviews, billboards and television commercials touting a proprietary technology that the company claimed would revolutionize the lab industry by delivering accurate results from a finger-stick sample of just a few drops of blood. But the company also appealed to Arizona's political leaders to relax rules and allow broader, direct-to-consumer testing.

Theranos contributed language to House Bill 2645, which allowed labs to sell any test to a consumer without a doctor's order. The bill sailed through the Arizona Legislature despite concerns raised by doctors' groups such as the Arizona Medical Association and  Arizona Academy of Family Physicians.

Republican Gov. Doug Ducey and legislative leaders from both parties hailed Theranos in an April 2015 bill-signing ceremony at Theranos' lab in Scottsdale, Ariz.

Ducey lauded Holmes as "the definition of an American success story" and said the bill "keeps our regulations light" and reflects Arizona's values as a business-friendly state.

Three years later, the governor's spokeswoman said in a statement that businesses that tout new technology must prove themselves in the marketplace. "Bad actors must be held accountable, and in this case, that's happening," said the statement. "Public health and safety is always a top concern and we will continue to do all that we can to protect the well-being of Arizonans while also allowing individuals to have greater access to their medical information.

The region's dominant lab-testing company, Sonora Quest, also objected to the legislation. But after realizing the strong political momentum behind the bill, Sonora Quest did not formerly oppose the bill and later formed a unit that sells lab tests directly to consumers.

Questions of accuracy

Theranos' fortune began to turn later in 2015 when the Wall Street Journal published the first in a series of stories that raised questions about the accuracy of the company's micro-blood draws and its underlying Edison technology.

Reports revealed that the company often relied on more traditional vein blood draws and lab equipment made by other companies rather than its unproven medical technology.

Federal lab regulators with the Centers for Medicare and Medicaid Services stepped up oversight of Theranos and moved to revoke that company's laboratory certificate after finding the company's operation in Newark, Calif., posed an "immediate jeopardy" to consumers.

Theranos reached a settlement with the federal agency, agreeing to a two-year ban from the blood-testing business and a $30,000 civil penalty.

In April 2017, Arizona Attorney General Mark Brnovich negotiated a consumer-fraud settlement to refund up to $4.65 million to consumers who purchased Theranos blood tests. The checks were disbursed through a third-party administrator with more than 80 percent of the settlement as of June 2018, officials said.

While the settlement provided consumers financial relief, it did little to address customers who were harmed by inaccurate test results, according to attorneys representing patients.

"The attorney general was able to get the money," said Leonard Aragon, a Phoenix attorney who represents a patient in a lawsuit against Walgreens in Maricopa County Superior Court. "That doesn't compensate people for being damaged by bogus test results."

Lawmakers now acknowledge that some patients may have been harmed by inaccurate test results. However, they insist that consumers have benefited from greater access to testing sold by other labs.

"The good news is there are other very high quality laboratory companies in Arizona that have embraced the legislation and have had tremendous success," said Heather Carter, an Arizona House Representative who sponsored the direct-access bill.

"I am extremely concerned about patient safety," Carter said. "Hopefully justice will be served and people will have their day in court on this."