[i] See, e.g., The blood-testing company has been operating its Newark, CA, lab for the past 10 months under the supervision of Sunil Dhawan, MD, a dermatologist without a degree or board certification in pathology â¦ approved hiring Balwani as president and COO despite having no blood testing, When Theranos eventually appointed a lab director, it was a dermatologist who was not actually qualified to run a clinical laboratory and was mostly an absent figurehead. At age 19 and after only two semesters of chemical engineering classesat Stanford, Holmes dropped out to start Theranos, a privately held for-profitentity. accomplished, but none of them had any substantial scientific or health care industry Similarly, in November 2006 Holmes faked successful results of a blood In March 2008, two high-level employees approached the board chair with Theranos was a privately held health technology corporation. [v] Marchand v. Barnhill, 212 A.3d 805 (Del. Theranos is a private health care and life sciences company with the stated mission to revolutionize medical laboratory testing through allegedly innovative methods for drawing blood, testing blood, and interpreting the resulting patient data. The media has reported extensively about Holmes and the downfall of Theranos, which was at one point valued at $9 billion. Theranos also set up protocols that allowed unlicensed personnel to conduct quality control procedures and process patient samples in the lab. leaders with significant connections for a reason, namely to work those laboratory, or medical industry experience (as a salacious aside, Holmes never implementation and effectiveness of the compliance and ethics program.â[ii], Under the seminal In re Caremark International, Inc. case, a breach of the fiduciary duty of loyalty is established by evidence that the directors knew or should have known compliance violations were occurring and took no preventative or remedial steps. Theranosâs board was window The Office of Inspector General of the Department of Health and Human Services has published practical guidance for boards of health care companies, and the Blue Bell case also provides important guidance. For example, not one health care Balwani regularly fired employees who dared question him. as the laboratory director," says Ed Thornborrow, medical director of the clinical labs at the University of California, San Francisco. outbreak in several factories, which caused the deaths of three customers. Education efforts and properly staffing the board may help foster a strong culture for compliance. This will assist the board with risk identification, assessment, and knowing which questions to ask company management. Wall Street Journal obtained copy of letter sent by CMS to Theranos, dated March 18, 2016, that notified its executives of sanctions that include revocation of Theranosâ CLIA license and a process by which the medical lab company can appeal Theranos, the high-profile clinical laboratory company, had a day of reckoning yesterday. [A former Theranos] lab technician said in her deposition that company executives frequently demanded that staff âhide things from people.ââWe were constantly hiding things from all sorts of people, whether it was regulators or whether it was outside vendors or even people that would come in â¦ As such, directors are responsible for ensuring a companyâs activities comply Soon afterward, a Theranos lab in California was found by the government to be a threat to patient health and safety. Sentencing Guidelines set out the required elements of an effective compliance at Stanford, Holmes dropped out to start Theranos, a privately held for-profit Holmes, who by all accounts is wildly intelligent and charismatic, was able to raise hundreds of millions of dollars for her idea, despite having no scientific or medical training. minds. Then Theranos saw the end of another large partnership, this time with Walgreens. This article is not about the gripping tale of deception, manipulation, and intimidation fostered by Holmes and Balwani (and other bizarre facts, such as Holmes communicating in a fake deep voice for years after starting Theranos) â Carreyrou, ABCâs Rebecca Jarvis in the podcast The Dropout, and many other talented journalists have thoroughly covered those topics.