This is an excerpt of a 1,867-word article in the October 18, 2021 issue of THE DARK REPORT (TDR). The full article is available to members of The Dark Intelligence Group.
CEO SUMMARY: During the trial, a pathologist who was a former Theranos lab director testified about the little regard Theranos executives had for federal proficiency testing regulations labs must follow to retain their CLIA license. Another point of contention was how this pathologist had sent himself copies of emails to document management decisions designed to override his responsibility to fulfill his requirements as the CLIA laboratory director.
RECENTLY, A PATHOLOGIST MADE NATIONAL HEADLINES FOR SEVERAL DAYS because of his testimony in the federal court case against Elizabeth Holmes, the discredited founder and ex-CEO of Theranos, the defunct medical laboratory company. At the same time, this pathologist’s testimony under oath is a teaching moment for any pathologist who is on the license of a CLIA laboratory as lab director.
The pathologist who was grilled on the witness stand was Adam Rosendorff, MD. He served as the laboratory director for Theranos from April 2013 through December, 2014. During this 21-month period, Theranos used a lab testing agreement with Walgreens to gain national attention. Theranos then launched testing operations using a number of Walgreens pharmacies in Palo Alto, Calif., and Phoenix, Ariz., as patient service centers to collect blood specimens from consumers and patients. (See TDR, “Theranos Won’t Discuss Disruptive Lab Technology,” and “Walgreens to Go National with Lab Tests in Retail Stores,” Sept. 30, 2013.)
As many pathologists and lab administrators know, Theranos quickly became a national—if not global—sensation. Elizabeth Holmes was universally lauded as a clever entrepreneur poised to successfully disrupt the entire clinical laboratory industry. She claimed Theranos could provide consumers and patients with a better medical laboratory test, at a price just 50¢ on the Medicare dollar, using a drop of blood, and with results delivered in two hours.
The false edifice came tumbling down in October 2015. That was when Wall Street Journal (WSJ) reporter John Carreyrou’s first exposè of the problems at Theranos was published. By then former Theranos lab director Rosendorff had been gone from Theranos for 10 months.
Pathologist’s Time at Theranos
Yet, his time at Theranos covered the period when Holmes was working to demonstrate that the company’s proprietary diagnostic technology could deliver. It also included the period when Theranos first began providing testing to consumers and to physicians who referred their patients to Theranos for lab tests.
As the CLIA lab director on the Theranos license, the former Theranos lab director had “responsibility for the overall operation and administration of the laboratory,” as described in CLIA regulations.
For federal prosecutors, the former Theranos lab director is the witness who can testify to facts and details of how Holmes and her team ignored evidence of serious problems with lab tests at Theranos in ways that violated federal and state clinical laboratory laws. This testimony is expected to support the criminal charges filed against Holmes by the federal Department of Justice (DOJ.)
The opposite is true of the defense. Holmes’ lawyers argue that Rosendorff, as the former Theranos lab director, was responsible for many of the problems, ranging from ongoing instances of inaccurate test results to improper use of FDA-cleared lab analyzers, and failure to properly perform proficiency testing and self-report the lab’s problems to CLIA officials.
However, it is important to remember that the criminal charges filed against Holmes in this case are not directly relatted to the failures of the clinical laboratory to comply with state and federal laws or the inaccurate lab tests reported to physicians, patients and consumers.
Rather, the criminal charges against Holmes are two counts of conspiracy to commit wire fraud and nine counts of wire fraud.
The same charges were filed against Ramesh “Sunny” Balwani, former Theranos Chief Operating Officer and ex-boyfriend of Holmes who will be tried separately. As noted in a DOJ press release, “According to the indictment, the charges stem from allegations that Holmes and Balwani engaged in a multi-million-dollar scheme to defraud investors, and a separate scheme to defraud doctors and patients.”
Essentially, one important strategy of the defense during this trial is to blame the pathologist who served as the former Theranos lab director for many of the serious problems in specimen testing at the clinical laboratory operated by Theranos.
These issues were identified by WSJ reporter Carreyrou and later by CLIA officials from the federal government who visited the Theranos laboratory facility. (See TDR, “Is Theranos Kowtowing to CMS over CLIA Sanctions?” May 23, 2016.)
Proficiency Testing Issues
Rosendorff, who is board-certified in clinical pathology, first took the stand in the week of Sept. 24. At that time, the jury heard him testify about how the staff at Theranos had little regard for the federal proficiency testing regulations that labs must follow diligently.
Rosendorff testified about Theranos’ failure to comply with proficiency testing. He also testified that he sent himself copies of emails to document management decisions designed to override his responsibility to fulfill his requirements as the CLIA laboratory director.
Rosendorff’s role in this trial highlights why the position of laboratory director in a CLIA-certified laboratory has significant risk. In his testimony for the prosecution, Rosendorff describes, in detail, how his advice, recommendations, and attempts to fulfill the requirements of CLIA certification were opposed or negated by Holmes and her COO, Bulwani.
However, during cross-examination, Holmes’ defense attorneys presented emails, documents, and testimony from witnesses that, they asserted, show Rosendorff did not fulfill his duties in a compliant manner. Defense attorneys claimed that it was Rosendorff who should be held responsible for the inaccurate lab test results which put patients at risk of harm—as well as the failure to properly perform proficiency testing and follow federal and state lab regulations.
Pathologists would find a review of the questions asked of Rosendorff by attorneys for the defense useful for understanding how a hostile attorney can attack a lab director who oversaw a laboratory’s operation during a time when it had serious problems and was reporting lab test results that put patients at risk of harm.
Is your organization’s laboratory director aware of the Elizabeth Holmes defense’s attacks on former Theranos lab director Rosendorff? Please share your thoughts about this in the comments below.