Breaking-The Theranos Story, ch. 41: settling, not fighting, with Partners Fund on fraud

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2017/04/The-big-dig.jpg” thumb_width=”150″ /]Breaking News and Updated. Settled–but not settled? Theranos’ May Day celebration was an announcement of a settlement with investor Partner Fund Management (PFM) LP on their two lawsuits alleging investor fraud. PFM’s funds had invested $96.1 million in Theranos’ February 2014 funding round. The amount and terms of the settlement were, as usual, not disclosed.

PFM’s original filing in Delaware Chancery Court in October claiming fraud on various representations that Theranos had made, such as 98 percent reliability on its small sample Edison labs. The second filing in April [Ch. 40] temporarily blocked Theranos’ added equity offer to investors, an offer which had the important condition of blocking further legal action once accepted [Ch. 38]. PFM had powerful and damaging evidence on its side from 22 deposed former employees and directors to bolster its allegations of investor fraud, which was revealed in snippets from unsealed documents last week.

This settlement, according to reports, ends both court actions and permits Theranos to continue their equity offer to investors. According to Theranos, 99 percent of investors were willing to accept it, which neatly heads off additional legal actions. The offer to C-1 and C-2 investors expires 15 May. Theranos release.

Yet the depositions obtained in this case appear to have taken on a life of their own. Digging down into the WSJ report (not yet paywalled if you go in through the ‘What people are talking about’ right-hand sidebar on LinkedIn, or if you have a subscription) is the interesting tidbit that “Federal investigators have obtained depositions taken in the Partner Fund litigation, including those of former Theranos employees and directors, according to a person familiar with the matter.” The WSJ also filed to have the depositions unsealed on Monday (1 May), which an outside entity can request under the rules of the Delaware Chancery Court even after a case is closed.

Despite settlements with PFM, the state of Arizona, and CMS, Theranos still faces a live investigation from the Securities and Exchange Commission (SEC) and the Justice Department (DOJ). There are also major lawsuits from Walgreens Boots seeking to recoup its $140 million investment (and remove the egg on their corporate face) and the Colman/Taubman-Dye suit in California. The latter action has the potential to become a much larger lawsuit, as the US District Court in Northern California has requested a show-cause from the plaintiffs on including third-party sellers (Lucas Venture Group, Celadon Technology Fund, SharePost) as defendants. It also personally charges Elizabeth Holmes and former CEO Ramesh ‘Sunny’ Balwani (ch. 39).

Time and money are running out–and with a Federal investigation in the mix, the future of Theranos still resembles our picture above.

  • In March, Theranos reported $150 million in cash holdings. With another settlement, how much is left in the bank?
  • That equity offer, expiring in two weeks, may be a moot maneuver. After investors do the math and look at the calendar, they may decide that legal action may be a better way of capturing whatever’s left, before it’s all gone or tied up in Chapter 11. Perhaps PFM is smart indeed in moving to settle early.
  • Federal investigations usually do not end happily, unless you are Mayor De Blasio of NYC. Who knows what high-powered maneuvering is going on behind the scenes to prevent Ms. Holmes’ black turtleneck from becoming orange? And where in the world is co-defendant ‘Sunny’ Balwani?

Additional coverage: TechCrunch, Bloomberg  Our index of Theranos coverage is here.

Pulmonary telehealth gets hot: FDA clears MTI’s Bluetooth spirometer for home use

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2017/05/GoSpiro.jpg” thumb_width=”150″ /]Monitored Therapeutics, Inc. (MTI) of Dublin, Ohio received FDA 510(k) clearance for a new home spirometer (left) specifically designed to connect via Bluetooth to smartphones, tablets, and PCs. According to Michael Taylor, MTI’s Chief Development Officer, “The GoSpiro is the only spirometer currently on the market that has met the latest and more stringent ISO and FDA device requirements for home use.”

Bill Zimlich, MTI’s CEO, told this Editor more about their market and the reasons for its development. “The GoSpiro is the first to be developed specifically for the home, and also the first to pass the home use FDA requirements. “Slow spirometry” is an added differentiating feature for highly impaired patients with idiopathic pulmonary fibrosis (IPF), amyotrophic lateral sclerosis (ALS), cystic fibrosis and other conditions who would have difficulty with the fast exhalation needed for the FEV test.”

Spirometers collect information on the patient’s inhaling and exhaling air in amount (volume) and speed (flow). The GoSpiro measures forced vital capacity (FVC) and slow vital capacity spirometry (SVC) which are the two main tests used to measure lung function in patients. It connects to MTI’s proprietary platform, CarePortal, based on Qualcomm 2Net, and their GoHome Patient Health Monitor. Specifications are listed here but it appears that MTI will not be selling direct to consumer.

Currently, spirometers are infrequently used in the home, which has been to the detriment of patients with pulmonary diseases such as asthma and COPD, plus associated conditions such as heart disease. Existing units have been expensive (from hundreds to thousands of dollars, excepting some new entrants), bulky, and require manual or cabled input to telehealth platforms. While cost is not disclosed, the MTI GoSpiro appears to be the first FDA-cleared home use device to fully change this picture, and in size and type can be easily bundled with a telehealth kit. Press release. Mobihealthnews.

Others in the now-hot pulmonary game are not far behind. (more…)

ATA 2017: Telehealth 2.0 annual President’s Awards

This year’s ATA 2017 President’s Awards, each honoring a company or individual, are:

President’s Award for the Transformation of Health Delivery (supported by Cerner): New York-Presbyterian OnDemand

NYP OnDemand has five services in its app which delivers services from Weill Cornell, NYP, and ColumbiaDoctors: Second Opinion, Urgent Care, Virtual Visit (telemedicine), Express Care (if you’re already in the ER, a virtual visit may shorten wait time), and Inter-Hospital Consult (a collaboration tool within the NYP network). At a recent Health 2.0 NYC Hospital Innovation Programs meeting, Jonathan Gordon (director of NYP Ventures) and Graeme Ossey (innovation manager) discussed its development (see video here, starting at 18:06, about 15 minutes).

Innovation in Remote Healthcare (supported by InTouch Health): Tyto Care

Tyto Care’s portable diagnostic device includes an FDA Class II cleared digital stethoscope, a digital imaging otoscope for ear exams, a throat scope, a skin camera and thermometer swipe. The Tyto home device includes video guidance instructions as part of the smartphone or tablet platform and connects to an online platform to send the information, either in real time or store-and-forward, to a primary care physician the user selects. Currently, they are working with American Well [TTA 2 Dec] and announced in the past month partnerships with Miami Children’s Health System and Allied Physicians Group, a 35-location pediatrics and specialty group headquartered in Melville, NY.

Other awards were: (more…)

Anthem to Cigna: This merger is on, despite the appeals court decision, but the clock is ticking

[grow_thumb image=”http://telecareaware.com/wp-content/uploads/2016/04/Yak_52__G-CBSS_FLAT_SPIN.jpg” thumb_width=”150″ /]The War of the Payers continues.

Update: The DC Court of Appeals released its decision Friday 28 April to deny the Anthem-Cigna merger, upholding the District Court’s decision. This was a 2 to 1 vote that was issued immediately prior to the 30 April merger expiration. It cited that the savings would not mitigate the anti-competitive effects in the national, large group, and local markets, mainly in Medicare Advantage. What has been under-reported is that 11 states plus DC originally joined with the DOJ to enjoin (stop) the merger. In the US system, any healthcare merger also has to be approved by the states, and this merger was a failure in this area. Remarkably, even the dissenting judge cited problems with hospitals and doctors due to the combined company’s negotiating power.

In any rational business deal, this would be the final nail in the coffin, especially with one of the merger partners already wanting to leave. Unless Anthem wants to appeal to the US Supreme Court, this merger has reached The End of the Line. Yet publicly Anthem is pursuing, at least for the time being. In a statement, Anthem expressed “We are committed to completing the transaction and are currently reviewing the opinion and will carefully evaluate our options.”  Court decision in full. Healthcare Dive. MedCityNews.

To recap other recent developments: In February, the two insurers were filing and counter-filing each other in Delaware Chancery Court–Cigna to end their merger, Anthem to continue. Last Wednesday (19 April), Anthem filed an injunction to prevent the deal from expiring as per the merger agreement on 30 April. This injunction may be heard by the Chancery Court on 8 May, according to Anthem documents, but the main court documents are still under seal. (Law 360, via Healthcare Dive 24 April)

In prior Federal court actions, the Federal District Court in DC, based on action by the US Department of Justice, first denied the merger on 8 February on antitrust and anti-competitive grounds [TTA 9 Feb]. Unlike the also denied Aetna-Humana merger, it was publicly known, to the point where it was cited in the District Court decision, that the companies had significant disagreements on the merger. After the denial, Anthem wasted no time in appealing for a reversal of the decision with the DC Court of Appeals. Cigna lost no time in initially wanting no part of any appeal of the ruling by Anthem–and filed in Delaware Chancery Court for $13 bn in damages in addition to the contractual breakup fee of $1.85 bn [TTA 14 Feb]. Two days later, Anthem filed in the same court for an injunction to delay the merger agreement’s legal termination [TTA 16 Feb]. In March, Cigna surprisingly filed a brief in support of Anthem’s appeal (Healthcare Dive). Anthem has also denied rumors of an appeal to the Justice Department to save the merger (Reuters), which is now moot if it ever existed.

As the clock winds down, there remain rivers of bad blood and accusations of bad faith between these two organizations which will continue to be fought in court. Was this merger ever really necessary? No, and it never was, and in our 16 February/21 February update (see analysis), this Editor opines on why Anthem’s to-date persistence in pursuing this has been extraordinarily harmful–to their customers and to both companies.

Australian Telehealth Conference 2017

While telehealth is still being tested in pilot projects in primary care in [grow_thumb image=”http://telecareaware.com/wp-content/uploads/2017/05/ATC-2017-banner.png” thumb_width=”150″ /]Australia it is beginning to be business as usual in secondary care, particularly for out patient services in rural areas and emergency care in regional areas, according to a review of this year’s Australian Telehealth Conference (ATC 2017) which concluded on Saturday. The article in Pulse+IT, puts the difficulty of getting telehealth into primary care down to the funding model in Australia.

The much admired Australian health care service is a mixture of public and private health care with, broadly speaking, the publicly (Medicare) funded hospitals providing a universal free service and the primary care being provided by a Medicare subsidised private practice service.

Until July 2014 telehealth services received incentives under the Telehealth Financial Incentives Programme. This programme was instrumental in introducing many telehealth trials through which the medical community learned the benefits and difficulties of telehealth first hand. Although these incentives have stopped, providers still receive higher Medicare benefits for approved telehealth services listed in the Medicare Benefits Schedule (such as video consultations between specialists and patients in telehealth eligible areas). However restrictions in eligibility for Medicare Benefits for telehealth usage have been shown to reduce the potential use of telehealth facilities (see our earlier item Should Australia review restrictions on use of telemedicine?).

Topics discussed at the conference included Telestroke, Innovations (Augmented Reality, AI), delivery models and virtual care. Many of the presentations given at the ATC 2017 are available at the ATC website here.