Lab testing startup Theranos started from a revolutionary idea: performing blood tests quickly and inexpensively using only a drop of blood. The idea may have been more revolutionary if the technology actually worked yet, and if its lab in California had been operating up to current standards. Now the federal government has imposed sanctions on the company, which include being unable to bill Medicare or Medicaid for its services, and its founder and CEO can’t own or run a laboratory for the next two years.

Other sanctions against the company and its employees include having its certification to perform tests in hematology (testing for blood diseases) limited, having to pay an unspecificed financial penalty to the government, and its ability to bill Medicaid and Medicare for tests related to hematology has been suspended.

The company’s proprietary equipment that performs tests on small amount of blood is the reason why it exists –– otherwise, it’s just a regular lab. Yet a Wall Street Journal investigation showed that the company was using commercially available equipment instead of its own machines for tests.

The company will be able to appeal this decision, and has already been working to avoid possible sanctions, including mailing corrected results to patients for tests performed as long as two years ago.

Theranos Receives Notice of Sanctions from the Centers for Medicare & Medicaid Services [Theranos]
U.S. Regulator Bans Theranos CEO Elizabeth Holmes From Operating Labs for Two Years [Wall Street Journal]

FURTHER READING:
Hot Startup Theranos Has Struggled With Its Blood-Test Technology [Wall Street Journal]

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.