By: Christopher A. Parrella, Esq., CPC, CHC, CPCO
Parrella Health Law, Boston, Ma.
A Health Care Defense and Compliance Firm

January 19, 2024

In an unprecedented move underscoring the government’s commitment to health care compliance and fraud prevention, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) has issued a 90-year exclusion to Elizabeth Holmes, the founder and former CEO of Theranos, Inc. This decision, announced by Inspector General Christi A. Grimm, marks a significant development in the realm of health care law and compliance, particularly for entities involved in Federal health care programs.

Holmes’s exclusion follows her January 2022 conviction for wire fraud and conspiracy to commit wire fraud against investors of Theranos in the United States District Court, Northern District of California. The severity of this exclusion, far exceeding the statutory minimum of five years, reflects the gravity of Holmes’s actions and the impact on investors and the health care industry at large. This decision was influenced by multiple aggravating factors, such as the duration of the fraudulent acts, her subsequent incarceration, and the substantial restitution amounting to approximately $452 million.

Holmes’s case is particularly notable given the nature of her company, Theranos, which she founded in 2003. Theranos claimed to have developed groundbreaking technology capable of conducting numerous clinical diagnostic tests using only tiny blood samples from finger pricks. However, evidence presented at her trial revealed that these claims were grossly misleading, as the Theranos device could only perform a limited number of blood tests with questionable accuracy.

The HHS-OIG’s authority to exclude individuals from Federal health care programs under section 1128(a) of the Social Security Act is a critical tool in safeguarding these programs and the public they serve. By preventing any payment for health care services or items furnished, ordered, or prescribed by excluded persons, the OIG effectively protects the integrity of Federal health care programs and their beneficiaries.

This exclusion mirrors a similar action taken against Theranos President, Ramesh Balwani, who also received a 90-year exclusion following his conviction for fraud. The parallel nature of these exclusions highlights the OIG’s consistency in addressing health care fraud at the highest levels of corporate leadership.

Inspector General Christi A. Grimm’s statement emphasizes the necessity of accurate and reliable diagnostic testing technology for public health. False claims and misrepresentations not only jeopardize patient health but also undermine trust in the health care system. As medical technology advances, the OIG’s commitment to using its exclusion authority to remove bad actors from the health care arena remains steadfast.

For health care entities and professionals, this landmark decision serves as a potent reminder of the critical importance of compliance with health care laws and regulations. It underscores the need for diligent oversight, ethical conduct, and the implementation of effective compliance programs to prevent fraud and protect patients and health care programs from deceptive practices.

At Parrella Health Law, we understand the complexities and challenges of navigating the health care regulatory landscape. This recent development serves as an essential case study for our clients in understanding the ramifications of non-compliance and the importance of maintaining robust and effective compliance programs.

For further insights into health care law and compliance strategies, feel free to contact us at Parrella Health Law. We are committed to providing expert legal guidance to ensure that your practices align with the highest standards of health care law and ethics.

Christopher Parrella, ESQ, CPC, CHC, CPCO, is the founding partner of Parrella Health Law in Boston, Mass. The firm focuses exclusively on healthcare defense and compliance matters. Chris also travels the country on behalf of a wide range of healthcare organizations, lecturing on a variety of health care enforcement and compliance topics. Chris is one of a handful of health care attorney’s that are also Certified Professional Coders (CPC) and is a member of the AAPC’s National Legal Advisory Board and Ethics Committee.  He is also a Certified Professional Compliance Officer (CPCO) and Certified in Health Care Compliance (CHC.)

The Photo of Elizabeth Holmes is licensed under the Creative Commons Attribution 2.0 Generic license.