The Arizona attorney general is prepping for a lawsuit against Theranos, alleging consumer fraud by the embattled blood-testing startup.
The office of Arizona Attorney General Mark Brnovich is looking to hire an outside firm to take legal action against Theranos and its subsidiaries according to a bidding contract filed Jan. 4.
This would be the first government-led lawsuit against the company. Several investors and at least eight customers have also sued the company, which has conducted several rounds of heavy layoffs in recent months.
The bidding document offers some insight into how the state of Arizona might frame the case. It claims that Theranos violated the Arizona Consumer Fraud Act, thanks to its “long-running scheme of deceptive acts and misrepresentations relating to the capabilities and operation of Theranos blood testing equipment.”
Theranos once claimed it could revolutionize the diagnostics industry with technology that purportedly could run hundreds of lab tests on a single drop of blood. It launched a partnership with Walgreens to create a network of Wellness Centers across Arizona and California, with aims to make Theranos testing more accessible to consumers.
Things began to unravel in late 2015, and accelerated this past summer when the Centers for Medicare and Medicaid Services found that Theranos’s practices in its California lab resulted in “immediate jeopardy to patient health and safety.” Federal regulators banned Holmes from owning or running a lab for two years. Walgreens ended its relationship with Theranos, shutting down the 40 Wellness Centers they had jointly created. The pharmacy giant has since filed its own lawsuit against Theranos.
This newest proposed lawsuit is meant to represent Arizona citizens who received services from the Theranos Wellness Centers in Arizona and California. It’s looking for civil penalties and restitution, as well as disgorgement — which means the state will likely ask Theranos to forfeit any profits it made from its Arizona consumers.
Theranos has not yet responded to a request for comment. A representative for Brnovich’s office confirmed to STAT that it’s seeking outside counsel to explore litigation against Theranos.
Law firms have until Jan. 27 to submit bids.