NEW YORK (360Dx) — Theranos said late Monday that it reached a deal with the Centers for Medicare & Medicaid Services to settle all outstanding legal and regulatory proceedings against the firm.
Separately, the firm today said it will reimburse Arizona residents $4.65 million for blood testing services that it performed between 2013 and 2016.
As part of the agreement with CMS, Theranos will not own or operate a clinical laboratory for the next two years. CMS had previously proposed banning Theranos Founder and CEO Elizabeth Holmes from owning or operating a clinical lab for at least two years.
Theranos also is withdrawing its September 2015 appeal of the sanctions imposed by CMS on the firm's Newark clinical lab. The federal regulator had imposed sanctions after finding quality control issues at that lab.
In return, CMS withdrew the revocation of Theranos' CLIA operating certificates and reduced its civil monetary penalty against the company to $30,000.
At issue had been problems uncovered by CMS at Theranos' laboratory in Newark, California that inspectors said could harm patients. When the firm failed to correct those issues, CMS moved to ban Holmes from the clinical lab business, and in July the agency revoked the lab's testing license.
Last fall, the agency found quality control problems at a second Theranos lab, in Scottsdale, Arizona, and this past February that lab's license was revoked.
Theranos said that as part of its business plans outlined last fall, it had already decided not to own any clinical labs and had exited that business, as well as the retail business, last year. It is now focused on developing its miniaturized automated, testing platforms and related chemistries.
Under another deal reached with the Arizona attorney general's office, Theranos will reimburse residents of that state for testing services "regardless of whether Theranos received payment for the tests, or whether the test results were voided or corrected," the company said in a statement.
Both the AG and Theranos intend to resolve all existing and potential claims against the firm, Theranos said, adding that the matter was settled "without any admission of liability."
The firm will not own or operate a CLIA-licensed laboratory in Arizona for two years, starting March 28, 2017. Theranos will also pay the AG's office $200,000 in civil penalties and $25,000 in attorney's fees and other legal costs.
The AG had signaled its intention to sue Theranos in January for its "long-running scheme of deceptive acts and misrepresentations,"
The Palo Alto, California-based company still faces several legal challenges, including a lawsuit by its former retail partner, Walgreens, which sued the firm in November for breach of contract. The same month, investor Robert Colman sued Theranos, saying it of made false and misleading statements about its operations and technology while seeking funding from investors.
In early January, the company said it was laying off 155 employees, or 41 percent of its workforce, to concentrate on commercializing its miniLab testing technology. Meanwhile, Holmes reportedly owes Theranos about $25 million.