HHS-OIG Issues Notice of Exclusion to Founder and CEO of Theranos, Inc.

Inspector General Christi A. Grimm announced today that the Department of Health and Human Services (HHS) Office of Inspector General (OIG) excluded Elizabeth Holmes for 90 years from participation in Federal health care programs due to her January 2022 conviction in the United States District Court, Northern District of California for wire fraud and conspiracy to commit wire fraud against Theranos, Inc. (Theranos) investors.

The statutory minimum for an exclusion based on convictions like Holmes’s is five years. When certain aggravating factors are present, a longer period of exclusion is justified. The length of Holmes’s exclusion is based on the application of several aggravating factors, including the length of time the acts were committed, incarceration, and the amount of restitution ordered to be paid.

Holmes was sentenced in May 2023 to 11 years in federal prison. Holmes was ordered to pay approximately $452,047,200 in restitution due to her offense resulting in a significant financial loss to entities and adverse financial impact to other individuals. Holmes founded Theranos, Inc. in 2003 and served as its CEO and Chairperson. Under Holmes’s direction, Theranos claimed to have developed proprietary technology that was able to run several clinical diagnostic tests on small amounts of blood from a finger prick instead of through veinous draws. During her trial, the government presented evidence that Holmes knew the Theranos device was never able to complete more than a small number of blood tests and the results were less accurate than traditional or conventional blood testing machines. Holmes’s false claims about Theranos induced investors to provide millions of dollars in funding and, in two instances, to develop plans to partner with the company so that the Theranos technology could be made available to provide health care services to their customers and patients.

HHS-OIG has authority under 1128(a) of the Social Security Act to exclude from participation in Medicare, Medicaid and other Federal health care programs individuals who have been convicted of certain crimes, including criminal offenses related to health care fraud. An exclusion is an administrative sanction that protects Federal health care programs and the people they serve by prohibiting payment for any health care item or service furnished, ordered, or prescribed by an excluded person.

HHS-OIG previously excluded Theranos President, Ramesh Balwani, for 90 years. Balwani was convicted for conspiracy to commit wire fraud against Theranos’s patients and investors.

“Accurate and dependable diagnostic testing technology is imperative to our public health infrastructure. False statements related to the reliability of these medical products can endanger the health of patients and sow distrust in our health care system,” said Inspector General Christi A. Grimm. “As technology evolves, so do our efforts to safeguard the health and safety of patients, and HHS-OIG will continue to use its exclusion authority to protect the public from bad actors.”