Whistleblower Lawsuit Calls Billionaire Patrick Soon-Shiong's Healthcare Startup 'Fraudulent' And Dangerous
1-15-15
Forbes
Click to read lawsuit, comments and embedded links
http://www.forbes.com/sites/matthewherper/2015/01/15/lawsuit-says-billionaires-health-venture-is-fraudulent-and-could-harm-patients/
On the television newsmagazine “60 Minutes” and in a cover story for Forbes, Patrick Soon-Shiong, the world’s richest doctor, has promised that his new company, NantHealth, can dramatically improve care for cancer patients everywhere. “I’m incredibly encouraged to say that we are on the path,” Soon-Shiong told 60 Minutes’ Sanjay Gupta. “And the technology to actually do all these things is not just hypothetical.” He told me: “My quest was and is to improve the quality of life through science.”
But a lawsuit filed yesterday in Panama City, Fla., where some of the operations of NantHealth are based, alleges that the company is anything but a dramatic leap forward. Instead, two former employees say that NantHealth is “engaged in a multitude of fraudulent activities” and broke laws related to health privacy and billing. The former employees say NantHealth and its parent, NantWorks, ignored their warnings “of the potential harm their products were exposing their patients to.” (Read the lawsuit here.)
The claims in the lawsuit raise doubts about a planned initial public offering of NantHealth, which has collaborations with cell phone maker Blackberry, which is providing hardware for its next generation devices, and biotech giant Celgene CELG +2.92%, which is using the company’s technology to study experimental drugs.
The plaintiffs had senior roles at Nant. Stephanie Davidson was hired last August as NantHealth’s Senior Vice President, Professional Services. William Lynch was hired last March and was promoted on August 4 to head NantHealth’s marketing as the Senior Director of Marketing. They both relocated to Panama City, a Metro Area in the Florida panhandle with a population of 170,000. The two lived together and were in a relationship.
“This lawsuit was filed after Nant turned down a demand by Ms. Davidson and her boyfriend Mr. Lynch for $2 million with an accompanying threat that unless Nant paid, Ms. Davidson and Mr. Lynch would launch a smear campaign filled with false and damaging information,” said Steve Curd, NantHealth’s Chief Operating Officer, who says he terminated both plaintiffs for “improper behavior.” He adds: “The facts are the allegations are false.”
Nant’s software and hardware are intended to link together different hospital devices in ways that current electronic medical records like those made by Epic Systems of Verona, Wisc., and Cerner CERN +2.36%, of Kansas City, Mo., can’t. In this way, every device connected to a patient, from a heart monitor to an insulin pump, would automatically collect data in real time. But the suit says that when Davidson arrived, she found that the technology violated privacy requirements put in place by the Health Insurance Portability and Accountability Act of 1996 and wasn’t up to Food and Drug Administration regulations.
Moreover, she says, Nant’s customers were rebelling. The suit claims the chief information officer of Piedmont Healthcare was threatening to stop working with Nant and to warn other hospitals not to upgrade either. She says 14 other customers were about to “throw out” Nant’s product. She also says an internal report commissioned by Soon-Shiong found that Nant’s Clinical Operating System (cOS), “as a platform, is ten years behind in technology capability. It is not ready for large enterprise use, much less for cloud deployment.” The report found the system was unreliable and “runs on LUCK.”
Davidson also alleges that NantHealth and Soon-Shiong’s charitable foundation may have worked to defraud the government. She says that NantHealth was using money from the Centers for Medicare and Medicaid Services (CMS) “in an unlawful and fraudulent manner. The suit alleges that, as an example, Soon-Shiong’s charitable foundation might donate $10 million to a joint venture between NantHealth and Phoenix Children’s Hospital, which would then use the money to obtain matching funds from CMS of $30 million. Then the joint venture would purchase products and services from NantHealth, essentially making the government pay for Nant products and getting additional funds, too.
Lynch alleges that Nant made misleading claims in marketing materials including “true patient engagement,” interoperability, security, safety, ongoing viability of its system for tracking patient vital signs, and the functionality of genetic and protein-based cancer tests. The suit alleges that many customers were incurring huge costs as a result of NantHealth’s products not working properly.
Davidson and Lynch claim they were fired after she told Laura Beggrow, NantHealth’s executive vice president, commercialization, that she was worried that misrepresenting the capabilities of the company’s products might harm Soon-Shiong’s reputation. They are suing under a Florida law that prohibits employers from firing employees for reporting violations of laws or regulations to superiors or authorities.
Curd, the NantHealth COO, points out that Davidson was employed for less than 3 months and Lynch for less than 9. “When Ms. Davidson was fired she reached out to the CEO requesting that he reverse the COO’s decision to terminate her saying, ‘I love what we are doing and believe in the company’,” he says. “When this reversal was denied her lawyer sent repeated requests for a $2 million payment to avoid a smear campaign. Nant denied the payment request and the couple filed this baseless lawsuit filled with inaccuracies and false statements.” A call to the lawyer representing Davidson and Lynch was not returned.
1-15-15
Forbes
Click to read lawsuit, comments and embedded links
http://www.forbes.com/sites/matthewherper/2015/01/15/lawsuit-says-billionaires-health-venture-is-fraudulent-and-could-harm-patients/
On the television newsmagazine “60 Minutes” and in a cover story for Forbes, Patrick Soon-Shiong, the world’s richest doctor, has promised that his new company, NantHealth, can dramatically improve care for cancer patients everywhere. “I’m incredibly encouraged to say that we are on the path,” Soon-Shiong told 60 Minutes’ Sanjay Gupta. “And the technology to actually do all these things is not just hypothetical.” He told me: “My quest was and is to improve the quality of life through science.”
But a lawsuit filed yesterday in Panama City, Fla., where some of the operations of NantHealth are based, alleges that the company is anything but a dramatic leap forward. Instead, two former employees say that NantHealth is “engaged in a multitude of fraudulent activities” and broke laws related to health privacy and billing. The former employees say NantHealth and its parent, NantWorks, ignored their warnings “of the potential harm their products were exposing their patients to.” (Read the lawsuit here.)
The claims in the lawsuit raise doubts about a planned initial public offering of NantHealth, which has collaborations with cell phone maker Blackberry, which is providing hardware for its next generation devices, and biotech giant Celgene CELG +2.92%, which is using the company’s technology to study experimental drugs.
The plaintiffs had senior roles at Nant. Stephanie Davidson was hired last August as NantHealth’s Senior Vice President, Professional Services. William Lynch was hired last March and was promoted on August 4 to head NantHealth’s marketing as the Senior Director of Marketing. They both relocated to Panama City, a Metro Area in the Florida panhandle with a population of 170,000. The two lived together and were in a relationship.
“This lawsuit was filed after Nant turned down a demand by Ms. Davidson and her boyfriend Mr. Lynch for $2 million with an accompanying threat that unless Nant paid, Ms. Davidson and Mr. Lynch would launch a smear campaign filled with false and damaging information,” said Steve Curd, NantHealth’s Chief Operating Officer, who says he terminated both plaintiffs for “improper behavior.” He adds: “The facts are the allegations are false.”
Nant’s software and hardware are intended to link together different hospital devices in ways that current electronic medical records like those made by Epic Systems of Verona, Wisc., and Cerner CERN +2.36%, of Kansas City, Mo., can’t. In this way, every device connected to a patient, from a heart monitor to an insulin pump, would automatically collect data in real time. But the suit says that when Davidson arrived, she found that the technology violated privacy requirements put in place by the Health Insurance Portability and Accountability Act of 1996 and wasn’t up to Food and Drug Administration regulations.
Moreover, she says, Nant’s customers were rebelling. The suit claims the chief information officer of Piedmont Healthcare was threatening to stop working with Nant and to warn other hospitals not to upgrade either. She says 14 other customers were about to “throw out” Nant’s product. She also says an internal report commissioned by Soon-Shiong found that Nant’s Clinical Operating System (cOS), “as a platform, is ten years behind in technology capability. It is not ready for large enterprise use, much less for cloud deployment.” The report found the system was unreliable and “runs on LUCK.”
Davidson also alleges that NantHealth and Soon-Shiong’s charitable foundation may have worked to defraud the government. She says that NantHealth was using money from the Centers for Medicare and Medicaid Services (CMS) “in an unlawful and fraudulent manner. The suit alleges that, as an example, Soon-Shiong’s charitable foundation might donate $10 million to a joint venture between NantHealth and Phoenix Children’s Hospital, which would then use the money to obtain matching funds from CMS of $30 million. Then the joint venture would purchase products and services from NantHealth, essentially making the government pay for Nant products and getting additional funds, too.
Lynch alleges that Nant made misleading claims in marketing materials including “true patient engagement,” interoperability, security, safety, ongoing viability of its system for tracking patient vital signs, and the functionality of genetic and protein-based cancer tests. The suit alleges that many customers were incurring huge costs as a result of NantHealth’s products not working properly.
Davidson and Lynch claim they were fired after she told Laura Beggrow, NantHealth’s executive vice president, commercialization, that she was worried that misrepresenting the capabilities of the company’s products might harm Soon-Shiong’s reputation. They are suing under a Florida law that prohibits employers from firing employees for reporting violations of laws or regulations to superiors or authorities.
Curd, the NantHealth COO, points out that Davidson was employed for less than 3 months and Lynch for less than 9. “When Ms. Davidson was fired she reached out to the CEO requesting that he reverse the COO’s decision to terminate her saying, ‘I love what we are doing and believe in the company’,” he says. “When this reversal was denied her lawyer sent repeated requests for a $2 million payment to avoid a smear campaign. Nant denied the payment request and the couple filed this baseless lawsuit filled with inaccuracies and false statements.” A call to the lawyer representing Davidson and Lynch was not returned.