Billionaire surgeon Patrick Soon-Shiong has developed quite the high profile – regarded as a kind of Tony Stark of health care.
His hush-hush startup, NantHealth, has attracted hundreds of millions in capital to improve cancer care through precision diagnostics – but the startup is now under scrutiny for being “engaged in a multitude of fraudulent activities.”
According to Matthew Herper over at Forbes:
Behavioral Health, Interoperability and eConsent: Meeting the Demands of CMS Final Rule Compliance
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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.)
Notably, the suit centers partly around NantHealth’s interest in filing for a $4 billion IPO. Given the general secrecy surrounding NantHealth, this move is certainly indicative of a recent trend in biotech to trust the buzz (cough, Theranos, cough.) According to the lawsuit:
“However, within a short period of time, Plaintiffs soon discovered that the Defendants were engaged in a multitude of fraudulent activities, which would, if known to investment bankers, customers, and the public, would substantially devalue the company’s stock and likely cause the end of the IPO.
Forbes explains the details:
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
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 CelgeneCELG +1.71%, 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.”
In essence, NantHealth’s product meant to up device and EHR interoperability’s been a bust in terms of customer satisfaction, and has gone against the HIPAA privacy laws.
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.
Read the whole Forbes piece here.
