The Arizona Attorney General’s Office is soliciting proposals from law firms interested in furnishing professional legal services on a contingent fee basis on behalf of the State of Arizona to pursue Consumer Fraud Action related to Theranos.
In October, the head of Theranos, Elizabeth Holmes, issued an open letter, in which she announced that the failing blood testing company would be closing all of its clinical labs and Wellness Centers, including those in Arizona.
According to Techcrunch.com, “Partner Fund Management (PFM), a San Francisco-based hedge fund that reportedly wrote out a $96 million check to Theranos back in 2014, is now suing the blood-testing startup and its founder, Elizabeth Holmes, saying it was duped into its investment “through a series of lies, material misstatements, and omissions,” and accusing the firm of engaging in “securities fraud and other violations by fraudulently inducing” it to invest and to maintain its investment in the company.”
The AG’s Notice Of Request For Proposal reads in part:
A. PURPOSE
The purpose of this contract is to retain Outside Counsel to aid the Arizona Attorney General’s Office (the AGO) in commencing legal action against Theranos, Inc. and its closely related subsidiaries for violations of the Arizona Consumer Fraud Act arising out of Theranos Inc.’s long-running scheme of deceptive acts and misrepresentations relating to the capabilities and operation of Theranos blood testing equipment, including but not limited to deceptive acts and misrepresentations made to Arizona consumers in connection with Theranos Wellness Centers in Arizona and California. Upon retention, Outside Counsel will assist the AGO on a contingency fee basis per the terms set forth in this Request for Proposal.
B. BACKGROUND
Beginning in October 2015, news reports (most notably those by the Wall Street Journal) have reported on facts and events (including relating to past governmental investigations) that raise serious concerns regarding the operations at Theranos, Inc. and the basis for claims made by Theranos, Inc. regarding the capabilities of its blood testing devices and the services those devices were said to perform, which devices and services were marketed to Arizona consumers. These news reports were accompanied by notices and letters from federal regulators regarding the operations at Theranos, Inc. and the validity of its testing—in particular, a July 2016 letter from the Centers for Medicare & Medicaid Services detailing failings at the company and imposing a ban on certain senior leadership from owning or operating a medical laboratory for at least two years.
C. GOALS
Litigation in this matter would be brought under the Arizona Consumer Fraud Act, A.R.S. § 44-1521 et seq., on behalf of the State of Arizona. Such litigation would seek to recover civil penalties, disgorgement, restitution, attorneys’ fees, costs, potential injunctive relief and other equitable relief, and any other appropriate relief, after consultation with the AGO. The Attorney General will consider seeking all or any combination of these remedies.