In the highly contested Theranos prosecution, U.S. District Court Judge Davila dismissed three counts from the indictment.

About Theranos Company

Theranos is a health care and life sciences company founded by CEO Elizabeth Holmes. Theranos’ mission was to revolutionize medical laboratory testing through innovative methods of drawing blood, testing blood, and diagnosing patients. Theranos sought to develop a device termed the Theranos Sample Processing Unit, Edison, or minilab that could quickly and accurately analyze blood samples.

The Indictment charges Holmes and her COO Ramesh Balwani with eleven counts alleging that they defrauded doctors, insured patients, and investors about the viability of Theranos’ blood testing technology. The government claims that the promises of the devices were never realized and that the device created “consistently” produced inaccurate and unreliable results. The government further claims that despite these failures, Theranos began a publicity campaign to promote the technology and sold the tests at Walgreens in California and Arizona.

After hearing oral argument on defendants’ motions to dismiss, Judge Davila issued an order directing the government to clarify in a bill of particulars the specific fraudulent representations at issue and to detail who made the misrepresentations to doctors and patients and how they were made. Judge Davila stated that he wanted to avoid the defense team facing surprise at trial. Judge Davila also held that the government had failed to allege how Holmes and Balwani had a “specific intent” to defraud doctors and patients whose insurance paid for the test because the indictment doesn’t specify how those patients and doctors were deprived of money or property. As a result, the judge dismissed one conspiracy count and two wire fraud counts involving insured patients and doctors.

Judge Davila, however, rejected defendants’ argument that they never misrepresented the accuracy and reliability of the blood tests to patients. The judge stated that it was clear from the indictment that patients did not receive the benefit of the bargain.

Even though defendants will face trial on the eight remaining counts, Judge Davila’s order will provide them with better tools to fight. Particularly, the bill of particulars will provide a roadmap of the government’s case and permit Holmes and Balwaini to strategize a defense case.

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