Theranos Trial: United States vs. Elizabeth Holmes, Day 17 (Four Corners)

It took a month and a half, but the government finally made its case. Former Walgreens executive Wade Miquelon's testimony boxed in the defense: having argued contractual language supersedes Elizabeth Holmes' verbal statements to investors and journalists, Holmes was confronted with clauses stating Theranos promised to use its own analyzer for blood tests. You can't have it both ways: either the contracts rule, or Elizabeth Holmes' words matter.

Walgreens and Theranos signed two master agreements, and Holmes personally signed both of them. In the contracts, the device to be used for blood testing was specified as homegrown: the "Theranos' reader" or the "Theranos' analyzer, the Theranos patient interface and sample collection tools." Since no exceptions were listed, per unambiguous contractual language, Theranos could not use third party devices for blood tests. The fact that both contracts limited the definition of device to Theranos' own product indicates consistency and purpose. By citing integration clauses, thus supporting a "four corners of the document" approach, Holmes' lawyers left themselves no wiggle room against Walgreens' diligent lawyers.

Not only did Miquelon lay the foundation to admit Walgreens' agreements with Holmes, he confirmed his understanding matched the contract: "blood would be tested on the Edison," an understanding also derived from discussions with Elizabeth Holmes. To the extent third-party devices were used, Miquelon believed they were for "calibration" purposes only--matching former Safeway CEO Steven Burd's testimony. (The difference is that Safeway's lawyers didn't limit the devices Theranos could use in the contract, or if they did, we didn't see the language.)

"Project Normandy Briefing" slides: "Lowest cost, highest quality testing from a finger-stick." (January 16, 2012)

In separate document, under the heading "Theranos' finger-stick based laboratory": "no regulatory risk."

Did issues arise in the multi-year partnership? Yes, but according to Miquelon, they were non-hardware-related, such as "medical billing," doctor relationships, insurance reimbursement, etc. In other words, Miquelon believed all delays were extraneous to Theranos' device, which means either Holmes lied or Miquelon is lying--at least if we want to honor the contract's definition of device. Unfortunately for Holmes, Miquelon's credibility was never damaged on cross-examination. In fact, the defense meandered into seemingly irrelevant subjects like stock prices. ("If you can't dazzle them with facts, baffle them with bull"?)

Poor defense lawyer Kevin Downey. Normally excellent, he didn't have much to work with. After spending substantial time on a Johns Hopkins report lauding Theranos, government lawyer Jeffrey Benjamin Schenk obliterated everything with a single page: "The materials provided [herein] in no way signify an endorsement by Johns Hopkins to any product or service." For "internal purposes only." Ouch.

Today, Wade Miquelon provided the wooden stake for the government, then hammered it into the coffin. RIP Elizabeth Holmes. 

© Matthew Mehdi Rafat (2021) 

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