Theranos Trial: United States vs. Elizabeth Holmes, Day 18 (It's All Over but the Crying)

It's gone from bad to worse for the defense. Yesterday, the government proved Elizabeth Holmes signed two Walgreens contracts promising to use homegrown Theranos devices for blood tests. Today, the government established interstate wire transfers occurred during the same times Holmes knew Theranos was using the Siemens Advia--a non-Theranos device--for blood testing.

In addition to meeting its burden of proof on at least one claim of fraud directly involving Elizabeth Holmes, the government introduced Nimesh Jhaveri, another former senior Walgreens executive. If Wade Miquelon delivered the knockout blow, Jhaveri stood above Holmes and counted her out.

Jhaveri is impressive. Diminutive but agile both mentally and physically, he embarrassed the best lawyer in the room during cross-examination. Defense lawyer Kevin Downey continued focusing on contractual language, saying minimum fingerstick metrics weren't part of the master agreement. In response, Jhaveri, who obviously reads and negotiates contracts, said they could have been mentioned in "SOWs." (Statements of Work and change orders are addenda to master agreements allowing the team executing the overall contract to fill in gaps lawyers neglected.) It's unclear whether Downey knew about SOWs, because he didn't follow up. Downey, having no real counter-attack, later asked if Jhaveri would want Theranos using a device that had failed QC, the implication being Theranos was prudently avoiding its own devices until it resolved issues. A few days ago, Downey's implication would have been welcomed as common sense; today, it looked desperate.

Jhaveri showed both parties, in writing, expected less than 50% of blood draws to come from the venous method. Over time, Walgreens expected venous draws to decline to 20%, then 10%, then 5% or less. Though Walgreens, in writing, anticipated venous draws declining to 20% or less by February 2014, then to 10% or less by August 2014, the parties extended the 20% maximum threshold to August 2014 and the 10% threshold to October 2014. Theranos missed the revised deadlines, thus harming Walgreens' ability to cut costs while improving patient experience.

Jhaveri explained a venous draw requires a licensed phlebotomist but a fingerstick does not. By eventually reducing the need for a specialist from 50% to 5% of blood draws, Walgreens could satisfy 95% of patient blood tests at any location while directing esoteric blood tests to its 24-hour stores. Staffing costs would be reduced, savings could be diverted to improving ambiance, and patients would receive blood tests faster and cheaper. Everyone would win, except for the phlebotomists.

"The innovation was [supposed to be] the fingerstick." -- Nimesh Jhaveri

As it became clear Theranos could not fulfill its side of the deal, Walgreens walked away. Jhaveri unequivocally stated his expectation was exactly what the contract said: blood would be tested on Theranos' devices. His explanation of why the fingerstick method was essential tied everything together. (To summarize, lower regulatory costs and better patient experiences would increase both sales and profits.)

Government: "Did you know that Theranos was using non-Theranos devices to test fingerstick draws?"

Jhaveri: "No."

By August 15, 2014, Jhaveri testified he still did not know non-Theranos devices were being used. He remembered Elizabeth Holmes demonstrating what a Walgreens customer would experience. She used a fingerstick. 

© Matthew Mehdi Rafat (2021)

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