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Report: Arizona prepares to sue blood-testing company Theranos for fraud

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PHOENIX — Arizona is making steps to sue the blood-testing company Theranos Inc. for fraud, which could make it the first government agency to do so, The Wall Street Journal reported.

Theranos is a private health care company that came under hot water in 2015 after it was discovered that the company’s technology was producing inaccurate test results.

According to a document obtained by The Journal, Arizona Attorney General Mark Brnovich is seeking outside counsel to aid in the legal action against Theranos for violating the Arizona Consumer Fraud Act.

The document claimed that Arizona is pursuing legal action against Theranos for its “long-running scheme of deceptive acts and misrepresentations…made to Arizona consumers” relating to the blood-testing equipment.

A spokeswoman for Brnovich told The Journal that they could not comment on “any potential ongoing consumer-fraud investigations” and representatives for Theranos declined to comment.

Arizona would be the first government entity to sue the blood-testing company if the action moves forward. Theranos is also facing a high-profile lawsuit from Walgreens, which partnered with Theranos in 2013 to offer in-store blood tests at multiple locations.

Theranos had a blood testing center in Scottsdale and in October 2015, the Arizona Department of Health Services reported that the lab had trouble meeting regulations. The lab shut down nearly a year later.

The company had a large influence on Arizona legislation and received lots of support from state lawmakers.

Theranos’ founder Elizabeth Holmes personally lobbied the Arizona Legislature and Gov. Doug Ducey. In 2015, Ducey signed a bill — at the Scottsdale lab — that allowed people to get a blood test without a doctor’s order.

The Wall Street Journal first reported on the company’s failures in October 2015, unveiling that Theranos used traditional blood testing machines to run its test as opposed to the company’s Edison machines, which occasionally produced false results.

By January 2017, Theranos had laid off nearly half of its staff and closed most of its operations. The company will now focus on miniature testing machines, Holmes said.

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