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Erika Cheung, Theranos Whistleblower, Speaks at National Whistleblower Day 2023 — Transcript

by National Whistleblower Center · 2,703 words · 382 segments · language en · Watch on YouTube

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0:01hello everyone uh I want to say thank
0:03you to the National whorer Center for
0:06having me and I wanted to thank Sharon
0:08as well for inviting me to this it's
0:10been uh truly a beautiful experience and
0:13I think um what Cynthia had said as well
0:16is when you walk into one of these
0:18events as a whistleblower and you hear
0:19everyone's stories you walk out a whole
0:21new person it's like the catharsis of
0:24really hearing all the sharing and
0:26really understanding that this
0:28experience and what happens to you is
0:30really the issue that can produce all
0:32these sort of personal consequences that
0:35in many moments you think it's something
0:36wrong with you but really is the
0:38circumstance that you're going through
0:40so I wanted to to kind of ask you guys
0:43because Theos is a fairly recent story
0:45it's had an immense amount of media
0:47coverage how many of you guys have sort
0:48of heard the case can I get a show of
0:50hands majority of the people so that
0:52makes my life a little bit easier and
0:55kind of giving a bit of a primer of what
0:57was going on and I'll share with you
0:59guys sort of what my concerns were in
1:02working for the company and and what I
1:05kind of saw from my perspective being a
1:08lab associate uh at the company it was
1:12my first job out of college and
1:13essentially what I was doing was working
1:16on thanos's proprietary technology to
1:19test patients through a finger stick
1:22versus a Venus draw and to give them
1:24their patient samples and while I was
1:27doing this job essentially what I was
1:29noticing saying is when we were running
1:32the quality assurance test for it there
1:34was huge variability in the results we
1:37were getting so say if I have a patient
1:41that's coming in uh before I run that
1:43patient I will run something called a
1:45quality control this quality control is
1:47telling me this person has you know 14
1:50nanograms of vitamin D in their blood
1:53and I know this is the answer and when I
1:55was running it through the Theos devices
1:57it'd come out 200 it'd come out two it
2:00come
2:01out 50 all for the same exact uh sample
2:06that was meant to be 14 and so this was
2:09happening not just for oneoff samples
2:11just for Vitamin D it was happening for
2:13syphilis and all your infectious disease
2:15it was happening for cancer Diagnostics
2:18it was happening for thyroid panels it
2:20was happening for whether your
2:22medication was appropriately clotting
2:25your blood or not real serious
2:28consequences to getting
2:30um the wrong result on this you know 70%
2:33of all medical decisions are decided
2:36through testing and particularly blood
2:40testing and so working as a young
2:42employee and working with these devices
2:44and seeing
2:46that there was just such high frequency
2:49of these errors happening and they were
2:51happening across the board I had
2:53attempted to essentially report
2:55internally like something's not quite
2:57right here I don't know what's going on
2:59and and it's very difficult I'd say in a
3:01startup setting because a lot of things
3:04don't work there's no processes there's
3:06no procedures there's no compliance
3:07department or anything you're really all
3:10in it together trying to build up this
3:13sort of baby company into something big
3:15even though Theos was 200 employees and
3:18had a lot of people it was still a
3:20burgeoning company because it was such
3:23an ambitious task of essentially in
3:26their words revolutionizing lab
3:28Diagnostics which was uh something that
3:30hadn't quite been done at that scale and
3:33with the amount of money that Theos had
3:35had because they had raised about $700
3:36million at a $9 billion valuation to
3:39sort of push forward that
3:41initiative um part of the issue through
3:45the reporting process is initially when
3:47I would talk to my lab supervisors and
3:49say hey what's kind of going on here I
3:52think a lot of them would say go talk to
3:55that person go talk to this person I
3:57don't know what's quite going on here or
4:00oh we dealt with this you need to go
4:02talk to your new boss in the clinical
4:05lab and see uh what what errors and
4:08issues are kind of going on there and
4:10the problem that you have in a startup
4:12environment is your new boss has only
4:14been working there for a month because
4:17to be a tenur employee at Theos if you
4:20worked there for two years you were
4:23considered a senior employee because the
4:25turnover on average was something like s
4:28months so even for people who were in
4:31positions of power and positions of
4:32expertise you couldn't really rely on
4:34them because they were just as lost if
4:36not more lost than you were because they
4:38just started and this is a dynamic I
4:41think that you see in these these early
4:43companies uh more so than than other
4:45types of companies um I had gone and
4:48reported all the way to the COO and when
4:51I had told the COO essentially that um I
4:55was concerned about the different issues
4:57that we were seeing in the laboratory
4:59cuz I had anticipated that maybe there
5:01was a Chasm between what was happening
5:04at the operational floor and what the
5:06executive management knew uh he
5:08essentially just said um you are a
5:11recent grad out of UC Berkeley have you
5:14ever taken a statistics class do you
5:15know anything about statistics I need
5:18you uh person with no visibility in this
5:21company to stop raising alarm and you
5:24need to tell me tomorrow if you want to
5:27work for this company anymore and you
5:29need to do the job I pay you to do which
5:32is to process patient samples without
5:35question so this was kind of the
5:38feedback that I had gotten from the clo
5:40based on accumulating all this evidence
5:42of all the different issues that we were
5:44seeing for these lab test and then I had
5:46even taken my concerns to the board and
5:49so George Schultz was one of the board
5:51members he uh was um essentially his
5:56grandson had worked for the company so I
5:59had uh called up his grandson who ID
6:02worked the night shift with to sort of
6:03report these concerns and essentially he
6:08said uh similarly like basically I told
6:12George Schultz in a dinner that I had
6:15had with him that what he thought he was
6:17investing in and that the company was
6:19doing which was essentially creating
6:21this one device that you could take the
6:23blood sample you could put it in there
6:25and it' pop the results was not at all
6:27what was going on what really was
6:29happening
6:30is the moment that people like George
6:32Schultz or all these VIP investors came
6:34in the door and got their blood sample
6:36and saw the little machine working
6:38essentially they would take the blood
6:40sample out of the machine they'd run it
6:43through a back door there would be a
6:45back laboratory where there would be six
6:47different teams on standby one of my one
6:49of those teams being mine and they'd
6:51split it through all these different
6:52Jerry rig devices to accommodate this
6:55small sample of blood and the only
6:58device that there know actually produce
7:00that was their own IP had failure rates
7:04up to 53% half the time that's really
7:07what was happening and when I told um
7:10George schultzes he said you know you
7:11seem very smart my grandson I know is
7:14very smart but I brought a lot of smart
7:16people into this deal and they all say
7:18it works and maybe you should look for
7:19another
7:21job and later I found out that it was
7:24actually a big issue even reporting to
7:25the board that they considered me kind
7:27of uh a problem basic basically that I
7:30made a real mess of things that is quote
7:31unquote I think what George salt said
7:34about me when I had come to his place
7:37for dinner so you can tell from that
7:40experience I'm 22 23 years old I have no
7:43idea what to do right it's like going
7:46from being very idealistic expecting to
7:49get out of college you want to make a
7:52big difference and a change in the world
7:54provide affordable accessible
7:55diagnostics for people and the next
7:57thing you know this is your first
7:58company they like whoo is this how the
8:00whole Healthcare infrastructure works
8:03and um luckily kind of to Sharon's Point
8:06what happened is because at this point I
8:08didn't know about Regulatory Agencies I
8:10didn't know uh to talk to a lawyer I had
8:14no idea what my options were because I
8:16thought okay there are these people that
8:18are doing this horrible things and I
8:20feel completely disempowered and who do
8:22I turn to and the idea I think in my
8:25case because I was so young hiring a
8:27lawyer is like that's going to bankrupt
8:29you we need to not go that route and had
8:32no idea that many of them work on
8:34contingency and many will support
8:37certain whistleblower cases pro bono um
8:40that will kind of go to my notion of
8:42improvements one of these things is
8:44really building awareness especially for
8:47younger people who are entering into
8:48some of these companies I think is
8:50really crucial because they don't know
8:52uh that these programs exist in addition
8:55to the fact I think for myself I never
8:57considered myself a whistleblower or
8:59even knew what that was until the media
9:01started really calling me that um so
9:05fast forward uh to talking to John KERO
9:10who worked for the Wall Street Journal
9:12and when John called me at my new
9:15workplace and he said Erica I know you s
9:18signed a non-disclosure agreement you're
9:20very freaked out because you uh have
9:23been told that if you say anything about
9:25what's going on in Theos that there will
9:27be repercussions legal repercussion
9:30but I heard from other people just like
9:32you that what Theos claims to be doing
9:35they're not actually doing and in fact
9:37they're endangering the lives of
9:38patients and it was
9:40like okay there's that door there's that
9:43channel to really get the truth out and
9:46to let people know about what is going
9:48on behind closed doors in this company
9:51so I was one of the early sources for
9:54John K R's uh
9:57reporting um and
9:59and honestly working with the media is a
10:02bit complicated as well like luckily
10:04there are great uh U investigative
10:08journalist that can do a good job in
10:10really examining the case and I think I
10:12got very lucky working with John because
10:14he had worked in healthc care fraud for
10:16a long time he understood what we were
10:19going up against and what kind of forces
10:23were going to uh kind of push back on
10:26the story to give you context rert
10:28Murdoch was actually an investor in
10:30Theos and so that makes ital he owns The
10:34Wall Street Journal and so Elizabeth
10:36Holmes was calling up the Wall Street
10:38Journal to essentially get the story
10:40suppressed and luckily he decided to run
10:43it but it gets very complicated because
10:45there were just so many Heavy Hitters
10:47who were on the investment board and um
10:51in addition to just investors within the
10:53company so uh luckily the story went
10:58public and and honestly when the story
11:00first came out it was really
11:02underwhelming because I think it was so
11:04technical I didn't know if people were
11:05going to understand what was actually
11:07happening but then John was such a good
11:09journalist that he was able to kind of
11:11pull the thread of all the different
11:13Fraud and Abuse cases and claims that
11:15were happening and so then um it really
11:19sort of took more steam over time
11:21because I'd say when people first heard
11:24of the fact that this was actually what
11:25was going on that Theos was lying
11:27there's more push back than there was
11:30acceptance of the reality of what was
11:32happening people were like they're
11:33trying to bring down a female founder
11:36this is what everyone tries to do they
11:38try and suppress the innovator and I say
11:40this is unique to startups in the
11:42Silicon Valley it is uh overwhelmingly
11:46libertarian there is this sentiment that
11:50uh rules governance uh legislation
11:54policy this is all there to kind of
11:57suppress our capacity to do things that
11:59we have never done before and I think
12:02this is something at least if you're
12:03working on the west coast in the Silicon
12:05Valley that people have to really pay
12:07attention to that that sort of uh ethos
12:11of um you just don't understand what I'm
12:14trying to do I'm above the law because
12:16I'm in a whole category of my own
12:18because we are doing something so
12:20outside of the purview of what people's
12:23Paradigm is that we can get away with
12:26doing all of these sort of egregious
12:28things because it's just part of the
12:31process of doing something different and
12:34so you have to be careful with that
12:35mindset but I think it's very very
12:37strong amongst people in entrepreneurial
12:40Endeavors maybe it's more prominent in
12:42the Silicon Valley because there is a
12:44bit of a disconnect between the west
12:46coast and uh engaging with policy makers
12:51versus companies that are on the east
12:52coast in New York or or all these other
12:55areas so I think that's something to
12:56definitely pay attention to um who did
12:59you report to that got the lab shut down
13:01finally yeah so I also reported to the
13:04media and then I reported to a
13:05regulatory agency uh the center of
13:08Medicaid and Medicare Services
13:10essentially they are the agency in
13:13charge of allowing companies
13:16to uh process patient samples or not
13:20daros operated in this bizarre loophole
13:24so because they had developed and built
13:27the devices on site the tests that they
13:32were running were considered laboratory
13:34developed tests so they were not
13:36regulated under the FDA because they
13:39were not Distributing medical
13:42devices the only medical device that was
13:45actually being distributed were these
13:46little blood vials for collection and
13:48that's the only thing that the FDA could
13:50really ding them on the regulatory
13:53agency in charge of them was Clea or
13:56were the Clea amendments and was CMS
13:59and so that's why it was this very
14:02obscure kind of agency that was able to
14:04essentially pull them from what I was
14:06most concerned about was the fact that
14:08they were still testing on
14:10patients um to sort of shut them down
14:12and to say uh you're no longer able to
14:15test patients so I think CMS came in and
14:17said that they're borred from running a
14:18patient sample for 10 years there was
14:21minor sanctions put up against them but
14:24they found like 40 to 60 deficiencies in
14:26the laboratory for all the patient
14:28samples but that is what finally shut
14:30them down it is finally what shut them
14:32down which was great but y'all can hear
14:34from Erica's story that there's just no
14:36place you know that we don't have enough
14:39knowledge about where to go when you
14:41want to report abuse of power and fraud
14:43and Corruption I I quite often I speak
14:46to audiences everywhere where when I
14:49talk about the office of The
14:50Whistleblower within the SEC it's a big
14:52surprise that over a billion dollars of
14:55rewards have been paid out to
14:56whistleblowers it's just too much of a
14:59closely guarded secret and I think we we
15:01do need more information out on um what
15:05is out there and avenues to go but we've
15:07got um some time we want to hear from
15:09bbec um sorry we're we're running a
15:11little bit over but we want to make sure
15:13we hear from him and the academic
15:15research area as well and um and you
15:20know once again look to National
15:21whistleblower Center for how we can all
15:23get involved to improve things for
15:26whistleblowers
15:28[Applause]

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