Two former employees of NantHealth, owned by billionaire Dr. Patrick Soon-Shiong, are suing the company, alleging they were fired for objecting to illegal practices that could have hurt patients and the company's bottom line. A NantHealth executive described the suit as part of an attempt to extort money from the company.
Stephanie Davidson and William Lynch filed the lawsuit against the NantWorks subsidiary in U.S. District Court in Panama City, Fla., on Wednesday. They allege, in part, that the company engaged in fraudulent practices that could have devalued the company's stock and ended its initial public offering. NantHealth belongs to a network of companies Soon-Shiong has gathered to improve healthcare data sharing and computerized decision making, particularly related to cancer care.
NantHealth Chief Operating Officer Steve Curd called the lawsuit “baseless” in a statement.
“This lawsuit was filed after Nant turned down a demand by Ms. Davidson and her boyfriend, Mr. Lynch, for $2 million with an accompanying threat that unless Nant paid, Ms. Davidson and Mr. Lynch would launch a smear campaign filled with false and damaging information,” Curd said. “The facts are the allegations are false, Ms. Davidson was employed for less than three months and Mr. Lynch for less than nine months and both were terminated by the chief operating officer for improper behavior.”
Curd said Davidson reached out to Soon-Shiong after she was fired, asking him to reverse the decision and he declined. That's when Davidson's lawyer demanded the company pay $2 million, Curd said.
The lawsuit alleges that Davidson, a former senior vice president, and Lynch, a former senior marketing director, were fired after voicing their objections about certain activities to their superiors and others. The pair claimed that the company's products did not perform as their marketing materials and labels claimed. They also alleged that the products posed “significant patient safety, compliance and security risks.”
According to the lawsuit, the company paid for a mock Food and Drug Administration audit that raised a number of issues, including that, “Although it may seem that your product cannot create risk to the patient, if a customer misuses the device, it could cause a hazard to health and these issues are reportable to the FDA ...,” according to the lawsuit.
Soon-Shiong also personally requested a report that found the company's clinical operating system was 10 years behind in its technological capabilities, according to the lawsuit.
More than a dozen hospitals and health systems across the country have had problems and incurred large costs as a result of the malfunctioning products, according to the lawsuit.
The lawsuit also alleges that NantHealth illegally used CMS money through a joint venture with Phoenix Children's Hospital and the city of Phoenix.
“By way of example, Defendants' foundation would donate 10 million dollars into the joint venture, which would then use that money to obtain matching funds from CMS of 30 million dollars,” according to the lawsuit. “In return, the joint venture agrees to purchase products and services from Defendants.”
Davidson and Lynch are seeking lost wages; damages for mental anguish and loss of dignity; and attorney fees, among other requests.
Follow Lisa Schencker on Twitter: @lschencker
