By Erik Larson | Bloomberg
Walgreens Boots Alliance Inc. has agreed to pay $44 million to settle class action claims by consumers who received flawed blood tests in Arizona and California through the pharmacy chain’s partnership with Theranos Inc.
The proposed settlement, which needs court approval, will provide consumers who participated in the lawsuit with “approximately double their out-of-pocket damages,” lawyers for plaintiffs said in a court filing Wednesday in federal court in Phoenix.
The lawsuit accused Walgreens of being “willfully blind” to fraud at Theranos and entering into a partnership with the startup even though it had good reason to suspect its finger-prick testing technology didn’t really work.
Lawyers for the company and consumers filed a notice of a tentative settlement in May but did not disclose the amount of the deal or any other terms. The initial agreement was struck after US District Judge David Campbell ordered the case to go to trial.
According to the filing, lawyers for the consumers said they believed the evidence would support a finding against Walgreens but acknowledged the judge had said the company had “potent” defense arguments, including that it was also defrauded by Theranos.
Elizabeth Holmes, the founder and former chief executive officer of Theranos, was convicted of fraud last year and sentenced to 11 1/4 years in prison. The company’s former president, Ramesh “Sunny” Balwani, was also found guilty by a jury and is now serving a 13-year sentence.
According to the filing, a separate deal with Balwani will allow another $1.3 million to be paid to the settlement fund, but that “an agreement with Ms. Holmes, unfortunately, could not be reached.”
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