Why Verily’s promise of precision health faces precision scrutiny
A whistleblower is suing Alphabet, claiming that Verily, its health tech subsidiary, breached proper protocol for handling the sensitive health data of 25,000 patients.
Ryan Sloan, a former executive with Verily, claims the company retaliated against him and that he was fired after discovering and reporting to senior management violations of the Health Insurance Portability and Accountability Act (HIPAA). This legislation provides protections for patients’ health information, including limiting how the data is accessed and used.
Sloan worked for Verily’s subsidiary, Onduo, prior to taking a role with Verily. He alleges that in early 2022, he and Julia Feldman, the general counsel for Onduo, discovered that the company had improperly used patients’ protected health information for marketing and research purposes. The violations affected patients in Onduo’s diabetes program, according to reporting by CNBC.
Sloan and Feldman informed senior leadership of their findings in January 2022, according to the filing, and an internal investigation confirmed that several HIPAA violations had occurred.
“Between January and March of 2022, internal investigators at Verily confirmed multiple breaches of fourteen (14) separate HIPAA Business Associate Agreements with large, covered entity clients of Onduo between 2017 and 2021,” the filing said.
Companies are required to notify impacted parties within 60 days of discovering a HIPAA breach—but the company did not, according to the suit. Rather, it “decided to delay the decision of notifying the covered entities” and went on to negotiate contracts with companies that included Walgreens Boots Alliance, Highmark Health, Quest Diagnostics, and Delta Air Lines.
CLAIMS OF COVER-UP
The filing alleges that when Sloan raised his concerns, the company’s actions were defended by a senior manager because disclosing the HIPAA violations would negatively affect public relations. What’s more, the company allegedly suppressed a press release out of concern it would draw attention to previous marketing studies that violated its HIPAA business associate agreements, and instructed employees not to mention it again.
Sloan was terminated from Verily in January 2023 while on protected leave to care for his mother, who was critically ill, according to the filing. Feldman and another employee who were aware of the HIPAA violations were also terminated.
Although Sloan’s allegations against the tech giant are part of a lawsuit that was filed last year, it had not been previously reported, according to CNBC.
JUDGE DISMISSES VERILY MOTION
On Monday, the federal judge overseeing this case struck a blow to Verily. The judge denied the company’s request to dismiss Sloan’s civil complaint or send the dispute to arbitration.
In the dismissal filing, the judge noted that Sloan has stated a claim for breach of contract and that “Verily does not dispute that if there were a contractual term for non-retaliation, whether express or implied, [Sloan] has pled sufficient facts to show that Verily retaliated against him in violation of that term.”
That dismissal means that Sloan’s claims can move forward with legal proceedings.
In a statement to CNBC, a Verily spokesperson said: ″Verily believes the allegations and contentions alleged in this employment matter that was commenced in 2023 are completely without merit. Verily will defend itself to the full extent of the law.”
VERILY BACKSTORY
Verily started in 2015 as an independent life sciences company within Alphabet’s innovation lab X. The moonshot company is meant to tackle the biggest challenges in health sciences with the use of tools, services, and software. The company originally developed devices like continuous glucose monitors before transitioning to pandemic response during the COVID-19 outbreak.
Its accomplishments include WastewaterSCAN, an initiative led by Stanford University, along with Emory University and Verily, to develop and scale a national wastewater sentinel system that can be used to inform public health measures to mitigate the spread of infectious diseases. (SCAN stands for “Sewer Coronavirus Alert Network.”)
But Verily has failed to achieve the types of successes that might be warranted, given the $1 billion-plus that’s poured in from investors. And now the company plans to restructure in anticipation of a fresh round of investment. According to Business Insider, Verily is reportedly planning to transition from a limited liability company (LLC) to a C corporation, which is a business structure generally considered to be more investor-friendly.
Last month, Verily slashed an unspecified number of jobs and shut down its medical devices program. As part of these changes, the company will focus more on artificial intelligence and data.
