Theodore M. Sullivan has joined Quarles & Brady LLP‘s Washington, D.C. office as a partner in its Health & Life Sciences Practice Group.

Sullivan counsels and advises clients on Food and Drug Administration (FDA) regulations and matters related to over-the-counter drug regulation, drug exclusivity issues, food and dietary supplement labeling and advertising, and import detention of FDA-regulated products. He has worked closely with clients in guiding new drugs and medical devices through the FDA’s approval processes, and has assisted clients resolving conflicts with the agency regarding approved products.

He received his law degree, with honors, from Chicago-Kent College of Law and his bachelor’s degree from George Mason University.

Atlanta-based LabMD was a successful company that tested blood, urine, and tissue samples for urologists, and had about 30 employees and $4 million in annual sales. Then one day in 2008, the company’s general manager received a phone call from a man who claimed to be in possession of a file containing LabMD patient information, including more than 9,000 Social Security numbers, reports Bloomberg.

Then came the sales pitch: His company, Tiversa, offered an investigative service that could identify the source and severity of the breach that had exposed this data and stop any further spread of sensitive information — at a cost of about $38,000. After some back-and-forth, LabMD told Tiversa to direct all communication through its lawyers. Then the Federal Trade Commission came calling.

LabMD’s woes could end up finishing off the once-promising business.

Read the article.

ExamWorks Group, Inc., a leading provider of independent medical examinations, peer reviews, bill reviews, Medicare compliance services, case management services, record retrieval services, document management services and other related services, has announced that it has entered into a definitive agreement to be acquired by an affiliate of Leonard Green & Partners, L.P., for $35.05 per share in cash, representing a total transaction value of approximately $2.2 billion, as detailed in a company press release.

The merger is subject to approval from ExamWorks shareholders and other customary closing conditions and is expected to close in the third quarter of 2016.

Latham & Watkins LLP represented Leonard Green in the transaction with a corporate deal team led by New York partners Howard Sobel, John Giouroukakis and Paul Kukish with associates Michael Young in Orange County and Eyal Orgad and Andrew Ritter in New York. Advice was also provided on finance matters by New York partner Joshua Tinkelman with associates Sonja Pollack and Jake Burne; on regulatory matters by Washington, D.C. partner Stuart Kurlander and counsel Nicole Liffrig Molife with associates Michael Dreyfus and Robert Canning; on benefits and compensation matters by New York partner Bradd Williamson, London partner Catherine Drinnan and New York counsel Rifka Singer with associates Anisha Mehta in New York and Lucy Boyle in London; on intellectual property matters by New York partner Jeffrey Tochner with associate Tiana Hertel; on tax matters by Chicago partner Joseph Kronsnoble with associate Sarah Smoler; and on environmental matters by New York counsel David Langer.

ExamWorks’ Board of Directors, on the recommendation of a special committee composed entirely of independent directors (the “Special Committee”), approved the merger agreement and recommend that the Company’s shareholders vote in favor of the transaction.  In accordance with the merger agreement’s “go shop” provision, the Company will conduct a market test for 25 business days concluding June 1, 2016.

Richard Perlman, ExamWorks’ Executive Chairman and James Price, Chief Executive Officer, said: “ExamWorks started a little over eight years ago from a concept and with the hard work and commitment of each and every one of our 3,600 employees, has grown to be the industry leader servicing over 6,000 clients on a global basis generating almost $1 billion of annual revenues.  We are immensely proud of this accomplishment, which delivers significant value to our shareholders.  We also want to thank our clients for their strong support and assure them of our continued commitment to providing unparalleled services.”

John Baumer, Senior Partner of Leonard Green & Partners, L.P., said: “We are excited to partner with ExamWorks’ management team and organization.  We fully support the Company’s commitment to its clients and look forward to the next phase of the Company’s growth.”

Peter Graham, Chairman of the Special Committee, said: “The Company received an acquisition proposal from Leonard Green & Partners, L.P., and after extensive negotiations and careful consideration in conjunction with our advisors, the Special Committee of ExamWorks’ board has unanimously concluded that this transaction is in the best interest of our shareholders.”

The Company expects to release its Q1 2016 earnings press release on or before May 10, 2016.

Goldman, Sachs & Co. and Evercore Group L.L.C. are serving as financial advisors to ExamWorks.   Paul Hastings LLP is serving as legal advisor to ExamWorks.  Latham & Watkins LLP is serving as legal advisor to Leonard Green & Partners, L.P.  Fully committed debt financing is being provided by affiliates of BofA Merrill Lynch, Barclays and Deutsche Bank Securities Inc., each of which is also serving as a financial advisor to Leonard Green & Partners, L.P.

Elizabeth Holmes
Photo by Max Morse for TechCrunch

Federal prosecutors have launched a criminal investigation into whether Theranos Inc. misled investors about the state of its technology and operations, according to people familiar with the matter, The Wall Street Journal is reporting.

Walgreens Boots Alliance Inc. and the New York State Department of Health have received subpoenas in recent weeks seeking documents and testimony about representations made to them by the Palo Alto, Calif., blood-testing company, some of the people said.

Theranos once claimed it had made “breakthrough advancements” that made it possible to run “the full range” of lab tests on a few drops of blood pricked from a finger. But some regulators and former employees have voiced doubt about the tests.

“Theranos was valued at $9 billion in a funding round in 2014 and the majority stake of Elizabeth Holmes, the startup’s founder and chief executive, at more than half that,” The Journal reports.

Read the article.

Second Genome, Inc., a privately-held biopharmaceutical company developing novel medicines through innovative microbiome science, has closed an oversubscribed Series B investment round with $42.6 million in financing, co-led by Pfizer Venture Investments and Roche Venture Fund.

The company was advised in the financing by Latham & Watkins LLP corporate partner Mark Roeder and associate Alexander White in the firm’s Silicon Valley office.

The round brings the combined total investment in the company to $59 million. The round also included new investors Digitalis Ventures, Adveq, LifeForce Capital, MBL Venture Capital, and Mayo Clinic, as well as Series A investors Advanced Technology Ventures, Morgenthaler Ventures, Seraph Group, and individual investor Matthew Winkler, Ph.D.

The funds will be used to further expand the Second Genome Microbiome Discovery Platform in a range of indications associated with barrier function, insulin sensitivity, and immune regulation. In addition, proceeds from the financing will be used to advance the clinical investigation of SGM-1019, a small molecule inhibitor of a key microbiome-mediated target to address inflammation and pain in ulcerative colitis, through human proof-of-concept studies.

“Our approach to developing novel therapeutics based on secreted functional proteins, peptides, and metabolites from the microbiome is highly relevant to the pharmaceutical industry. The progress made by our team to date has allowed us to attract significant interest from a premier group of investors, including Pfizer Venture Investments and Roche Venture Fund,” said Peter DiLaura, Second Genome’s CEO. “This financing will enable us to accelerate our efforts to scale our unique microbiome discovery platform and reach several major inflection points, including key milestones for the SGM-1019 clinical program and other therapeutic programs.”

In conjunction with the new financing, Elaine Jones, Ph.D., Executive Director of Pfizer Venture Investments, and Carole Nuechterlein, Head of Roche Venture Fund, will join the Second Genome Board of Directors.

“Second Genome has demonstrated early success in accessing the previously overlooked and untapped potential of the microbiome in drug discovery and development,” said Dr. Jones. “The company has developed a unique platform and the deep scientific expertise required to create value by mining the microbiome to build a pipeline of novel therapeutics for a broad range of chronic conditions with high unmet medical need.”

Second Genome‘s Microbiome Discovery Platform combines genomics technologies, computational biology, and phenotypic screening to identify novel proteins, peptides, and metabolites from the microbiome that play a causal role in human disease and wellness.

A recently disbarred Kansas City lawyer pleaded guilty Wednesday to embezzling more than $1.2 million from St. Luke’s Health System, reports The Kansas City Star.

Alan B. Gallas, 64, previously worked for a law firm that collected from patients who were behind on payments to the hospital system. He waived his right to a grand jury and pleaded guilty in U.S. District Court in Kansas City to mail fraud.

“Gallas admitted that from 2009 to July 2015, he defrauded St. Luke’s Health System out of $1,224,264,” the report says. “He must pay that amount in restitution as part of Wednesday’s plea agreement.”

Read the article.

A physician signed a non-compete covenant, agreed to be enjoined if he breached, and allegedly did breach. But when his former employer asked a Providence, Rhode Island Superior Court judge to enter an injunction, the judge refused to prevent patients from being treated by a doctor of their own choosing, reports Paul E. Freehling of Seyfarth Shaw on the firm’s Trading Secrets blog.

The case involved a physician employed by a provider of health care services principally to nursing home residents. He signed an employment agreement with a non-competition covenant but several years late, he left the employer but continued treating its clients.  The company sued him and sought an order preventing him from competing with the provider.  The judge ruled, however, that the requested order would violate Rhode Island public policy.

Read the article.

Compliance Group will present a complimentary webinar on HIPA compliancy for business associates Thursday, April 21, beginning at 2 p.m. Eastern time.

HIPAA compliance for business associates has become critical, especially when they deal with medical professionals, Compliancy Group says on its website. This webinar will explain the law, what business associates need to know and do to be compliant, and how to differentiate a firm to acquire new and maintain current clients.

The webinar will cover:

• The steps on how to become HIPAA compliant as a Business Associate
• What an effective BAA should include
• How to help existing and new healthcare clients with compliance
• Why it is important to differentiate yourself as HIPAA compliant

Register for the webinar.

Abbott Laboratories didn’t cause medical providers to submit false payment claims to Medicare for unapproved stents, a Texas jury ruled, thwarting a whistle-blower’s lawsuit seeking as much as $1 billion, reports Bloomberg.

A former salesman for Abbott’s predecessor Guidant claimed the company pushed bile duct stents that were intended for short-term purposes for more complex vascular use. His 2006 lawsuit on behalf of the U.S. government accused the company of encouraging doctors and hospitals to code bills to Medicare falsely.

“Abbott, which acquired Guidant’s stent business in 2006, denied during the trial in Dallas federal court that it induced anyone to submit false claims to Medicare. Its lawyers told jurors the use of biliary stents for peripheral vascular or arterial disease was accepted medical practice and Medicare knowingly approved payments,” Bloomberg reports.

Read the article.

Now that Marco Rubio is out of the race, for the first time in U.S. political history, every presidential candidate — of both parties — supports at least states’ rights to do as they please with regard to marijuana legalization, according to a report in Rolling Stone.

Bernie Sanders, who pledges to end the drug war, is the most progressive on marijuana policy. And fellow Democrat supports states’ rights to legalize, but proposes to reschedule instead of deschedule cannabis, the newspaper says.

Donald Trump believes there should be more research on cannabis. Ted Cruz says he would not support legalization, but he believes states have a right to determine the legality for themselves. John Kasich also is opposed to marijuana use, but would defer to states’ rights, the report says.

Read the article.

A former vice president of the drugmaker that drew national criticism for raising the price of a parasite-fighting medication by 5,000% testified he was fired weeks after telling CEO Martin Shkreli the increase “was not justified,” reports USA Today.

The report says Howard Dorfman, also the former top lawyer for Turing Pharmaceuticals, told a Senate committee he joined managers who told Shkreli and other company officials that hiking the price from $13.50 per pill to $750 per pill “would have a severely negative impact on Turing’s business and reputation.”

Shkreli later resigned from Turing and now faces unrelated federal securities fraud charges.

Read the article.

Johnson & Johnson and its DePuy unit were ordered by a Texas federal jury on Thursday to pay about $500 million to five plaintiffs who said they were injured by Pinnacle metal-on-metal hip implants, Reuters reports.

Jurors deliberated for a week before finding that the Pinnacle hips were defectively designed, and that the companies failed to warn the public about their risks. The verdict at the conclusion of the two-month trial called for about $140 million in total compensatory damages and about $360 million in punitive damages.

A J&J spokeswoman said the company will appeal.

Mark Lanier of The Mark Lanier Law Firm, with offices in Houston, New York and Los Angeles, was lead trial counsel for the plaintiffs.

Read the article.

The Compliancy Group will present a free webinar focused on mitigation strategies Covered Entities and BA’s alike can take to minimize the risk of data breach or actions prompting an OCR Audit. The webinar will be Wednesday, March 9, beginning at 2 p.m. EST.

Healthcare IT thought leadership and practice managers continually seek ways to foster a culture of alertness when it comes to HIPAA compliance, the company said in a release. They have the dual challenge of staying on the right side of federal regulators and stopping would-be hackers. This is especially true given the potential impact a data breach can have on their organization’s reputation and bottom line. By reflecting on 2015, it becomes clear that covered entities and business associates alike will continue to prepare to mitigate the threat of cyber-attacks and the planned ramp up of OCR Phase 2 Audits.

The webinar will cover:

• Security risks that might initiate an OCR Audit or increase risk of data breach
• Why you should prioritize a Security Risk Analysis
• 6 Cyber Hacking prevention tips
• How to create a culture of a Cyber Security workforce
• What is TLS vs. SSL encryption and why you should care

Register for the webinar.

The computers at Hollywood Presbyterian Medical Center have been down for more than a week as the Southern California hospital works to recover from a Ransomware attack, reports CSO.

Officials at HPMC said they’re cooperating fully with the Los Angeles Police Department and the FBI in an effort to discover the identity of the attackers. But for now the network is offline and staff are struggling to deal with the loss of email and access to some patient data, the report says.

“The type of Ransomware responsible for shutting down the hospital remains unknown, but one local computer consultant said the ransom being demanded was about 9,000 BTC [Bitcoin], or just over $3.6 million dollars,” according to the report.

Read the article.

U.S. District Judge Sidney Fitzwater has entered a judgment of $9.6 million for medical products manufacturer ThermoTek Inc. after a jury found that a competitor fraudulently obtained the company’s business information for a series of physical therapy machines.

ThermoTek is the Flower Mound, Texas-based manufacturer of VascuTherm2, Vascutherm4 and other products that are used in the treatment of deep vein thrombosis (DVT) and other medical conditions.

In 2010, ThermoTek was sued by a distributor, which alleged faulty manufacture.

ThermoTek’s lawyers from the Dallas-based law firm Rose•Walker managed to move the case to Dallas, where Judge Fitzwater dismissed a number of the original claims. The attorneys then brought a counterclaim, alleging plaintiffs fraudulently obtained ThermoTek’s business information in order to design and sell their own products. During the litigation, some of the plaintiffs were sanctioned for failing to produce documents.

Read more details about the case.

Lincare, a major provider of in-home respiratory care and other services, will pay $238,900 in civil monetary penalties for violating the Health Insurance Portability and Accountability Act (HIPAA), federal authorities announced Wednesday, according to a report by Home Health Care News.

“This marks only the second time that the Office for Civil Rights (OCR) has imposed civil monetary penalties for a HIPAA violation. The penalty was challenged but now has been upheld by an administrate law judge (ALJ),” the report says.

The breach involved a Lincare branch in Wynne, Arkansas, doing business as United Medical. Faith Shaw worked as a manager there from 2005 until 2009. Shaw had stored records of 278 patients in her car, which she left behind when she moved out of her marital home in 2008. Her husband reported finding those records to the OCR.

Read the article.

NBTY, Inc., a global leader in vitamins, nutritional supplements and sports and active nutrition, has announced that it has entered into a definitive agreement to sell its U.S. retail business, Vitamin World, to Centre Lane Partners. The deal will enable Vitamin World to operate as a stand-alone retail business. Today, there are 380 Vitamin World stores in the United States, Guam, the Virgin Islands and Puerto Rico.

Latham & Watkins LLP advised NBTY on the transaction with a Washington, DC-based team led by corporate partner David Dantzic and tax partner Andrea Ramezan-Jackson.  Advice was also provided on employee benefits, intellectual property, environmental and real estate matters.

NBTY is the owner of several of the most recognized brands in the marketplace, including:  Nature’s Bounty, Sundown Naturals, Osteo Bi-Flex, Solgar, MET-Rx, Pure Protein, Body Fortress, Puritan’s Pride, Holland & Barrett and many others.

Centre Lane Partners is a private investment firm with investments in North American middle market companies across a broad range of industries. Centre Lane targets companies with revenues between $20 million and $500 million that have leading market positions and sustainable competitive advantages in their respective niches.

“Vitamin World has a long history of meeting its customers’ wellness needs. For some time, it has been clear that it should be a stand-alone business with the right investment and resources tailored to a retail operation,” said Steve Cahillane, President and CEO of NBTY. “With the shift of NBTY’s focus in our US business to investing in and building our core brands, this sale of Vitamin World to Centre Lane Partners will ensure Vitamin World has the right investment and focus on its future as a stand-alone retail business,” Cahillane added.

Mayank Singh, a Managing Director at Centre Lane, said, “We are enthusiastic about working with the Vitamin World management team and employees to position the business for long term growth and success.  They have done a terrific job of making Vitamin World one of the leading specialty retailers of vitamins, minerals and supplements and we want to build on that foundation.”

“The Vitamin World employees are dedicated to helping our customers meet their wellness goals,” said Sue Gove, President of Vitamin World.  “We are excited to begin this new journey with Centre Lane Partners and to continue giving Vitamin World’s loyal customers the best products and service in the industry.”

Vitamin World began in 1976 with a kiosk in Williamsville, New York. Today, there are 380 Vitamin World stores in the United States, Guam, the Virgin Islands and Puerto Rico.

NBTY is a portfolio company of The Carlyle Group.

Latham & Watkins LLP acted as legal advisor and Lazard Middle Market LLC as the financial advisor to NBTY in connection with the transaction. Katten Muchin Rosenman acted as legal advisor and Alvarez & Marsal as the financial advisor to Centre Lane Partners in connection with the transaction.

As a part of its complimentary HIPAA education series, Compliancy Group will present a webinar on best practices for preparing for upcoming 2016 HIPAA audits, with lessons and examples from past breaches and fines.

The webinar will be Thursday, Jan. 28, beginning at 2 p.m. Eastern time.

“With 2016 audits looming in the headlines there is no doubt you should be prepared for the long overdue, stricter audits.” the company says on its website. “Past violations will be analyzed: causes of the incidents, gaps, and remediation. Learn from experts about how to stay out of the headlines, avoid penalties and protect your reputation.”

Register for the webinar.

U.S. drugmaker Merck & Co. on Friday said it would pay $830 million to settle a federal class action lawsuit involving allegations the company failed to adequately inform investors about heart risks from its now-recalled Vioxx pain medication, according to a report on the Business Insurance website.

“The drug was approved by U.S. regulators in 1999 as a new type of treatment for pain and quickly became a blockbuster product, ultimately used by an estimated 20 million Americans,” according to a Reuters report. “But the company in 2004 recalled Vioxx from the market after a colon-polyp prevention study showed it more than doubled the risk of heart attacks or stroke after 18 months of use.”

The company’s cash payment for the settlement and fees will be about $680 million after reimbursement from insurance policies, Merck said.

Read the article.

Celgene Corporation has announced the settlement of litigation with Natco Pharma Ltd. of India, Natco’s U.S. partner, Arrow International Limited, and Arrow’s parent company, Watson Laboratories, Inc. (a wholly-owned subsidiary of Allergan plc) relating to patents for REVLIMID (lenalidomide), reports StreetInsider.com.

“As part of the settlement, the parties will file Consent Judgments with the United States District Court for the District of New Jersey that enjoin Natco from marketing generic lenalidomide before the expiration of the patents-in-suit, except as provided for in the settlement,” the story reports.

“Celgene has agreed to provide Natco with a license to Celgene’s patents required to manufacture and sell an unlimited quantity of generic lenalidomide in the United States beginning on Jan. 31, 2026.”

Read the article.