Verily Sued by Former Executive Over Alleged HIPAA Breaches

What You Should Know: 

– Verily, a subsidiary of Alphabet, is facing a lawsuit from a former executive who alleges the company repeatedly covered up HIPAA breaches that affected more than 25,000 patients, CNBC first reports. 

– Ryan Sloan, who served as chief commercial officer for Verily’s diabetes and hypertension business, claims he was wrongfully fired after reporting his concerns to senior management. The lawsuit, filed in federal court in San Francisco, has not been previously reported

Allegations of Unauthorized Data Use and Retaliation

According to an amended complaint filed in June, Sloan and Julia Feldman, Onduo’s general counsel, discovered in January 2022 that Verily had improperly used patients’ protected health information. The lawsuit claims the “extensive violations” affected over 25,000 patients in the Onduo diabetes program. The data was allegedly used in research, marketing campaigns, press releases, and national conferences without authorization.

An internal investigation at Verily confirmed that multiple HIPAA breaches had occurred between 2017 and 2021. Patients who accessed Verily Onduo through clients such as Walgreens Boots Alliance, Highmark Health, Quest Diagnostics, and Delta Air Lines may have been affected.

The lawsuit alleges that Verily chose to delay notifying the impacted parties, and in August 2022, the company terminated Feldman and another employee who knew about the breaches. Sloan claims that when he raised his concerns again in October 2022, a Verily executive allegedly defended the decision not to disclose the breaches, citing potential negative effects on public relations. Sloan was officially terminated in January 2023 while on protected leave.

Verily’s Request to Dismiss Complaint Denied

A judge recently denied Verily’s request to dismiss Sloan’s civil complaint or send the dispute to arbitration. The lawsuit adds to a series of reported struggles for Verily, which has raised over $1 billion but has had difficulty establishing a winning product. The company has shifted its focus multiple times, from developing hardware to focusing on pandemic response, and then to precision health. Verily is reportedly transitioning to a C-Corp structure to prepare for a new round of funding.