Outcome Health investors receive DOJ subpoenas as Chicago-area hospitals back away

The Justice Department is subpoenaing investors in Chicago-based Outcome in the wake of a lawsuit accusing the prominent information and advertising startup of committing fraud to secure nearly $500 million in funding.

The orders from federal investigators, revealed in court documents filed by investors Thursday, come as hospitals and health care advertisers back away from the fast-growing company, which places interactive screens and tablets in doctors’ offices. The court filing indicates investors also anticipate inquiries from the Securities and Exchange Commission.

The investors — including units of Goldman Sachs and Google and a fund co-founded by gubernatorial candidate J.B. Pritzker — sued Outcome Health, CEO Rishi Shah and President Shradha Agarwal on Tuesday in New York. The lawsuit followed a Wall Street Journal report last month that said some Outcome Health employees charged pharmaceutical companies for ads on more video screens than the company had installed.

Outcome Health has denied the lawsuit’s allegations and has hired former U.S. Attorney Dan Webb to review issues raised in the Journal’s story.

Speak Your Mind