A Chicago-based COVID-19 testing company that used ties to the Democratic governor to operate in Nevada missed 96% of the cases it tested there, ProPublica reports.
An investigation eventually showed that Northshore Clinical Labs had a long list of deficiencies at its operations, which included not providing training to all of its employees, not following instructions from the test manufacturers and not performing quality control measures properly.
The state's problems began last fall when Northshore decided to expand its operations and looked to Nevada, where the contractor the company used had connections.
While Northshore Clinical Labs is a three decade-old business, it was taken over in July 2020 by new leadership with no known history in clinical labs, but with fraud allegations in their past: brothers Hirsh and Gaurav Mohindra and associate Omar Hussain.
The Mohindras previously operated a debt collection business until 2016 when the Federal Trade Commission accused them of running a scheme bullying people into paying off debt they didn’t owe. They agreed as part of their settlement to never work in the debt collection business again. Hirsh Mohindra also served prison time for an unrelated mortgage fraud case.
Hussain was accused by the FTC of involvement in a phantom debt-debt collection ring related to the Mohindras' case, and he also agreed to a ban on working in debt collection.
The trio decided to take their COVID testing operation nationwide in 2020, when they contracted with Greg and Angelo Palivos, who have ties to Chicago and Las Vegas, to manage their operations and build a customer base. Their father, Peter Palivos, is a heavy Nevada campaign contributor with close ties Democratic Gov. Steve Sisolak.
The Palivos first needed a statewide testing license, and turned to lobbyist Mike Willden, a former director of the Nevada Department of Health and Human Services, for help. Willden had once worked on an unsuccessful venture with their father.
Willden told ProPublica he helped the Palivos brothers because he thought there might be a shortage of testing.
“My understanding was there was a license pending, and in this world of testing where it would take three to five days to get results and everybody was calling me frustrated,” Willden said. “I said, ‘Look, here’s someone who can help you with testing.’”
Willden's request got the ball rolling, and Northshore was able to jump the line over other labs in the approval process. This frustrated state employees, who saw it as favoritism, but Willden said the state was "getting broad pressure to help speed up testing and results. I seriously doubt my inquiries carry that much weight."
Northshore received a license to operate for Clark County, home of Las Vegas, only and never completed paperwork to operate statewide but still pushed statewide operations by dangling the promise of free testing to counties.
Northshore managed this by billing the federal government under a program for the uninsured. Those with insurance were encouraged not to provide their information to allow for billing through the federal program.
Once Northshore got its first signees, more joined in based on the recommendations of other governmental leaders. No one did deep background checks on the company because they trusted those making the recommendations and assumed they had done the vetting. And it was an emergency situation.
But the company's plan eventually began to unravel when inconsistent results began hitting the Washoe County School District and the University of Nevada Reno. Rapid tests were giving negative results while the follow-ups were coming back positive for many people, including those with symptoms.
Dr. Cheryl Hug-English, medical director of the University of Nevada student health center in Reno, began to suspect something, noting a 96% failure rate. Not satisfied with the company's response, she had other labs double-check the results.
Eventually, state officials listened and the company shut down its operations in the state, but not before multiple people who had tested positive for COVID had gone about their routines in public, likely infecting others, as state statistics showed a rapid rise in the omicron variant in the areas that contracted with Northshore.
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