The COVID Testing Company That Missed 96% of Cases State and local officials across Nevada signed agreements with Northshore Clinical Labs, a COVID testing laboratory run by men with local political connections. There was only one problem: Its tests didn’t work.
by Anjeanette Damon
May 16, 2022 5 a.m. EDT
Co-published with The Nevada Independent and Block Club Chicago
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This article was co-published with The Nevada Independent and Block Club Chicago.
Last winter’s sports season had just begun, and the epidemiology staff at Nevada’s second-largest health district were busy calling the parents of high school athletes who’d tested positive for COVID-19.
A state mandate required unvaccinated or traveling athletes to get tested weekly. A nasal swab for an on-site antigen test produced rapid results in 15 minutes; a second swab was sent to an out-of-state laboratory for a more sensitive PCR test. Parents of students who tested positive on the rapid tests would get phone calls from the health district.
Because families already knew about positive rapid results, the phone calls should have been a routine follow-up to start tracking anyone who had had contact with the infected person. But for some reason, parents were repeatedly disputing that their children had the virus.
“These parents were pretty adamant that their kid was not a case and that they could play,” said Heather Kerwin, epidemiology program manager for the Washoe County Health District.
Heather Kerwin, epidemiology program manager for the Washoe County Health District Credit:Emily Najera for ProPublica
A pattern emerged. Athletes would test positive on the rapid test. But before a contact tracer could call, parents would learn from the testing company that their children’s PCR tests, typically the gold standard of COVID-19 testing, were negative, even for students with symptoms. Kerwin investigated and learned the University of Nevada Reno campus was seeing similarly conflicting results.
The university and school district had something in common. Both had recently hired the same company to conduct their testing: Northshore Clinical Labs.
The Chicago-based company was aggressively pursuing government customers in Nevada. In fact, as Kerwin was learning about the inconsistent results, Washoe County Assistant Manager David Solaro was negotiating with Northshore to provide testing for public employees and local residents. Kerwin thought county officials should know there might be a problem with the company’s tests, and encouraged her contact at the school district and her boss, COVID-19 Regional Operations Chief Jim English, to alert Solaro before an agreement was finalized.
Solaro signed the agreement anyway.
“Why did this go through without a discussion of their discordant results? This is going to cause absolute mayhem,” Kerwin wrote English when she learned the agreement had been signed.
English wrote back: “I tried. No one listens to me sorry.”
Credit:Screenshot highlighted and redacted by ProPublica
Kerwin’s instincts were right. As state scientists would later verify, something “catastrophic” was wrong with Northshore’s PCR tests.
A ProPublica investigation into the company’s operations in Nevada, including a review of more than 3,000 pages of internal emails obtained through public records requests, shows the Chicago laboratory’s testing was unreliable from the start. As evidence mounted that Northshore was telling infected people that they had tested negative for the virus, government managers in Nevada ignored their own scientists’ warnings and expanded the lab’s testing beyond schools to the general public.
Ultimately, state public health officials found that Northshore’s PCR tests missed 96% of the positive cases from the university campus — errors that sent people infected with COVID-19 back into the community. But to date, neither state nor county health officials have alerted the public to the inaccurate tests.
ProPublica’s investigation also found that Northshore used political connections, including contracting with the sons of a close friend to the governor, to fast-track its state laboratory license application and secure testing agreements with five government entities in the state. Those agreements not only gave Northshore the exclusive right to test and bill for thousands of people a week, they also gave its lab a legitimacy lacking among upstart testing companies that had set up shop in strip malls and parking lots across the country.
In mid-January, when state regulators finally launched an investigation into Northshore, they found the company had been operating unlicensed sites across Nevada. They allowed the company to continue its rapid antigen testing anyway.
Northshore, which said it had operations in more than 20 states, pitched free COVID-19 testing, telling local officials the tests would be paid for by individual insurance plans or a federal government program for the uninsured. But emails reviewed by ProPublica raised serious questions about the company’s billing practices.
In its pitch emails, Northshore told multiple government agencies it planned to bill the federal program for the uninsured even for those who might have insurance but declined to provide the information. In one case, a Washoe County School District official said in an email the company recommended insured individuals withhold their insurance information so the company could bill the government instead.
As of May 5, the company had collected nearly $165 million from the federal government, 11th most among more than 28,000 companies nationwide seeking reimbursement for testing uninsured individuals.
Northshore, through the public relations firm Weber Shandwick, repeatedly declined requests for interviews. After ProPublica provided the company with a summary of its findings, a spokesperson asked for additional time to address them, then responded: “Northshore declines to comment.”
Although demand for COVID-19 tests waned after the initial omicron surge passed, testing remains a key component of President Joe Biden’s pandemic mitigation strategy. What happened in Nevada offers a cautionary tale as local governments search for ways to provide testing through a system that relies on massive government spending to attract companies to meet the demand.
“It’s still a profit-hungry model,” said Alex Greninger, assistant director of the University of Washington’s virology lab. The guarantee of large payouts prompts companies to take on too many clients too quickly, he added: “Most groups get overwhelmed and exceed clinical capacity. Your operations fall apart.”
“I Do Not Understand Why This Lab Gets Preferential Treatment”
Northshore Clinical Labs has been in business for nearly three decades, but its leadership changed in July 2020. It is now run by three men with no apparent clinical laboratory experience and a history of fraud allegations: brothers Hirsh and Gaurav Mohindra and their associate Omar Hussain.
The Mohindra brothers have been involved in a variety of business pursuits unrelated to the medical field. Hirsh Mohindra was a real estate developer and Gaurav Mohindra lists himself on his LinkedIn page as an intellectual property lawyer.
Together they ran a debt collection business until 2016, when the Federal Trade Commission accused them of operating a scheme in which they bullied people into paying off debt they didn’t owe. As part of a settlement agreement, the brothers and a partner surrendered $9 million in assets and were banned from the debt collection business.
Hirsh Mohindra later served time in prison for an unrelated mortgage fraud case. He was released in February 2020, just as the pandemic was beginning and five months before his mother, Meena Mohindra, was listed as the new president of Northshore in Illinois Secretary of State filings.
In 2019, the FTC accused Hussain of participating in a phantom-debt collection ring with ties to the Mohindras’ case. He also agreed to a lifetime ban on debt collection activities and to surrender assets. The Illinois Secretary of State’s Office currently lists Hussain as Northshore’s president, replacing Meena Mohindra.
The Mohindras did not respond to requests for comment. Hussain declined an interview through a spokesperson.
Last year, the company began a dramatic national expansion. In Nevada, it contracted with Greg and Angelo Palivos, brothers with deep ties to both Chicago and Las Vegas, to build clientele and manage operations. Their father, Peter Palivos, is a prolific contributor to Nevada political campaigns and close enough with Gov. Steve Sisolak that the two met regularly in the early days of the governor’s administration. (Peter Palivos also served time in prison on an obstruction of justice charge related to a fraud case in Chicago, though he maintained he was set up by the U.S. Attorney’s Office for not helping prosecutors build a case against former Illinois Gov. George Ryan.)
The Palivoses’ first task was to get the lab licensed in Nevada. They turned to an influential ally for help: Mike Willden, a former director of the Nevada Department of Health and Human Services, who now works for The Perkins Company lobbying firm, run by former Assembly Speaker Richard Perkins. Willden had worked with Peter Palivos on a past health care venture that didn’t pan out.
Willden said he talked with the manager of the state’s licensing office, who explained to Northshore how to submit its application. But when the Palivos brothers thought it was taking too long, Willden called and emailed his contacts in the governor’s office and laboratory licensing bureau — an agency he had overseen as head of DHHS.
Willden told ProPublica he helped the Palivos brothers as a favor and because he thought the company could help address a dearth of testing capacity in Nevada.
“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.’”
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Poster Comment:
If this testing company was in Chicago, their first mistake was to hire them in the first place. Let the buyer beware.