Startup got $219 million for dubious COVID tests
GOP leaders helped turn fledgling Utah group into key player
When boxes of personal protective equipment for the Tennessee Department of Health arrived at a warehouse outside Nashville early in the COVID-19 pandemic, Michelle Fiscus was aghast.
As Tennessee’s top vaccine official, Fiscus knew the gear came from Nomi Health – a small Utah startup with no public health experience.
Yet, the Republican governor’s office, on the recommendation of a GOP lobbyist, had pushed the state’s health department to sign a $26.5 million contract with Nomi about a week earlier on May 1, 2020. The contract called for Nomi to provide vital equipment and COVID-19 tests to hundreds of sites across Tennessee. Speed was crucial because the virus was
surging and had already killed around 70,000 people across the U.S.
Fiscus had hoped to receive thousands of gown sleeves, masks and disinfectant for front-line medical workers. Instead, Nomi had sent thousands of pink bovine insemination gloves, wipes labeled “for veterinary use” that didn’t kill the COVID-19 virus and low-quality face masks, she said.
Not what Tennessee expected
“My first reaction was: ‘Oh, my God. You have to be kidding me,’ ” Fiscus told USA TODAY in an interview last month. “Then it was, ‘What are we supposed to do with this?’ The whole attraction of contracting with Nomi was that they were supposed to provide much-needed PPE, and we were sitting with this.”
Led by Mark Newman, an entrepreneur who had created an on-demand video interviewing service, Nomi was part of a group of four politically wellconnected Utah firms that came together as the COVID-19 pandemic worsened in March 2020.
Nomi would essentially act as a general contractor for the enterprise, setting up testing sites, hiring nurses and staff, and purchasing testing equipment. It would use COVID-19 tests supplied by Co-Diagnostics, a molecular testing company that had “no major customers” in 2019, according to the company’s annual report. Rounding out the Utah team were two software firms – Domo and Qualtrics – that provided electronic dashboards and test surveys.
The unsuitable PPE gear revealed Nomi’s inexperience, Fiscus said in her USA TODAY interview.
Newman, the company’s chief executive, didn’t dispute that Tennessee received bovine gloves, saying they were a supplement to other, appropriate supplies. But emails among Tennessee health officials and photos that Fiscus provided USA TODAY confirmed her allegations that the equipment was not what the state expected.
So, how did an upstart, inexperienced company and three collaborators from Salt Lake City’s emerging tech hub become key players during the worst infectious disease crisis in more than 100 years?
It came down to who they knew.
Tens of thousands of tests
A USA TODAY investigation based on more than 30,000 documents and dozens of interviews found that a web of money, business relationships and connected political leaders in at least five states tipped the scales in favor of Nomi and the three companies associated with it. These Republican leaders in Florida, Iowa, Nebraska, Tennessee and Utah awarded $219 million in contracts for tens of thousands of COVID-19 tests and PPE despite Nomi’s inexperience in public health.
The quartet of Utah businesses, like many firms during the pandemic, capitalized on limited oversight as elected officials in states and at the federal level offered no-bid government contracts under emergency powers to deal with the health and economic crisis.
Infectious disease officials from those states in interviews and internal emails were stunned that they were not consulted or offered the opportunity to lead the testing efforts. Lawmakers in Nebraska questioned why their highly regarded university hospital was bypassed in favor of Nomi. Further, major companies like Thermo Fisher Scientific, whose test kit was on the market two weeks before Co-Diagnostics’ and with a long track record of making testing products, lost out to Co-Diagnostics.
Thermo Fisher said it had up to 5 million COVID-19 tests available a week as of mid-March and more than 10 million a week in May as it sold its tests around the country.
The problems, however, went beyond PPE mishaps in Tennessee and political favoritism.
‘Inconsistent’ results
Tennessee’s Health Department reported that Nomi Health’s tests were “inconsistent,” and it spent nearly $6 million to pull out of its contract with the company about 45 days after signing on. Nomi officials said the money was paid for services provided.
Nomi officials did not say whether they disclosed the report to the other states despite multiple attempts from USA TODAY to get them to answer the question.
Governors or their spokespeople in Florida, Iowa, Nebraska and Utah either did not respond to questions about the Tennessee report or did not express concern when told about it by USA TODAY.
USA TODAY also found that the Tennessee Public Health Laboratory in late May had concluded the state had “no confidence” that the testing would “provide reliable and reproductive results.”
The state, with the report in hand, terminated its contract for testing sites, supplies and technology support with Nomi on June 15, 2020, saying the company failed to provide suitable lab machinery and personal protective equipment “free from material defect.” Further, the state “reasonably determined” that the actions of Nomi and its subcontractors “have caused, or reasonably could cause, life, health, or safety to be jeopardized.”
“The report is accurate and factual,” said now-retired Tennessee Public Health Laboratory Director Richard Steece, who approved the “verification/ validation” report that was reviewed by five other lab officials. “The thing to remember is that Nomi was not a diagnostic manufacturing company. They were a group of businessmen with no experience in diagnostics that saw an opportunity to make some money.”
Despite the report, however, Nomi continued to be paid millions of dollars from the other states for its testing services over the following months.
To be sure, the federal Food and Drug Administration says no COVID-19 tests are perfect (though Co-Diagnostics claimed in May 2020 that its tests had 100% sensitivity and specificity). Yet Nomi’s testing system gave “people a false sense of security that what they have is not COVID,” and they could easily transmit the disease, said Fiscus, the Tennessee vaccine official who now lives in Virginia.
“No test is 100%, but these were not good,” said Fiscus, who was fired in July 2021 after she created a firestorm with conservative lawmakers for encouraging Tennessee teenagers to get vaccinated for COVID-19. She filed a lawsuit against the state, alleging her reputation was damaged. The case is ongoing.
Newman told USA TODAY that Nomi’s tests were safe and accurate, and he dismissed the Tennessee report as an outlier. He said internal politics within Tennessee’s Health Department hurt Nomi, and the state had one of the worst records in dealing with the pandemic and reopening its economy.
“Tennessee as a state, as it relates to COVID, was dysfunctional on its best days. It had one of the worst responses in the nation,” Newman said. “Frankly, they convinced us to come. … Candidly, we showed up and did great work, and everything was performing like it was supposed to.”
Co-Diagnostics noted that Tennessee’s report found the company’s PCR test “performed as expected,” and said its lab customers have “each individually validated the performance” of its tests.
“Our customers know first-hand the capabilities of the company’s testing products which is why they have earned many repeat orders,” Co-Diagnostics said in a June statement to USA TODAY.
In Nebraska, Alex Reuss, a spokeswoman for Gov. Pete Ricketts, said the state already was several months into its Test Nebraska program when Tennessee canceled its contract, and Nebraska “had already independently conducted our own validation of the tests provided by Nomi Health at the state lab.”
She said those results showed sensitivity at 95%, which means the Nomi test only missed people who had the disease 5% percent of the time. Tennessee ended its contract after finding Nomi’s test showed sensitivity at just below 91%.
Fiscus, the Tennessee doctor, said “missing nearly one in 10 positives wasn’t acceptable.”
Email records among health department officials in Utah, Iowa, Nebraska and Tennessee show infectious disease and health experts expressed concern about the reporting and accuracy of the Nomi tests, although no other state ended its contracts.
“Department staff raised questions about the performance of the Nomi Health testing process with this department’s leadership,” said Joe Dougherty, a Utah Health Department spokesman.
He added that “current department staff doesn’t know what information “was shared with the governor or lieutenant governor’s offices or the response from those leaders.
Dougherty said his agency did not conduct an independent validation of the Co-Diagnostics COVID-19 test because the state had depended on federal authorization for the test.
A nationally renowned laboratory in Utah offered to verify the quality and accuracy of Nomi’s COVID-19 tests when state health department officials raised concerns about the tests in late April and early May 2020.
Nomi, however, “declined to participate in that effort,” according to the Associated Regional and University Pathologists Inc. in Salt Lake City.
In her USA TODAY interview, Fiscus said she was pleased when the validation report prompted the state to end Nomi Health’s contract in Tennessee.
That’s because the first round of state testing was to be done in low-income communities with large populations of people of color, groups hit hard by and suffering worse than others from COVID-19. Black people were among the most likely to have died from COVID-19 in Tennessee – and the rest of the country – during the first year of the coronavirus pandemic, according to records compiled by The COVID Tracking Project at The Atlantic.
“We couldn’t use a test that we knew was not reliable, especially in that population,” Fiscus said.
‘We needed more tests’
Shortly after President Donald Trump declared a national emergency in response to COVID-19 on March 13, 2020, Utah’s business groups – especially tech firms that are part of the state’s “Silicon Slopes” community – and politicians began to mobilize to support Utah affected by the crisis.
Lt. Gov. Spencer Cox, a farmer turned politician, was running for Utah governor and was appointed the COVID-19 czar.
He has repeatedly defended and praised Nomi’s testing efforts.
“I didn’t care if they were 90% or 100% accurate; we needed more tests,” he told USA TODAY. “Would you rather have 1,000 tests at 90% (accuracy) or 100 tests at 100% accuracy? Yes, they may not have been as accurate, but they were not deeply flawed.”
Cox said he doesn’t recall any conversations with Nomi regarding the Tennessee validation report.
Cox had close ties to leaders in Silicon Slopes. He was often a speaker for the business group whose board included chief executives from Domo and Qualtrics, two of the companies aligned with Nomi in the testing business.
Cox also was well connected to Sen. Mitt Romney, the 2012 Republican nominee for president who would lend a hand to Co-Diagnostics, which was having trouble getting approval from the FDA for its tests.
Co-Diagnostics, which was selling its COVID-19 tests in Europe, began seeking FDA approval in early February. But its tests were stalled at the agency because doctors there wanted more validation information and data regarding limit of detection, the lowest concentration of a substance that can be reliably distinguished with a specific analytical method.
Meanwhile, the FDA on March 13 gave emergency approval to Thermo Fisher for its COVID-19 test, just 24 hours after it was submitted to the federal government, according to the FDA.
Denny Crockett, who at the time was director of global business development for infectious disease at Co-Diagnostics, had reached out to Romney’s office on March 15, following a recommendation from Kelvyn Cullimore Jr. the former Republican mayor of Cottonwood Heights, a Salt Lake City suburb.
‘Happy to connect them’
Cullimore, president and chief executive of the 200-member association BioUtah, sent an email that same day – a Sunday – to his friend Dr. Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health, which granted emergency applications.
Cullimore wrote at 8:37 p.m. on behalf of Co-Diagnostics, saying he was working with the Utah governor’s task force and that “we see the benefit of having this test to use. Can you advise as to when this may be cleared for distribution?”
Shuren quickly responded that CoDiagnostics had not submitted a formal emergency use authorization request, but “I would be happy to connect them with an appropriate person on our team.” The two finished their email exchange around 11 p.m.
“We were trying to make sure the Co-Diagnostics test was going to be cleared and utilized to have testing here,” Cullimore told USA TODAY in late June. “My role was to see if there was any way to expedite it in the right channel and not have it stuck in some bureaucratic dead end.”
By the end of the month, Romney’s office had lobbied the FDA for Co-Diagnostics, according to a March 27 email from Jess Pavel, a congressional staffer. That email to Crockett and Newman said the FDA told Romney’s office that its tests were validated on March 19.
Also on March 27, Cox, then lieutenant governor of Utah, informed state Health Department executives that he had “reached out” to Romney’s team and “they went straight to the FDA and were told that the preliminary approval is sufficient . ... Please tell your teams that we need to move heaven and earth to get more testing.”
Jennifer Napier-Pierce, a spokeswoman for Cox, said the governor doesn’t recall having a direct conversation with Romney. Instead, it “may have been a staff-to-staff conversation,” she said.
Romney’s office did not return a request for comment. The company received emergency use authorization for its COVID-19 test on April 3.
Jim McKinney, an FDA spokesman, said it’s common for the agency to receive correspondence from elected officials on a variety of FDA-related matters, including policy updates. He noted, however, that the Center for Devices and Radiological Health did not specifically receive any inquiries from Romney or other Utah congressional offices related to Co-Diagnostics.
While Cullimore, Cox and Romney were working on behalf of Co-Diagnostics, Newman, as CEO of Nomi, was becoming the corporate face of the testing initiative at public events and internet podcasts. And he acknowledged he was learning on the job.
“I have been trying to learn as fast as everyone else,” Newman said with a chuckle during a podcast on March 25, 2020. “If a clinician is listening to this and says ‘That guy doesn’t know what he’s talking about,’ just call me up and help educate me. We are trying to move as fast as we can.”
On April 2, Cox as well as Utah Gov. Gary Herbert and Silicon Slopes tech leaders announced a public-private partnership called TestUtah that would be run by Nomi. TestUtah promised to help more than double the state’s testing capacity to 6,000-plus COVID-19 tests a day.
The goal: Find people who have COVID-19, get them treated, slow the spread of the deadly disease and reopen the economy.