When Things Go Wrong

A Friend posted this on my timeline. When customers start to sue you, things have really gone wrong.

Law360, Boston (June 30, 2016, 4:19 PM EDT) — A group of medical providers has slapped PerkinElmer‘s health sciences division with a lawsuit in Massachusetts state court accusing the lab technology company of selling a drug-detection machine with a “dismal performance.”
The AxION 2 Time-of-Flight Mass Spectrometer was launched in 2013, and PerkinElmer Health Sciences Inc. quickly learned that it took months to set up and often produced unreliable results that had to be retested for prescription and illegal drugs, the testing laboratories said in the suit, filed June 10 in Suffolk County Superior Court’s business litigation session. But the company failed to address the problems with the machine, the medical providers said.

“PerkinElmer touted its TOF Instrument as able to identify the type and quantity of substances in urine samples with exactitude, and as far superior to other competing technology in the marketplace,” the complaint states. “In reality, the TOF was incapable of accurately and reliably performing these functions, as laboratories across the country including plaintiffs discovered only after purchasing the TOFS.”

The labs — Medical Source Inc., Arkansas Spine and Pain, Physician Partners of America LLC, Palmetto Pain Management LLC and Beachway Therapy — are seeking full refunds, costs and multiple damages.

“The complaint contains a group of laboratories across the country that purchased equipment from PerkinElmer based on their description that the equipment was the best in the market and able to perform the tasks described,” Charles Steese, who represents the laboratories, said in an interview with Law360. “When the equipment was purchased, in reality, and as PerkinElmer knew full well, the equipment failed to operate, not only as described, but in any meaningful way at all.”

The suit comes amid an opioid epidemic that has been spurred in part by abuse of prescription painkillers. The labs said they needed to test their patients when prescribing certain medications to make sure they were following a pain-management plan and not abusing drugs. The labs also served people who needed to be tested for work or probation.

The labs said that PerkinElmer knew shortly after the first spectrometers were rolled out in 2013 that the testing device didn’t work as advertised, but it continued to sell the product anyway. Making matters worse, the competitor devices that actually worked for that purpose sold for only a fraction of the price of the AxION, the complaint says.

Beachway, based in Florida, was unable to use the spectrometer to reliably test for amphetamine, methamphetamine, MDMA, meprobamate, nordiazepam, EDDP, benzoylecgonine, hydrocodine and alprazolam, the complaint states.

Palmetto Pain specifically told PerkinElmer that it wanted to test for methadone and the active ingredient in marijuana, and PerkinElmer told it that the AxION could do that, the complaint says. That turned out to be incorrect.

Taken together, the failures mean that the device simply wasn’t meant for use in clinical commercial laboratories, despite PerkinElmer’s attempts to sell it that way, the complaint says.

Every time PerkinElmer was contacted to address the complaints, the medical providers said, the company blamed the providers’ own lab technicians.

The labs are suing for fraudulent inducement, fraudulent inducement by omission, negligent misrepresentation, breach of contract and warranty, and unfair or deceptive acts practices under Massachusetts, Connecticut, Florida, Arkansas, South Carolina and Tennessee law.

Several references to the device have been scrubbed from the PerkinElmer website; a YouTube video describing the spectrometer in minute technical detail is still available online, as is a brochure with technical specs. The company says in the brochure that its spectrometer offers sensitivity, speed and the ability to provide a full-spectrum analysis.

“Only the AxION 2 TOF MS delivers the ideal combination of mass accuracy, dynamic range, speed and sensitivity to optimize performance no matter what your application or sample matrix,” the brochure reads.

Without knowing the specific sample prep techniques used it’s impossible to tell exactly what these labs thought they had.  I do know that when we were testing the DSA we put just about all of those substances through the instrument and it correctly detected them.

Here’s the video discussed in the article.

If anybody takes the claims of ad seriously,

I’ve seen a bunch of ad material from just about all the mass spec manufacturers and they are all pretty much making the same sorts of claims. The law360 tried to make a big deal out of exaggerated claims, but I don’t think that that’s the real issue here.

Now there is very little that I don’t know about the clusterf**k that was the genesis of this instrument.  I was there for most of it and this lawsuit is just the icing on a cake baked out of poor goals, no project planning or inability to define what the product would be.


The instrument itself is something that I am still proud of. Used properly it will deliver all the things that the labs ask of it.  We had machines running continuously for years testing all sorts of substances.  On the other hand none of us on the team had much experience actually working in the kind of lab environment.  One thing I am sure of is that we did no testing on urine samples.  Nor did we pay as much attention to sample separation as we should have.   To say nothing of the fact that we didn’t pay nearly as much attention to customer feedback as we should have.


Was the instrument oversold?  I can believe that.  PKI treated the TOF just like any of the other instruments they sell, without true regard to how different a mass spectrometers is, or how it actually worked.  Then there were the real problems.  Just like the recent mess at Wells Fargo, how  management does things has a huge consequence on what happens after. The management at PKI has had some long term issues.

The company has been laying off people right and left now for years. Including me, I must admit.  Still the layoffs and the consequent fears have been hanging the rank and file people in the company for years now.



Then  there’s the company’s habit of buying the latest shiny toys and not knowing what to do with them.





Including this acquisition in 2009.


Making acquisitions and then screwing them up is sort of expensive.  The problem with constantly having layoffs is that you are flushing your experience curve along with the people. That’s because the people who are laid off and those who constantly leave on their own are carrying the company’s crucial knowledge and experience in their heads.


The problem with random layoffs, or laying people off for political reason with the only numbers being considered is the amount of drawback the company has to take for the layoff is that so much of the asset value of a company is intangible.  Essentially the company is destroying it’s asset value. and creating screw-ups like the AxIon2.
So how did the situation with the Axion 2 get so bad that things became a battle of attorneys, a lose-lose for PKI? Well the problem probably revolves around the fact that the DSA was a new instrument.  Because of that there were no set procedures for using the DSA in a lab environment that came in a book that the labs could go to and train people on.

I think though, that the people in charge of the labs didn’t really understand the fact that they were pioneering. Or at least didn’t understand the implications.  When PKI canceled the AxIon2 because of slow sales and the acquisition of a different type of mass spec, they left those people without the support that they were expecting.  Suddenly the calls were not being returned and nobody was holding the lab techs hands anymore.  Maybe this works for some things, but complicated scientific instruments require just a bit more attention.  Thus the lawsuits.

Like all too many companies the leadership of PKI seems to have lost touch with their business. Far too much effort in companies is spent chasing shiny new toys that other people come up with then trashing the toy when things don’t work out immediately. This seems to be a trend throughout corporate America.  The problem is that some point the bubble that corporate managements are living in are going to pop and reality will hit home.



I don’t think that the corporate management types really understand how their businesses work anymore.  Far too many of them come from financial or legal backgrounds, or are almost affirmative action hires for “diversity” purposes.  While that may look good on the website and press releases the affirmative action CEO means a ship with a captain that spend all their time on frivolities and style rather than the substance that the business needs.  The financial types tend to keep looking in the rear view mirror to try and figure out where the company needs to go which works about as well as you might expect.  Some companies seem to oscillate between the two kinds of CEO.  Both types seem  to have the  habit of constantly buying new trendy toys and not understanding how  to use them to build the business.


The bigger problem is that this is all an effect, not a cause of the kinds of problems that are being created by the economy.  A fish rots from the head and things like this lawsuit are the result of the chaos and stagnation caused by decades of bad policies the have created corporations that have become more institutional than entrepreneurial.  Institutions can afford incompetence.  Indeed, as a culture an institution thrives on incompetence.  Which is why they strive so hard to drive competence out. A corporation, on the other hand, has an obligation to the stockholders to be competent in the business and provide a return on the stockholders investment.  With so many people invested in mutual funds that are the major stockholders in almost all the major corporations, the general growing incompetence and lack of leadership in the typical corporation is not going to end well if these companies continue to willfully destroy their most valuable asset, the experience they gain by doing business.


One comment

  1. JP Kalishek · November 18, 2016

    I am going through yet another “merger” at work. Yeah, we are “merging” with another company . . . by taking their name, their high up management, and they are moving their headquarters to our new Cork, Ireland headquarters from their Southeast Wisconsin high tax (though not as bad as it was) location.
    We got bought out at our management’s request, and the buying on my former company, for my job (really, they wanted my products and I am the only one doing the job. $132 million +) is a large part of the reason they needed another “merger” (more like Help! Save Us!).
    We originally were owned by a guy who started small and grew, eventually buying one of his suppliers for the products I work on. He then got in a “Who is gonna buy who” back and forth with a company we were going to contract to make their products, and suddenly got a bit too big.
    Meanwhile, a certain Holdings Company had a division we sold to at one time, and in a patent lawsuit case deposition, they had to admit they violated a contract with us. Owner can be a bit spiteful, and stopped selling to them (they were rather notorious for late payment like many large companies, anyhow), and the company we were in back and forth suing with couldn’t supply them, so, years later, they asked to buy my division, and he stated “Buy it all, or buy nothing.” So they bought their competition to get one of their suppliers. This is a very odd business like that. We sell to our biggest competitors world wide.
    What the Holdings Co. didn’t know was we were about to go through an AlGore inspired product update, and a closer scrutiny by the EPA (CFC/PFOA hole in the ozone BS) that is causing product relisting and associated fees averaging $1 million each.
    Oops. our former CEO, now President got a bit of egg on her face over that.

    At our old location in Texas we had a nice Alegiant (sp?) GC, and a Mass Spec from them.
    They thanked us for buying it giving us a $10,000 attachment for the GC.
    Our head chemist and the assistant they kept passing over (but who had to train all the incoming new hires) were the only ones who ever got the things to work consistently.
    The buyout was, of course, a “Nothing’s gonna Change (TM)” deal that then became “We are shutting down this location” and that included the R&D lab, but it was supposed to move, but that was a lie. They eliminated the lab jobs, and the head chemist who holds some of the patents is on retainer to consult, and they shafted the chemist who was his assistant with less of a severance than others got.
    “Hey, can you show us how to set up this GC and the Mass Spec?”
    “No. Call the company.”
    “But that’ll cost a lot of money!”
    Gee, you lie to people, and require them to lie to their people, and they really don’t seem to want to help you afterwards? Shocking.


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