Qliance healthcare startup cites lender fraud for sudden shutdown as patients are left in the lurch

Credit: geekwire.com

Erika Bliss, co-founder and CEO of Qliance. (Qliance Photo)

Qliance Medical Management — a Seattle-based healthcare startup originally backed by investors including Amazon founder Jeff Bezos, TV personality Drew Carey and computer mogul Michael Dell — closed its six primary care clinics suddenly this week, saying the company would shut down June 15 due to financial difficulties.


Now more details are emerging. Qliance co-founder and CEO Erika Bliss told GeekWire this morning that the company’s lender made an “unauthorized withdrawal” of about $200,000 from a Qliance bank account on May 12, causing the sudden shutdown.


Three former Qliance patients and a former employee say that the company gave them no notice it was closing its clinics and that it hasn’t responded to any communications, including urgent requests for prescriptions. The healthcare company charged monthly membership fees for access to its direct primary and preventative health care clinics in the Seattle region.


Bliss said the money was taken from a Qliance account by a Florida-based lender, who she said was under investigation by national law enforcement. “It was an improper draw on our account, it was not their money,” Bliss said. “It was a fraudulent draw on our account.”


She said the lender cited a number of reasons for taking the money, including default and improper banking practices, which Bliss denied happened. “All kinds of things that had absolutely no bearing on reality,” she said. “We were not in default, we were totally paid up.”



GeekWire has contacted the U.S. Attorney’s Office in Seattle for additional details. The U.S. Justice Department generally does not confirm or deny ongoing investigations.


Although Bliss said the sum wouldn’t have been large enough to keep Qliance going, she said its loss was what caused the clinics to shut down so suddenly, giving patients almost no notice and leaving the company struggling to keep up with demands for prescription renewals and other medical assistance.


“Our plan was to have a more orderly shutdown, and that would have allowed us to keep on more staff,” she said.


A Qliance employee who wished to remain anonymous told GeekWire that the company had been struggling to pay wages for months and owed some providers up to $90,000.



“Starting in March, there had been issues with us getting paid. We weren’t getting paid on time, and when we were being paid the checks were bouncing,” the employee said.


The employee was laid off with no notice shortly before the day Bliss said the money was taken. The employee also said Qliance leadership hadn’t responded to them or other employees in the wake of mass layoffs and the company’s closure. “It’s like they just basically fell off the face of the earth,” the employee said.



Of the five employees remaining at the company, Bliss is the only clinical doctor who is able to attend to most medical needs. She said patients who need quick assistance should use the option listing “urgent medical needs” when they contact the company.


The company serves about 13,000 patients in the Seattle region.


Former patient Tess Robins, who received care at Qliance’s downtown clinic, said the company hasn’t responded to repeated calls and emails requesting a refill for her prescription. Prescription authorization requests from her pharmacy have also failed, despite repeated attempts. She was eventually forced to go to an emergency room to have her prescription refilled. 


She did receive one communication from the company — a response to a Yelp review she left on Wednesday, two days after the company’s clinics closed.


“They have been irresponsible and unethical in the way they have conducted this closure so far,” Robins told GeekWire in an email. In a follow-up conversation, she said she was concerned that her medical records wouldn’t be transferred to her new care provider.


Bliss said the company did send out a mass email to patients notifying them of the closure, but all three patients GeekWire spoke to said they hadn’t received any communication from the company.


“We are deeply sorry for any inconvenience this is causing people, and we’re desperately trying to get to everyone as soon as we can,” Bliss said.


“We did everything we possibly could,” Bliss said. “The problem is it’s the hourly workers who suffer, and all of our employees who suffer. They can’t afford to just keep working for nothing — they need to go find other jobs or get on unemployment or something. It’s just completely horrendous. And the folks involved in the theft — they don’t care.”


In a previous interview, Bliss told GeekWire that the company was attempting to find funding outside the traditional venture capital system so she and Qliance president Cheryl Kilodavis could retain control of the company. Bliss and Kilodavis bought out the company in March of last year.


Qliance president Cheryl Kilodavis. (Qliance Photo)

Another Qliance patient, Sarah Renee Watkins, said she had an appointment scheduled on Tuesday, the day after the company’s clinics suddenly closed. She was contacted by her doctor that morning, who told her the clinic had closed and took care of her immediate medical concern. Watkins said she has still received no communication from the company itself.


Greg Hughes, who also had an appointment Tuesday, said he turned up for the appointment to find his clinic closed. He said he has not had any response from the company and was also unable to get a prescription refilled.


Robins and Watson both said they liked Qliance’s service and were sad to see the company shut down.


“I really liked them and their system, and the doctors and the staff were all great,” Robins said. “A wonderful place to go, I told everyone about it.”


Qliance was originally a well-funded startup, with a total of $33 million raised in 2013. The company’s backers included Jeff Bezos, venture capitalist Nick Hanauer, Zillow chairman Rich Barton, comedian and Seattle Sounders owner Drew Carey, Dell founder Michael Dell and others.


Membership-based primary care systems are becoming more popular as healthcare costs skyrocket, with the conventional wisdom that quality primary care helps ward off costly health issues down the line. In a twist of irony, membership-based primary care startup One Medical opened its Seattle clinic on Wednesday, just two days after the Qliance clinics closed.


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