Allscripts To Pay $9.7M Settlement to EHR Reseller Over Dispute

November 12, 2014 in News

A North Carolina judge has ordered Allscripts Healthcare Solutions to pay more than $9.7 million in an arbitration award to settle a 19-month lawsuit with a health IT services provider over its former electronic health record system, Modern Healthcare reports (Conn, Modern Healthcare, 11/7).

Lawsuit Details

In the suit, Etransmedia — a reseller of health IT products — alleged that it had pre-purchased millions of dollars in MyWay licenses to resell after Allscripts promised that the EHR would be certified to meet Stage 2 meaningful use requirements and upgraded to comply with the new ICD-10 code sets.

Under the 2009 economic stimulus package, health care providers who demonstrate meaningful use of certified electronic health records can qualify for Medicaid and Medicare incentive payments (Bresnick, EHR Intelligence, 11/6).

However, on Oct. 5, 2012 Allscripts announced plans to stop providing support for its MyWay EHR and offered its customers a no-cost alternative system.

In August 2013, the companies submitted their dispute to arbitration.

Etransmedia alleged that Allscripts:

  • Breached contract provisions;
  • Impeded Etransmedia’s sales attempts; and
  • “Stuck” the company with 684 prepaid software licenses and an additional 300 licenses that the company had agreed to buy from Allscripts but had not finished purchasing.

The licenses were among 1,378 total licenses that Etransmedia bought from Allscripts over several years.

Ruling Details

Last month, Superior Court Judge Robert Hobgood confirmed the settlement determined by a three-member arbitration panel (Modern Healthcare, 11/7).

The panel found that Allscripts violated the North Carolina Unfair and Deceptive Trade Practices Act by knowingly making false promises that hindered Etransmedia’s potential for business (EHR Intelligence, 11/6).

According to the settlement award, Allscripts’ decision to suspend MyWay support “immediately rendered Etransmedia’s unsold inventory of MyWay licenses impossible to market.”

In addition, the panel found that Allscripts’ alternative EHR product was not a reasonable substitute under the partnership agreement with Etransmedia.

However, the panel cited a lack of evidence and denied an allegation that Allscripts committed fraud.

Etransmedia estimated that the unsold licenses were each worth about $3,865, which entitled the company to receive about $2,967,961 in actual damages.

The damages were increased to $8.9 million, and additional claims and interest brought the total settlement to more than $9.7 million. Hobgood denied a request from Allscripts that the decision and award be sealed (Modern Healthcare, 11/7).

Reaction

Etransmedia President and CEO Vikram Agrawal in a statement called the settlement “a hard-fought victory for a company of our size against a giant $1.4 billion publicly traded company like Allscripts” (EHR Intelligence, 11/6).

In a statement, Allscripts said, “While we respectfully disagree with the panel’s award, we look forward to putting this matter behind us” (Modern Healthcare, 11/7).

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