Doctors strike back at EHR vendor with class-action suit
■ Physicians say Allscripts misled them about a software program's functionality and quality. The case could encourage more litigation as doctors become dissatisfied with systems.
By Alicia Gallegos — Posted May 6, 2013
Anesthesiologist Robert Joseph, MD, interviewed several electronic health record vendors when researching which EHR system would work best for his small Florida clinic. He finally chose a software program called MyWay, sold by a subsidiary of Allscripts Healthcare Solutions, because it was designed to fit small and solo practices.
But $40,000 and dozens of training hours later, the program has created headaches for Dr. Joseph's practice, he said. He claims that the system never worked effectively and failed to meet the federal regulatory requirements promised by Allscripts.
“My office manager quit because the program was so difficult,” said Dr. Joseph, owner of Pain Clinic of Northwest Florida in Panama City, Fla. “Our revenues were down … 50% over one year. It was just so frustrating. Initially, we asked for our money back and were just going to go to a new program.”
Dr. Joseph said Allscripts would not provide a refund nor let the practice out of its contract. Instead, the company said it was providing MyWay users a free upgrade to another system, according to court documents.
Such problems have prompted a first-of-its-kind, class-action lawsuit against Allscripts by Dr. Joseph and three other practices. South Baldwin Family Practice LLC in Alabama, American Pain Care Specialists LLC in Florida and Advanced Pain Specialists in Missouri have joined Dr. Joseph's December 2012 suit on behalf of 5,000 physicians who purchased MyWay. The system was sold beginning in 2009 until its discontinuation in late 2012. The doctors claim that Allscripts misled them about the software's functionality and quality, and failed to adequately remedy the product's alleged defects.
A spokeswoman for Allscripts said the company does not speak publicly about pending litigation. In a court motion, Allscripts requested that a judge dismiss the suit and compel the parties into arbitration. A trial court in March denied the motion.
Allscripts then issued an emergency appeal asking an appellate court to block the suit while it reviewed the lower court's decision. The 3rd District Court of Appeal for the State of Florida on April 23 ruled in favor of the physicians, allowing the suit to move forward.
Allscripts also faces a lawsuit over MyWay from Cardinal Health 200 LLC, which provides medical and surgical products to physician offices and others nationwide. In its February suit, Cardinal said it paid Allscripts $5 million for 1,250 licenses to sell MyWay to health professionals. Cardinal later discovered that the software was not compliant with ICD-10 and would not meet meaningful use requirements, the complaint said.
“To date, Cardinal Health has 994 unsold licenses of MyWay software remaining for which Cardinal Health paid $3,978,000,” the suit said. “With [Allscripts'] announcement that it would discontinue the sale, support and installation of MyWay, these remaining licenses are unsalable and obsolete.”
A spokeswoman for Cardinal declined to comment. According to Cardinal's complaint, Allscripts offered to make the MyWay licenses compatible with a new software system, which Cardinal called significantly more expensive and difficult to license, implement and support.
More lawsuits on the way?
The cases against Allscripts could encourage more litigation against EHR vendors as physicians become increasingly dissatisfied with the systems they are sold, said Ronald Sterling, president of Sterling Solutions Ltd., a medical practice consulting company based in Silver Spring, Md.
In March, a survey by AmericanEHR Partners of 4,279 health professionals, including primary care physicians, found that EHR user satisfaction declined from 39% in 2010 to 27% in 2012. AmericanEHR Partners maintains a database on EHR products and vendor ratings based on satisfaction reviews submitted by its member organizations, including the American Medical Association.
Another report, this one released in February by Black Book Rankings, a technology market research firm in Clearwater, Fla., found that of the nearly 17,000 physicians and others surveyed who were active EHRs users, 17% planned to switch vendors in 2013. An additional 6% wanted to change but had no time frame, and 8% said they would like to switch but couldn't afford to do so.
It “is not an uncommon situation where a vendor has decided to sunset a product or go off into a different direction,” Sterling said. “It's going to become more and more common, because we have 400-plus electronic health record [systems] out there, and not all of them are going to succeed. It leaves [physicians] in a tough space.”
The doctors' suit against Allscripts appears strong, especially because it's a class action, Sterling said. “There's enough people and enough money involved that they can pool their resources and fight this thing,” he said.
Attorney Adam M. Moskowitz, who is representing the doctors, said about 50 practices have contacted him about joining the Allscripts suit since it was filed. He hopes the case will encourage EHR companies to take responsibility for their actions when they realize products are not performing as promised.
“I hope we can get the message out to physicians that they have certain rights that need to be enforced,” he said. Physicians “need to be careful when they negotiate with these companies. [But] when they aren't treated fairly, they can absolutely stand up for their rights.”
Contracts can hinder suits
Although suing may seem like a good option when dealing with a difficult vendor or defective system, physicians should first check their contracts, legal experts said. Frequently, clauses prevent or limit litigation, said Albert A. Carrion, a Texas attorney who practices intellectual property law. Some clauses say doctors cannot sue vendors for any consequential or punitive damages no matter what problems the software causes, he said. Other language sets a low dollar amount for possible damages or restricts awards to the initial price of the software.
“This could be very small compared to the lost cost,” Carrion said. It creates “a lot of disincentive to bring a case.”
Contracts also may force cases to be filed in the state where a vendor is based, Sterling said. In other cases, the parties must go through arbitration rather than the courts to resolve conflicts.
In the Allscripts case, the company argued that the doctors' contracts include a broad arbitration clause that requires them to resolve any allegations of wrongdoing through arbitration. The practices countered that the agreements are between them and an Allscripts subsidiary, and that Allscripts Healthcare Solutions, as the parent company, was not a signatory.
However, physicians for the most part can expect a difficult time winning against vendors. “You're talking about some pretty strong contractual barriers,” Sterling said. In many cases, “the vendors are not legally responsible for doing very much.”
That's why it's essential for doctors to discuss appropriate terms and considerations with vendors at the start of contract negotiations, said Jonathan P. Tomes, a Kansas health law attorney who consults with practices on EHR rules and implementation. Physicians should make sure to include in writing what capabilities the vendor has promised, rather than just a general description of the system, Tomes said.
“It's more difficult when you haven't specified in the contract that this is what it's got to do,” he said. “You may still be able to recover, but now you're relying on oral testimony. If the contract says it's got to provide [certain] usage and programming and it doesn't, it's an easy win” for breach of contract.
To protect against paying for subpar systems, doctors also can negotiate payment structures that allow them to pay incrementally, said Deborah C. Hiser, a Texas attorney who focuses on patient privacy and health technology law. This way, the total bill is not paid until all software is functional, she said.
Involving attorneys from the beginning of buying and implementing EHRs is a must, Tomes added.
“It's critical to get an attorney who's knowledgeable about health care and intellectual property,” he said. “I would start [involving] an attorney when drafting the request for a proposal, but certainly in drafting the specifications of the contract.”
If vendors continue to ignore system bugs and repeatedly break contractual guarantees, physicians should consider filing a lawsuit, said Hiser, who is representing a medical group that is suing an EHR vendor over an allegedly defective system.
“You should sue when you find out they're not going to be able to meet the performance they've promised,” she said.
However, physicians should first weigh the legal expenses and other costs to their practice, said Elisabeth Belmont, a Maine attorney and past president of the American Health Lawyers Assn.'s board of directors.
“Litigation usually is considered a last resort, given both the expense and the disruption to the delivery of patient care from having a nonfunctional EHR system over a prolonged period of time,” she said. “This is the reason why it is so important to negotiate an agreement with appropriate warranties, remedies and limitation of liability provisions.”