Cerner sued for $16 million over revenue cycle rollout

Agnesian Healthcare claims issues in Cerner’s billing software caused losses of more than $16 million, while damaging the hospital system’s reputation; Cerner disagrees.
By Jessica Davis
02:00 PM
Cerner sued

Wisconsin-based Agnesian Healthcare is suing Cerner for fraud and breach of warranty, claiming issues in its billing software resulted in losses of over $16 million.

Further, the hospital said the issues have damaged its reputation and claims $200,000 a month in damages. The lawsuit was filed Sept. 15.

The hospital went live with Cerner’s revenue cycle software in 2015 and paid $300,000 for the platform. In the suit, Agnesian said problems with the software began almost immediately after the installation that resulted in “pervasive errors” in billing statements to patients.

[Also: Canadian Cerner install under investigation again, but mishaps go deeper than the tech]

To compensate, the hospital system said it was forced to send out payment statements by hand, which resulted in a massive backlog of unprocessed statements -- some of which were eventually written off.

The suit claims that Cerner said it fixed the issues in 2016. However in 2017, Agnesian found “major additional coding errors, which had resulted in large numbers of undetected write-offs of claims made to insurance companies and other payers.”

“As Agnesian later learned, Cerner’s Integrated Solution was automatically writing off reimbursable charges for services without any notice to Agnesian,” according to the lawsuit. “Due to the severity of coding issues, Cerner admitted to Agnesian that the Integrated Solution needs to be rebuilt.”

[Also: Cerner posts all-time high of $1.6 billion in second quarter bookings]

According to Agnesian, the Cerner personnel who were supposed to rebuild the tool left the company.

“Even if Cerner is able to successfully rebuild the Integrated Solution, it will take many months thereafter to return to normalcy in billing collections,” the suit reads. “In the interim, late charges will be required to be written-off.”

As a result, Agnesian may also fail to meet federally mandated billing requirements.

[Also: Northern Arizona Healthcare goes end-to-end with Cerner, adds business services platform]

The hospital system is seeking direct and indirect damages, as well as punitive damages. Agnesian also seeks cancellation of the Cerner contract. The lawsuit was transferred to the U.S. District Court of the Eastern District of Wisconsin.

“Cerner disagrees with the allegations and will aggressively defend the case,” Cerner said in an emailed statement.

The company filed a motion to dismiss the case on Sept. 21 or to transfer the case to the U.S. District Court for the Western District of Missouri. In its motion, Cerner claimed improper venue stemming from an arbitration clause in its Agnesian contract.

This is not the first time Cerner has been sued. A Kansas hospital sued Cerner over its EHR install and a North Dakota health system alleged Cerner’s patient-accounting software malfunctioned.

The Cerner EHR rollout at the Nanaimo Regional General Hospital, Dufferin Place residential care center in Nanaimo and Oceanside Health Centre in Canada is currently under investigation by British Columbia Health Minister Adrian Dix.

Cerner was recently awarded the coveted U.S. Department of Veterans Affairs EHR replacement -- without a competitive bidding process. As a result, the VA was sued by EHR hardware, software and support solution provider CliniComp.

Healthcare IT year in review

This was one of our most popular stories of the year.

Twitter: @JessieFDavis
Email the writer:

More regional news

Doctor in PPE

Photo by Morsa Images/Getty Images

MemorialCare Saddleback Medical Center MemorialCare Health System mental health

MemorialCare Saddleback Medical Center (Credit: MemorialCare Health System)

Want to get more stories like this one? Get daily news updates from Healthcare IT News.
Your subscription has been saved.
Something went wrong. Please try again.