Hospital brings EHR vendor to court

Platform failed to meet contract agreements, officials say
By Erin McCann
12:00 AM

The six-bed Mountainview Medical Center in rural Montana has filed suit against electronic health record heavyweight NextGen Healthcare, alleging the company violated a signed contract by both failing to install an EHR system by the negotiated deadline and failing to implement a system that meets 2014 federal meaningful use criteria.

Mountainview Medical Center, which filed suit in December, had entered into a software and license agreement with NextGen back in September 2012. This agreement, the lawsuit alleges, stipulated the EHR provider would install a system no later than June 2013, an EHR system certified to meet the Office of the National Coordinator for Health Information Technology’s 2014 standards, which took effect Oct. 2013.

However, NextGen failed to meet the go-live deadline and subsequently requested a four-month extension to October 2013, the complaint alleges. To this day, the platform has yet to be deployed, despite the hospital having already paid out $441,000 to install the EHR.

“NextGen’s representations were false and misleading at the time such representations were made,” Mountainview Medical Center officials said. “As a direct result of NextGen’s breach of the Agreement, (the hospital) suffered damages in an amount to be proven at trial, including without limitation the $441,000 expended to date, loss of revenues, loss of federal reimbursement payments, and loss of operations.”

NextGen Spokesperson Michelle Rovner told Healthcare IT News the company would not comment on pending litigation but added that the hospital’s allegations are “without merit,” and the company would “defend against them vigorously.”

David McLean of Browning, Kaleczyc, Berry & Hoven, the firm representing Mountainview Medical Center, however, called NextGen’s comments “puzzling,” seeing as the complaint “clearly identifies NextGen's deficient performance in this matter.”

Even by the final go-live date of October 2013, “The time came and went without installation,” added McLean.

This is not the first time NextGen has been taken to court over an alleged breach of contract.

In September 2012, Neillsville, Wis.-based Memorial Medical Center filed suit against the EHR company citing similar grievances to those of Mountainview Medical Center.

NextGen pushed back the critical access hospital’s EHR system go-live date six times, according to the lawsuit. The original project plan was full implementation by August 2011, which was ultimately delayed nearly a year to June 2012.

The hospital’s lawsuit also cited integration and functionality issues that rendered the hospital unable to attest to $150,000 in meaningful use incentive payments.

Nearly $500,000 later and no fully implemented, integrated EHR software to show for it, Memorial Medical Center officials sent NextGen a letter ending the project altogether.

EHR behemoth Cerner has also faced legal action in recent years over similar contract breaches.

In February 2012, for instance, the 35-bed, Kansas-based Girard Medical Center sued EHR behemoth Cerner Corporation alleging the company failed to meet certain parts of the agreement, “continually provided inaccurate price quotes,” and also failed to install a system in a timely manner that met meaningful use requirements. 

For instance, hospital officials cited a microbiology component of the system, originally estimated by Cerner representatives to cost $24,000, which ultimately increased to $70,000.

“Hospital provided notice to Cerner that on several occasions that it was in breach of the agreement and was not fulfilling its promises, and that hospital had recognized that Cerner had inaccurately represented the system and the implementation of the system to induce hospital to enter into the agreement,” the lawsuit read.

Moreover, after expending $1.29 million on the EHR system that had not yet been fully installed, “Cerner representatives notified Hospital’s mid-level management of their desire to discontinue its services and abandon the project to implement the system,” according to the lawsuit.

“This is not like installing Microsoft Windows on your computer,” said Sean Wieland, Piper Jaffray research analyst specializing in the health IT market, to Healthcare IT News back in August 2012. “No two EHR implementations are alike. It requires an enormous amount of work by both the hospital and the vendor.”