On Thursday, Medfusion has filed a lawsuit against Allscripts seeking actual and punitive damages in the millions.The lawsuit states that Allscripts owes Medfusion $4.5 million in payments and was responsible for an order backlog that cost the company more than $10 million.
On July 9, 2009 both parties entered into a “Patient Access Solution Agreement” allowing AllScripts to integrate Medfusion’s technology with Allscripts healthcare software solutions to create a FollowMyHealth patient portal for healthcare providers. The agreement gave Allscripts the ability to:
- Offer more robust patient engagement services to healthcare providers
- Include the portal offering by default in every Allscripts “EHR Enterprise” and “EHR Pro” deal
- Purchase the portal the rights to the portal for period of 36 months with automatic renewals
The initial term of the agreement was five years ending on July 17, 2014
The relationship become torn when Allscripts acquired Jardogs and the rights to FollwMyHealth during HIMSS 2013 with virtually no advance notice to Medfusion. At the time of this acquisition, there were 18 months left in the initial terms of agreement and Allscripts did not wait until its contractual obligations owed to Medfusion ended in July 2014 before making FollowMyHealth available across its products. The rights acquisitions of FollowMyHealth immediately shifted Allscripts priority and plan from the portal, which is shares its sales revenue with Medfusion to developing and marketing FollowMyHealth. This also included converting end users who were either using the portal or were in the “backlog” waiting for the portal to FollowMyHealth. As a result, the backlog got worse.
Allscripts failed to expedite the portal implementation and billing process leading to a backlog exceeding more than $10 million as of April 2014. Last month, Medfusion filed a formal breach of notice to make timely payments due in the amount of $5,460,627.64. In response, Allscripts sent payments totaling $993,540.80 partially acknowledging its failure to make timely payments.
Medfusion will continue to support for its part of the portal through May 2014 to avoid disruption in the end user ‘s use of the portal and communication with their patients.
“The good part for us is now that the relationship is terminated, we’re in a lot better position to bring innovation to our clients,” states Medfusion CEO Steve Malik. An Allscripts spokeswoman stated that the company does not comment on pending litigation(Ohnessorge, BizJournals, 5/15).
