EMR provider eClinicalWorks has been hit by another class action lawsuit, this time a suit led by clinicians, raising questions as to how much legal trouble the vendor can survive.
The new suit is the latest of a series of dominos falling on eCW. Its legal problems began in May of last year, when it was forced to settle a suit filed by the U.S. Department of Justice for $155 million. The suit contended that eCW got its Meaningful Use certification by misrepresenting its capabilities.
Then, in November of last year, eCW was slammed with a class action lawsuit, this one demanding $1 billion. The suit alleged that by lying about the capabilities of its software, eCW “failed millions of patients by failing to maintain the integrity of patient records.”
Now, eCW faces another class action suit, this time led by primary care doctors. The suit alleges that because eCW’s software didn’t meet MU standards as promised, they lost government reimbursement. The suit asserts the eCW gave the PCPs “no reason to suspect that [it] had made false statements to obtain its certification.”
All of this is interesting in and of itself, but it doesn’t address the bigger question: Can eCW survive the legal firestorm that has engulfed the company?
eClinicalWorks is a private company, so I can’t offer detailed information on its finances, but it reported revenue of $130 million for the third quarter of 2017. If that’s a representative number, the company generates roughly half a billion dollars a year.
That’s a lot of money, but it’s not an infinite supply. The $155 million settlement has to have hurt (though I suppose it might have been covered in part or entirely by business liability insurance).
The other two lawsuits could prove more deadly. While it’s hard to predict whether a suit will go anywhere, there’s at least some chance that eCW will face a $1 billion judgment. Of course, even if it does lose the case, it will take effect only after several years of legal wrangling. Nonetheless, it seems likely that such a conclusion could bankrupt the company.
The other key question is whether eCW can hold onto its customers as lawsuit after lawsuit is filed. It might seem to some that eCW has been punished enough for its indiscretions, and that the additional lawsuits are largely part of a feeding frenzy. On the other hand, one might suggest that if eCW lied to all of its customers, it deserves to be forced out of business. It’s a flip of the coin at this point.
Regardless, the suits do suggest that EMR vendors had better keep their noses clean. If they try to fool customers – or the feds – the results could be catastrophic.