Free Hospital EMR and EHR Newsletter Want to receive the latest news on EMR, Meaningful Use, ARRA and Healthcare IT sent straight to your email? Join thousands of healthcare pros who subscribe to Hospital EMR and EHR for FREE!

Cerner Agrees To Pay $106M Over Allegedly Defective Software

Posted on March 12, 2014 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

After years of back and forth, Cerner has settled a dispute with a North Dakota hospital claiming that Cerner’s financial software was defective and didn’t deliver expected business benefits.

Back in April 2012, Trinity Health told the vendor that it was transitioning away from Cerner’s patient accounting software solution and certain IT services provided by Cerner. At the time, it alleged that the patient accounting solution didn’t work right.  Of course, Cerner disputed the allegations, according to its 10-K yearly report.

The two players began arbitration in December 2013, a move which allowed Cerner to collect some payments due from the hospital.  At the outset, Cerner was predicting liability you of up to $4 million, while Trinity anticipated damages totaling $240 million.

Ultimately, the two agreed upon a settlement under which Cerner would pay Trinity $106 million. Interestingly, Trinity is continuing as a client of Cerner for its clinical solutions, something you might not expect under the circumstances.

This is a particularly unusual outcome for a vendor/hospital dispute, because most vendor contracts contain clauses to eliminate “consequential damages,” which limit hospital’s ability to take legal action, notes Trinity attorney Michael Dagley. That being said, there are areas under state and common law provisions of consumer fraud statutes, under which manufacturers cannot misrepresent product capabilities and benefits.

Knowing how hard it is for a hospital to sue a vendor of IT services, it makes you wonder whether the growing number of hospitals dumping their current EMR are doing so because they’re not getting what they want but can’t sue to get their money back.  While it may be heinously expensive, buying a new EMR and installing it is certainly faster than going through years of court proceedings and then having to buy another EMR nonetheless.

Are Vendors Buckling Under the Meaningful Use Pressure?

Posted on January 3, 2014 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Today, I’m going to tell you about a legal dispute between the hospital EMR vendor NextGen Healthcare Information Systems. It’s not pretty but it’s not so spectacular that deserves a lot of publicity by itself. But the dispute does say something about the capacity of vendors to keep up with the next round of certifications and support for Meaningful Use Stage 2 and beyond.

The dispute involves two parties, the Mountainview Medical Center of White Sulfur Springs, Mt. and NextGen. According to documents filed in US District Court last week, the Medical Center had hired NextGen to install a certified EMR by June 1, 2013 for a price of $441,000. When NextGen couldn’t meet the deadline, the Medical Center gave it an extension until October 1 of this past year.

Here is where things get ugly. According to the MMC, it found out that NextGen not only failed to meet the deadline, but didn’t have a solution that complied with Meaningful Use. At that point, it seems, MMC basically threw its hands in the air and said “it’s time to fight back.” MMC now wants the $441,000 it spent to prepare for the NextGen installation.

I’m sure there’s more to this story. As you can imagine, NextGen has said that they believe the case is without merit and will defend against it. Plus, it seems that NextGen Inpatient Clinicals EHR 2.6 is 2014 Certified as a modular EHR. So, was the issue with NextGen not having enough resources to install the EHR? No doubt NextGen was certified.

My question is this: if a vendor in the size of NextGen can’t meet the meaningful use deadlines for its users, are its larger brethren at risk as well? Can we expect to see Cerner, Meditech or even Epic get so overwhelmed managing existing installations (which is what I imagine is happening with NextGen) that it will temporarily or permanently drop out of the Meaningful Use program?

Maybe your first reaction is “no way — this is just a blip on the map to successful installation and certifications for all major vendors.” But maybe not. I find myself wondering whether we’re seeing beginning of a showdown, in which, at minimum, large vendors focus on customers they’ve got already in place and lack development resources to speed the development of a certified EMR that will meet upcoming criteria.

I say, keep your vendor on a short leash. If you can’t afford to have your Meaningful Use implementation dates shift, you may need to keep close eye on even the largest and best funded vendors.

Cerner Forced To Pay Out Large Settlement To Customer

Posted on December 17, 2013 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

Cerner has struck a settlement agreement with one of its customers which will force the giant IT vendor to take significant charge against its fourth-quarter earnings.

The client, Trinity Medical Center of Minot, N.D., claimed last year that the patient accounting software sold by Cerner in 2008 was defective and didn’t deliver on the promised business benefits.

In the suit, the medical center asked for $240 million in damages, while Cerner only estimated damages of $4 million.  To settle the matter, the two parties agreed to go into arbitration, according to a report in the Wall Street Journal.

While the amount of the settlement was not disclosed in court filings, Cerner clearly got its clock cleaned. The vendor issued a statement saying that it “strongly disagreed” with the amount the hospital was awarded.

As a result of the arbitration settlement, Cerner will take a charge of $0.18 to $0.19 per share for the quarter ending Dec. 23, 2013. Clearly, Cerner came out on the wrong side of the deal, and then some. And it’s not used to losing. The vendor’s statement also noted that this settlement was “the only material judgment against Cerner in its 34-year history.”

While both Cerner and Wall Street will get over this matter, it’s still something of a landmark in the IT vendor business. Most of the time, IT vendor contracts have customers so tied up in knots that they can’t even speak about their experiences with the product, much less take the vendor to court for for poor product performance.

Cerner Sued Over Failed Hospital Installation

Posted on July 17, 2012 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

We seldom hear about these things (probably because of the EHR Gag Clauses that John wrote about previously), but this time word has gotten out. According to a report in The Kansas City Star, a critical access hospital northwest of Pittburg, Kan. has sued Cerner Corp. over an allegedly botched EMR installation.

In its suit, Girard Medical Center has made some ugly accusations against the HIT giant, including allegations that Cerner promised features that the system it bought didn’t have. (Oops.)

The suit also says that Cerner had demonstrated “disparaging attitudes” about the hospital. Hey, given the size projects it usually takes on, maybe Cerner didn’t feel the $2.9  million project was worth its time, and wasn’t so diplomatic about it.

What does seem to be established fact is that after a year of work, and $1.29 million in payments from Girard, Cerner backed out of the project last September.

Girard, for its part, demanded that Cerner repay the $1.9 million. Getting no satisfaction, it filed suit, accusing Cerner of a host of no-nos such as breach of contract, negligent misrepresentation and fraud. Since that point, the suit has been kicked into arbitration, moved there by a provision of the contract Cerner managed to enforce.

Obviously, we are unlikely to ever know exactly what happened here, but I have a few theories:

–  As the story notes, Girard was desperate for Meaningful Use payments, but Cerner didn’t meet the initial deadline as the two sides had apparently agreed.  Did Cerner understand how important meeting such a deadline would be for a small hospital which depended on the incentive to finance the EMR?

– Maybe Cerner assigned junior people to this “little” project and they didn’t have what it took to get through the task.

–  Perhaps this is an EMR install failure like many others, but one ending in a lawsuit since the tiny hospital couldn’t afford to lose its investment.

What are your thoughts, readers?