Marketing pitch touches off lawsuit
Thursday, November 5th, 2009
A recent court battle between two top health tech firms offers a rare public glimpse into the fierce competition for billions of dollars in stimulus money set aside for electronic medical records.
The lawsuit, settled in September, focused on what the sales force at Cerner Corporation in Kansas City called an “attack campaign” to elbow out major heath tech rival Siemens Medical Solutions, of Malvern, Pa.
On April 28, Cerner sent letters signed by company executive vice president Michael G. Valentine by overnight mail to hospitals using systems built by Siemens. Valentine predicted that Siemens products would fail to meet federal “meaningful use” standards required for buyers to collect stimulus money. Those standards, detailing the capabilities of approved systems, won’t be released until early next year.
“We have reviewed both available and planned offerings of your current HIT (health information technology) provider. We do not believe they will deliver solutions that will enable you to achieve ‘meaningful use’ in a timeframe that positions your organization to receive the maximum incentive payments available,” the letter reads.
Stressing that Cerner is “confident” it would meet the standards, Valentine offered hospitals that agreed to switch “attractive payment terms that closely align with the anticipated incentive payments.” Valentine gave the hospitals 120 days to decide to dump Siemens.
A phone call to Valentine’s office was returned by Sarah Bond, of Cerner’s media relations team, who said the company would have no comment.
Siemens spokesman Lance Longwell said the company does not comment on “specific litigation matters.” But he said in an email: “I can confirm that a settlement was reached and the parties amicably resolved the dispute.” As with most lawsuits, the terms of the settlement are confidential.
Siemens had filed suit in June, accusing Cerner of making “false, misleading and completely unsubstantiated claims.” The suit sought unspecified damages under the Lanham Act, a federal law which prohibits false advertising.
Siemens obtained Cerner emails showing at least 300 sales contacts, which Siemens alleged were done “with the intention of trying to steal customers.” Cerner got the names of Siemens clients through an industry trade group, court records show.
In court filings, Cerner lawyers denied wrongdoing, saying the sales pitch was accurate.
To make its case, Cerner cited findings by KLAS Enterprises, a Utah firm that evaluates healthcare software. Cerner said it engaged KLAS to conduct an “impartial” study of which tech firms would be most likely to qualify for the stimulus money.
KLAS concluded that software made by Cerner and two other major firms was likely to pass government muster. Three others, Siemens among them, were said to be at risk of failing to meet the standards. Siemens denied that in court filings. Federal officials aren’t expected to decide on the standards until early next spring.
Court records don’t say if Cerner’s sales campaign succeeded in dislodging Siemens from any hospitals.
