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Allscripts sues HHC, Epic over major EHR contract

By Kyle Murphy, PhD

Allscripts has officially filed a lawsuit against New York City Health and Hospital Corporation (HHC) and Epic System as a result of the $303-million contract that HHC awarded to the Wisconsin-based company. According to a Dec. 13 petition filed with the Supreme Court of the State of New York, Allscripts is contending that HHC’s decision is “arbitrary, capricious, an abuse of discretion, and lacks a rational basis” and “irreparably harmed.”

The crux of the Chicago-based company’s argument centers on how HHC calculated the total cost of ownership (TCO) submitted as part of the two EHR companies’ proposals for implementation and maintenance of HHC’s integrated clinical information system:

HHC failed to follow the evaluation criteria which required that award be based, in part, on the comparative Total Cost of Ownership (“TCO”) of offerors. Properly calculated, the TCO of Allscripts’ proposal represents savings of up to $535 million in comparison to Epic’s proposal. For example, HHC awarded point scores to offerors under the undisclosed evaluation criterion of “overall cost.” Although Allscripts’ proposed cost was indisputably lower, Epic’s point score under this criterion was 27% higher than Allscripts’.

Not only did HHC not base it decision on a comparison of TCOs, but it also allegedly produced proof of its assessment of Allscripts’s TCO after rather than before a decision was made:

HHC’s only analysis of the TCO of Allscripts’ proposal appears to have been created after the award decision was made and includes numerous material errors that artificially inflated Allscripts’ TCO by approximately  $535 million. HHC’s evaluation record does not provide for HHC’s calculation of Allscripts’ TCP.

In October, Allscripts filed a complaint with HHC, protesting its decision and requesting further information as to the decision-making process. “Allscripts agreed to fund over 100 software development jobs in the City, which was suggested in the bid, while Epic did not,” a spokesperson for Allscripts told EHRintelligence.com in October. “Allscripts bid was a fixed fee while Epic has a history of cost overruns and their bid did not include all of the hospitals.” The Chicago-based company’s protest ultimately proved unsuccessful.

In particular, Allscripts has petitioned the Court to consider five actions:

• Declaring null and void the determination of Respondent HHC awarding a contract to Epic;

• Enjoining Respondent HHS from executing a contract or continuing performance of any contract executed as a result of HHC’s award decision;

• Directing Respondent HHC to make its award to Allscripts or to re-evaluate Allscripts’ and Epic’s proposals in accordance with governing law and the terms of the Solicitation;

• Awarding Allscripts its cost and disbursements incurred in this proceeding; and

• Awarding Allscripts such other and further relief as the Court deems just and proper.

The lawsuit caps off a tumultuous and financially-trying year for Allscripts. In April, news broke of the shakeup at the top with the firing of Chairman Phil Pead, who joined the company’s board after Allscripts acquired Eclipsys to strengthen the company’s EHR offerings. In October, the company filed a complaint against New York City Health and Hospitals Corporation over its award of the contract to Epic Systems. At the same time, Allscripts announced the hiring of Richard Poulton as its new CFO and indicated that the hiring was key to the company’s rebound and growth. In November, CEO Glen Tullman told investors that speculation about the potential sale of the company have negatively impacted its sales and relationships with customers. So far, Allscripts has received two waves of private-equity bids.

The complete petition and exhibits are available through the New York State Supreme Court and the Country Clerk of New York website.




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