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WI Health System Suing Cerner for $16M for Faulty Software

Agnesian Healthcare in Wisconsin is suing Cerner for more than $16 million in losses due to allegedly faulty billing software.

Cerner Corps

Source: Thinkstock

By Kate Monica

- A Wisconsin health system is suing Cerner Corporation for breach of warranty and fraud over issues stemming from its billing software that allegedly led to more than $16 million in losses.

Agnesian Healthcare Inc. filed the complaint on September 15 claiming problems with the health IT company’s revenue cycle management software started immediately after implementation.

According to Kansas City Business Journal, Agnesian paid $300,000 for the scheduling, billing, and claims software, which began causing “pervasive errors” soon after it first went live in the health system’s ambulatory clinics in 2015.

The not-for-profit health system stated it has needed to resort to issuing payment statements to patients by hand due to problems with the Cerner software, which lead to a large backlog of unprocessed statements. In total, the health system stated billing issues caused at least $16 million in losses and continuing costs of about $200,000 per month.

According to the complaint, Cerner reported the problem resolved in 2016. However, Agnesian reported discovering additional coding errors in 2017 that sometimes lead to large quantities of undetected write-offs of claims issued to insurance companies and other payers.

Cerner determined the software needed to be rebuilt, but the staff members assigned to the task had left the company, according to court documents. The case has been transferred to the US District Court of the Eastern District of Wisconsin.

Agnesian is seeking direct and indirect damages, punitive damages, and a cancellation of the Cerner contract. The health system stated it may take until 2018 for its billing processes to proceed as normal, and the issues will likely inhibit the hospital from fulfilling federal billing requirements.

"Cerner disagrees with the allegations and will aggressively defend the case," a Cerner spokeswoman told the news outlet.

On September 21, Cerner filed a motion to either have the case dismissed or transfer the case to the US District Court for the Western District of Missouri. Cerner claimed the Eastern District of Wisconsin is an improper venue for the case due to an arbitration clause in its Agnesian contract. According to these terms, Agnesian could settle the complaint through arbitration or abandon the claim altogether.

This lawsuit follows another suit filed by Rush University Medical Center in August against a health IT developer over an allegedly defective $18 million patient monitoring system.

The medical center filed the complaint in federal court accusing Draeger Inc. of breach of contract, unjust enrichment, and fraud due to problems with the Infinity Acute Monitoring Solution that Rush had spent four years implementing.

Rush alleges problems with the patient monitoring system posed a threat to patient safety and required the medical center’s employees to waste time trying to fix operational complications.

“The system also failed to provide key promised features, including wired-to-wireless monitoring required for patient transport, and monitoring for de-saturation of neo-natal patients’ blood oxygen,” stated Rush officials.

The medical center seeks $18 million as well as payment of punitive damages and legal fees.

The Cerner IHealth EHR system is also presently under review by the Canadian government after some physicians at Nanaimo Regional General Hospital and Dufferin Place have claimed the system is a patient safety threat.

This will be the second review for the $178 million EHR system in a little over a year. The review will assess the costs, benefits, and problems with IHealth and result in recommendations on how to fix the system. 

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