A Wisconsin district court judge has dismissed the $16 million lawsuit filed by Fond du Lac, Wisconsin-based Agnesian Healthcare against health IT giant Cerner, leaving the door open to the dispute being settled through arbitration in Cerner's home state of Missouri.
Agnesian had claimed in the September suit that Cerner’s revenue cycle management solution has had “pervasive errors” since it went live at the system’s ambulatory clinics in 2015. It further alleged Cerner made many false claims about the software’s capabilities to convince Agensian to move forward with the project and later stated major issues had been resolved when the system alleged it’s still losing $200,000 per month due to additional coding errors.
The Dec. 8 ruling from U.S. District Judge J.P. Stadtmueller didn’t address the substance of those allegations, but rather where the dispute has to be settled. He pointed to language in the sales agreement signed by Agnesian requiring the two companies settle disputes through binding arbitration in Missouri—not in Wisconsin, as Agnesian had wanted.
By Agnesian’s argument, Stadtmueller said, Cerner would have to initiate arbitration proceedings, even though it’s not the “aggressor” in the dispute, as a means for Agnesian to have the dispute settled in a more favorable venue in its home state.
“This would, in turn, make Cerner the party petitioning for arbitration and force it to arbitrate in Agnesian’s home state,” Stadtmueller wrote. “Such gamesmanship cannot be tolerated; if Agnesian has a dispute with Cerner, the contract says that it must take its complaint to Cerner. This is true notwithstanding the fact that Cerner may not at present have made a formal motion to compel arbitration.”
Stadtmueller ruled the case “must be dismissed” because of these improper venue concerns, adding it “appears that the parties will agree to arbitrate if it is sought in Missouri.”
Agnesian didn’t immediately respond to HealthExec’s questions on whether it will move forward with the case in Cerner’s home state.