Cerner sued for $16M over billing system rollout

Fond du Lac, Wisconsin-based Agnesian Healthcare has filed a lawsuit against Cerner, claiming its revenue cycle management system had “pervasive errors” which has damaged the health system’s reputation and led to losses of at least $16 million and continuing costs of $200,000 per month.

The suit, filed on Sept. 16 in the U.S. District Court for the Eastern District of Wisconsin, claimed the alleged fraud began even before the Cerner software went live at Agnesian’s ambulatory clinics in August 2015. The $300,000 software, according to the suit, was replacing a McKesson product with an “integrated solution,” with features like relative value unit calculation and guarantor billing specifically requested by Agnesian included.

Agnesian said many of Cerner’s claims about the new software were false, claiming Cerner misrepresented results at other providers and showed off misleading demos to convince Agnesian to move forward with the project.

Once it went live, errors with inpatient billing forced it to manually process patient billing statements and resulted in a large backlog of claims. By the summer of 2016, the suit said billing processes had appeared to improve and Cerner had told Agnesian “all major issues were resolved” and the software was stable, but then Agnesian found new issues in 2017.

“In 2017, Agnesian discovered major additional coding errors, which had resulted in large numbers of undetected write-offs of claims made to insurance companies and other payers,” the suit said. “As Agnesian later learned, Cerner's Integrated Solution was automatically writing off reimbursable charges for services without any notice to Agnesian.”

Those coding issues led to Cerner telling Agnesian the billing software “needs to be rebuilt.” The system said even if that project is successful, it will take months for billing to return to normal, requiring further write-offs and putting the hospital out of compliance with CMS billing requirements. The suit said the problems have already caused “grave damage” to Agnesian’s reputation and standing in the community.

"Cerner disagrees with the allegations and will aggressively defend the case," Cerner spokesperson Misti Preston said.

Along with denying the allegations, Cerner argued the case should have been filed in Western District of Missouri, which includes Cerner’s headquarters in Kansas City, per the terms of its arbitration agreement with Agnesian. That agreement, in Cerner’s argument, means the lawsuit shouldn’t have been filed in the first place, so it asked the Wisconsin court to either dismiss the case or transfer it to Missouri where Cerner will ask that court to compel arbitration.