Allscripts Healthcare, LLC v. DR/Decision Resources, LLC

CourtDistrict Court, D. Massachusetts
DecidedFebruary 20, 2020
Docket1:19-cv-11038
StatusUnknown

This text of Allscripts Healthcare, LLC v. DR/Decision Resources, LLC (Allscripts Healthcare, LLC v. DR/Decision Resources, LLC) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Allscripts Healthcare, LLC v. DR/Decision Resources, LLC, (D. Mass. 2020).

Opinion

United States District Court District of Massachusetts

) Allscripts Healthcare, LLC, ) ) Plaintiff, ) ) v. ) ) Civil Action No. DR/Decision Resources, LLC, ) 19-11038-NMG d/b/a Decision Resources Group ) ) Defendant. ) )

MEMORANDUM & ORDER GORTON, J. This suit arises out of a contractual dispute between Allscripts Healthcare, LLC (“Allscripts” or “plaintiff”) and Decision Resources, LLC d/b/a Decision Resources Group (“DRG” or “defendant”). Pending before the Court is the motion of Allscripts to dismiss DRG’s counterclaim for false and misleading statements pursuant to Section 43(a)(1)(B) of the Lanham Act. I. Background A. The Parties Allscripts is a healthcare information technology company that collects, aggregates and de-identifies sensitive patient level data from a network of medical practices in compliance with applicable privacy and security laws and regulations, i.e., the Health Insurance Portability and Accountability Act (“HIPAA”).

Allscripts licenses its data to third party recipients, provided that, among other things, the third party agrees to protect the data and an independent statistician certifies that the data has been de-identified in compliance with HIPAA. In June, 2014, Allscripts entered into a Master Data License Services Agreement (“the Agreement”) with DRG, a healthcare data and consulting company that compiles and repackages licensed data for sale to third parties.

In February, 2018, Allscripts acquired Practice Fusion, an electronic health records company and data provider, and subsequently formed a new business unit, Veradigm, which competes directly with DRG. B. The Agreement

Pursuant to the terms of the Agreement, which is governed by Delaware law, the parties agreed that Allscripts hereby grants to [DRG] a limited, revocable non-exclusive license to use the Data [as defined elsewhere in the Agreement] to create analyses, reports and products (“Client Products”) using the Data and to commercially distribute such Client Products to its customers. If the Data is de- identified using a statistician certification, such license is subject to the terms and restrictions set forth in the statistician certificate. [DRG] shall have no authority, permission, right, or license with respect to the Data except as expressly and explicitly granted to it by Allscripts by the terms of this Agreement. The Agreement further provides that either party can terminate if the other party commits a material breach and fails to cure within 30 days of receiving written notice. C. Alleged Breach of the Agreement In October, 2018, Allscripts exercised its audit rights under the Agreement to conduct an audit of DRG’s facilities and records on suspicion that DRG was licensing patient level data to third parties in violation of the Agreement. In February, 2019, Allscripts sent a letter to DRG asserting that DRG was in breach of the Agreement because it was providing Allscripts’ patient level data to DRG clients. DRG maintained that it was acting in accordance with the terms of the Agreement and HIPAA. In response to DRG’s disavowal of the

accused conduct, Allscripts contended that DRG’s provision of patient-level Allscripts data to DRG customers materially breached the Agreement. DRG contends that shortly thereafter it learned that Allscripts, through Veradigm, “initiated contact with one of DRG’s customers” and informed that customer, who remains unidentified, that “it should be concerned about DRG’s sustained ability to sell [electronic health records (“EHR”)] data.” DRG submits that Allscripts also “falsely indicated to other DRG customers that DRG [would] soon lose access to Allscripts’ data.”

D. Procedural History Mediation proved unsuccessful in May, 2019, whereupon Allscripts filed the instant action alleging 1) violation of the Defend Trade Secrets Act (Count I); 2) trade secret misappropriation under Massachusetts law (Count II); 3) breach of contract (Count III); 4) unfair and deceptive practices under M.G.L. c. 93A (Count IV); and 5) fraud in the inducement (Count

V). Defendant counterclaimed for 1) declaratory judgment (Counterclaim I); 2) unfair competition under M.G.L. c. 93A (Counterclaim II); 3) false and misleading statements in violation of Section 43(a)(1)(B) of the Lanham Act (Counterclaim III); and 4) breach of contract (Counterclaim IV). The parties filed cross motions for preliminary injunctions both of which were denied. Prior to the Court’s ruling, Allscripts moved to dismiss only DRG’s Lanham Act counterclaim (III). II. Motion to Dismiss A. Legal Standard

To survive a motion to dismiss, a claim must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In considering the merits of a motion to dismiss, the Court may only look to the facts alleged in the pleadings, documents attached as exhibits or incorporated by reference and matters of which judicial notice can be taken. Nollet v. Justices of Trial Court of Mass., 83 F. Supp. 2d 204, 208 (D. Mass. 2000), aff’d, 228 F.3d 1127 (1st Cir. 2000).

Furthermore, the Court must accept all factual allegations in the claim as true and draw all reasonable inferences in the claimant’s favor. Langadinos v. Am. Airlines, Inc., 199 F.3d 68, 69 (1st Cir. 2000). If the facts in the claim are sufficient to state a cause of action, a motion to dismiss must be denied. See Nollet, 83 F. Supp. 2d at 208.

Although a court must accept as true all the factual allegations in a claim, that doctrine is not applicable to legal conclusions. Ashcroft v. Iqbal, 556 U.S. 662 (2009). Threadbare recitals of legal elements which are supported by mere conclusory statements do not suffice to state a cause of action. Id. Accordingly, a counterclaim does not state a claim of relief where the well-pled facts fail to warrant an inference of any more than the mere possibility of misconduct. Id.

B. Analysis DRG alleges that Allscripts disseminated false and misleading statements in violation of Section 43(a)(1)(B) of the Lanham Act by initiating contact with at least one DRG customer and fostering concern about DRG’s sustained right to sell EHR data. Section 43(a)(1)(B) of the Lanham Act provides that any person who “uses in commerce” any false or misleading description of fact, or false or misleading representation of fact, which . . . (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities, shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act. 15 U.S.C. § 1125(a)(1). To state a claim pursuant to Section 43(a)(1)(B), a claimant must allege that: 1) the offending party made a false or misleading statement of fact; 2) in a commercial advertisement about its product or the product of another; 3) in interstate commerce; 4) that was material and either actually deceived or had the tendency to deceive a substantial segment of the declarant’s audience; and 5) which caused injury to the claimant. Ferring Pharm. Inc. v. Braintree Labs., Inc., 38 F. Supp. 3d 169, 176-77 (D. Mass. 2014). Allscripts moves to dismiss DRG’s counterclaim on the

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Allscripts Healthcare, LLC v. DR/Decision Resources, LLC, Counsel Stack Legal Research, https://law.counselstack.com/opinion/allscripts-healthcare-llc-v-drdecision-resources-llc-mad-2020.