It’s game on for Epic Systems confronting an antitrust challenge.
On Sept. 5, Isthmus reported that the Madison area’s prize tech company had grown so dominant in health technology that observers openly speculated if it was risking antitrust action.
The “yup” answer came less than three weeks later with an antitrust suit filed in federal court in New York by a struggling medical data startup called Particle Health. Epic stands accused of using illegal means to block Particle from accessing digital files stored on Epic’s ubiquitous software and thus crippling Particle’s business as a data intermediary.
Per the complaint: “Epic has used its…dominance to worm its way to the core of the U.S. healthcare system and stamp out competition in a wide variety of interrelated markets, thereby generating billions of dollars for itself.”
The Verona-headquartered Epic is having none of that. In a short bristling statement, it decried Particle for allegedly violating patient privacy by accessing data “for impermissible purposes.” (That is, for reasons unrelated to treatment.) This would be a major breach of protocol because protecting patient privacy is a core federal requirement for anyone working in the health field.
Epic doubled down on its get-tough policy with Particle, promising “to continue to protect patient privacy and vigorously defend itself against Particle’s meritless claims.”
It’s way too early to determine how all this will play. But one thing you can bet on: it will be a rock’em, sock’em legal fight. Founded by Madison tech icon Judith Faulkner in 1979, Epic has never shied from a legal throwdown.
Epic spent nine years battling an Indian tech company that it successfully sued for stealing Epic software code. When the smoke cleared, Epic walked away with $280 million in punitive and compensatory damages.
Epic also fought all the way to the U.S. Supreme Court to overturn (on a 5-4 vote) a circuit court decision that voided arbitration agreements Epic employees had to sign as a condition of employment. Widely viewed as anti-worker rights, the provision required employees to pursue wage complaints through private arbitration and not collectively in the courts through, for example, a class action suit.
And then there are the multiple cases where Epic’s lawyers have slapped down and countersued so-called patent trolls who file what are considered nuisance suits over questionable patent infringements. And then demand payment for the suits to be dropped.
Celebrating the vanquishing of one such troll (in a press release headlined “Epic Defeats Another Prolific Patent Troll”), Epic’s law firm quotes company Senior Vice President Stirling Martin as promising continued vigilance: “[W]e will not back down to patent trolls looking to shake down Epic or our customers.”
As for Particle, its law firm —Quinn Emanuel Urquhart & Sullivan — has its own swagger, boasting of 1,000+ lawyers in 35 offices on four continents. The firm’s web page touts that a consulting group has repeatedly named Quinn Emanuel as “the No. 1 most feared law firm” in litigation.
Quinn Emanuel does have serious rep.
“They are heavy hitters and a very good law firm,” says Peter Carstensen, a UW-Madison law school emeritus professor who specializes in antitrust. Assuming Particle’s record of claims holds up, Carstensen expects the lawsuit to pass muster for trial.
The case will cost both sides a ton of money, he predicts. “Testifying experts are now getting $2,000 to $3,000 an hour for their work. It’s ridiculous. They’re hired guns.”
Still, the stakes are so very high for all concerned.
For Particle, which has seen its customer flow cut off by Epic, the lawsuit is pretty much a life or death struggle that if won will open the door of opportunity not just for Particle but for other health IT startups.
For Epic, which is far and away the largest seller of electronic health record programs in the world, the fight is both mercenary (to maintain its lucrative market share) and mission-driven (to protect the integrity of its acclaimed software system).
Observers say the case will probably grind on for years in court; Carstensen says the discovery part of the trial alone could last a year and half. By all measures you can expect it to be a truly epic court fight.
