Medfusion, which recently was reacquired from Intuit by founder Steve Malik, on Thursday filed suit against Allscripts, saying its former business partner owes some $5 million.

Medfusion tells WRAL TechWire that it filed the complaint against Allscripts for “three main reasons:”

  • Allscripts did not meet its development commitments significantly impacting Medfusion’s ability to deliver innovation to clients
  • Allscripts did not meet its sales and marketing commitments
  • Allscripts withheld payment to Medfusion

If Medfusion wins, it could receive triple that amount plus more money for damages, lost sales and “brand value.”

However, just how much money Medfusion could receive is not yet known. The company notes that the trial will determine the final amount should it prevail. 

  • WRAL TechWire exclusive: Steve Malik says Medfusion remains strong despite Allscripts dispute.

Medfusion “ended” its services relationship with Allscripts last month in what the company describes as “unresolved payment disputes.”

Under a five-year contract that wasn’t due to expire until July 17, Allscripts worked with Medfusion to offer Medfusion’s patient web portal for a variety of uses by medical practices.

In the suit, which was filed in Wake County and which Medfusion wants to be heard in North Carolina’s special business court, the Cary-based firm says it has suffered “negative financial consequences” of some $10 million.

The falling out between Medfusion and Allscripts came after Allscripts bought a Medfusion competitor known as FollowMyHealth.

Following an extended period of back-and-forth over payments due, Medfusion said it “had had enough” and terminated the agreement as of April 14.

The suit comes after the companies talked about the payments due for a period of 10 days in April but no resolution was reached.

Medfusion and Allscripts began doing business together in 2009.

In a statement when the contract was terminated, Medfusion said it “had been indirectly providing its online patient portal and website solutions to approximately 30,000 Allscripts providers.

“These users of Medfusion’s portal technology not experience any immediate lapse in service, and they will be given an opportunity to secure direct service from Medfusion.”

In a press release, Medfusion announced the termination of the agreement “due to unresolved payment disputes.”

“The end of a long-standing contract is never easy,” said Vern Davenport, Medfusion president. “However, for us at Medfusion, we believe that this is best for the healthcare providers and patients we serve.”

Allscripts providers had used Medfusion portal technology for a variety of patient services. 

“Healthcare providers are under a lot of pressure to meet government requirements,” added Davenport. “Medfusion’s job is to help providers do that in the most effective manner and help them ensure their incentive payments are awarded. As we enter this most exciting era of consumerism in healthcare, we will continue to offer solutions for patients who want to understand and play a more active role in their overall care.”

MedFusion also says in the suit that Allscripts has been critical of the company in dealing with customers.