Digital health startup Dorsata has filed a lawsuit against EHR provider athenahealth and women’s health company Unified Women’s Healthcare. The startup alleged that athenahealth stole trade secrets, used deceptive business practices and breached its contract — and that Unified aided and abetted these purported practices.
Dorsata filed its lawsuit in the civil court of Suffolk County, Massachusetts on Wednesday. Dorsata alleged nine counts against athenahealth: unfair and deceptive acts and practices, breach of oral contract, breach of fiduciary duty, common law fraud, unjust enrichment, theft of trade secrets, tortious interference with current customers, breach of nondisclosure agreement and commercial disparagement. The startup also brought two counts against Unified — aiding and abetting a breach of fiduciary duty, as well as breach of contract.
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The defendants moved to impound the complaint on Friday morning, Dorsata CEO David Fairbrothers told MedCity News. By trying to impound the complaint, athenahealth and Unified are seeking to eliminate public access to the lawsuit and prevent Dorsata from speaking about it to the press. However, at the time of this article’s publication, the complaint was still available for public viewing on Massachusetts’ state court website.
Specializing in data tools that help obstetricians, Dorsata offers a platform that aims to reduce disparities in medical care during pregnancy and prevent avoidable complications. About 700 OB-GYN providers across the country use the startup’s platform, Fairbrothers said. Dorsata partnered with athenahealth in 2016 and has been providing its tool to obstetricians who use the company’s EHR since then, he added.
The complaint alleged that in 2021, athenahealth approached Dorsata and “proposed that they work together to pursue a broader relationship with Unified, the largest obstetrics and gynecological doctors group in the United States.” To do this, athenahealth suggested that it work together with Dorsata to provide Unified with an integrated solution, the lawsuit said.
Next, Dorsata signed a non-disclosure agreement and provided trade secrets and other confidential information to athenahealth — including financial projections, customer pricing, material contracts and software architecture — according to the complaint. The startup’s decision to provide this information was “heavily influenced” by the likelihood that it would be acquired by athenahealth, the lawsuit said.
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Operating under the understanding that the two parties would present the software product to Unified as a joint venture, Dorsata developed a tool called vU. However, athenahealth was simultaneously creating its own version of vU that it planned to pitch to Unified without Dorsata’s knowledge, the lawsuit charged.
Dorsata poured “significant time and resources” into the development of vU, and as a result, the company needed “a significant cash infusion to continue to develop its business,” according to the lawsuit. The startup decided to borrow $6 million from athenahealth because of its belief that athenahealth “would either purchase Dorsata or continue its joint venture to expand their relationship with Unified.” Athenahealth “cultivated this perception,” the complaint said. When it gave Dorsata these funds, athenahealth also signed a promissory note prohibiting Dorsata from doing business with any of its competitors, the startup alleged.
By assuring Dorsata that it was interested in developing a joint solution for Unified, athenahealth “was able to acquire significant knowledge of the inner workings of Dorsata’s technology,” the lawsuit alleged. It wasn’t until after this insider information was shared that Dorsata realized athenahealth never had any intention of pitching the joint product to Unified, the complaint said.
When athenahealth cut Dorsata out of its deal with Unified, the startup was left with a “limited ability” to generate the revenue needed to pay the EHR vendor back its $6 million by 2025, the complaint said. It also said that athenahealth is telling Dorsata’s customers that the startup “is financially impaired and will not remain in business in the future.”
Dorsata is seeking damages in the amount of loss of expected profits, loss of company valuation, injury to reputation, future lost business and unlawfully gained commercial marketplace advantage. The startup has also asked the court to prevent athenahealth from collecting the $6 million it loaned to Dorsata by deeming the EHR vendor’s promissory note “a fraudulent artifice intended to prevent Dorsata from competing in the marketplace.”
An athenahealth spokesperson told MedCity News the company believes “the suit is without merit” and plans to defend itself “vigorously.”
MedCity News’ interview with Dorasata’s Fairbrothers occurred shortly after athenahealth moved to impound the complaint, so he was barred from commenting specifically about the lawsuit. However, he did discuss the broader issue at hand, declaring that it’s not uncommon for EHR companies to deceive their digital health partners.
“I’ve had more than a couple of digital health founders reach out to me in the past day with their stories of their EHR partners eventually competing with them head-to-head after years of development and work with their mutual customers,” Fairbrothers said. “To me, this is anti-competitive and monopolistic in a critical industry to our country.”
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