Fruit Street Health, a startup that delivers the CDC’s diabetes prevention program through group telehealth classes, filed a lawsuit against digital health company Sharecare on Friday.
The New York-based startup is suing Atlanta-based Sharecare because it claims Sharecare violated the terms of their shared business agreement by rolling out its own version of the Fruit Street’s diabetes prevention program, which had been previously offered to Sharecare members. Sharecare told MedCity News that the complaint is without merit.
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The lawsuit, which was filed in the Superior Court of Fulton County in Georgia, seeks compensatory and punitive damages in excess of $25 million.
Fruit Street was founded in 2014 as a public benefit corporation. The company’s digital platform combines health coaching, activity monitoring and group health classes, allowing registered dieticians to deliver the CDC’s diabetes prevention program through virtual visits.
Sharecare was founded in 2010 by WebMD Founder Jeff Arnold and Dr. Mehmet Oz, the television personality and failed Senate candidate. The company offers an employer- and health plan-facing health and wellness engagement platform that includes telehealth programs for things like diabetes, smoking cessation, mental health, heart disease and physical therapy. It went public via a SPAC with Falcon Capital Acquisition Corp. in 2021.
The two healthcare companies began working together in 2018 when Sharecare began offering Fruit Street’s program on its platform.
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In a 2021 SEC filing, Sharecare described its digital therapeutics marketplace as “an array of value-added proprietary and partner-powered solutions” that integrate directly into its flagship platform and “are available for enterprise and provider clients to purchase for their populations.” The filing said that the diabetes solutions included in Sharecare’s digital therapeutics marketplace contained three main offerings: virtual diabetes care, diabetes education and a diabetes prevention program. The diabetes prevention program was described as “an interactive, telehealth-based weight loss program that can be accessed by our members through our partnership with Fruit Street Health.”
The lawsuit alleges that Sharecare engaged in internal misconduct and breached fiduciary duties it owed to Fruit Street when it launched a competing diabetes prevention program of its own in January and began promoting it in lieu of Fruit Street’s program. Sharecare’s program, called Eat Right Now, bills itself as a “mindfulness-driven diabetes prevention program recognized and approved by CDC.”
Fruit Street CEO Laurence Girard told MedCity News that he was “completely shocked and outraged” when he learned that Sharecare had developed a new diabetes prevention program. He believes that “large public companies like Sharecare should be held accountable for taking advantage of small digital health startups such as Fruit Street that are trying to improve the health of the public.”
However, Sharecare contends that the opposite is true.
The company “made multiple and considerable efforts to help Laurence Girard and offer [its] customers the option to choose Fruit Street as part of their Sharecare experience,” Jen Martin Hall, the company’s executive vice president of corporate communications, wrote in an email to MedCity News.
“Unfortunately, Fruit Street and Mr. Girard have failed to maintain the standards of financial stability and integrity we expect of our vendors and working with them was no longer a tenable option. Mr. Girard has a documented track record of using litigation as a go-to business strategy, and this latest meritless lawsuit has put us in the position of not only defending against unfounded allegations but also pursuing claims against Mr. Girard and Fruit Street, including for the more than $3 million that Fruit Street owes Sharecare,” she wrote.
Sharecare is confident that “the actual facts will show the true nature of its vendor relationship” and interactions with Fruit Street, Martin Hall added.
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