March 10, 2014

Cerner settled dispute with $106.2 million payment

Trinity Medical Center in North Dakota had claimed a patient accounting product was defective. The payment was the result of an arbitration ruling in December.

Cerner Corp. settled its dispute with a North Dakota hospital by paying $106.2 million, the health information technology company said.

Its payment, the result of an arbitration ruling, ended Cerner’s battle over a patient accounting product that Trinity Medical Center in Minot, N.D., had purchased in 2008.

“As of December 28, 2013, this matter has been resolved and paid,” Cerner said in its recent annual filing with the Securities and Exchange Commission.

In April 2012, Trinity told Cerner it was moving to another system, “alleging that the patient accounting solution purchased in 2008 was defective and did not deliver the promised benefits,” the filing said.

In December, Cerner said that the two sides had agreed to arbitrate the dispute and that an interim ruling would cut into Cerner’s fourth-quarter earnings. The arbitration ruling also allowed Cerner to collect some payments due from the hospital, Cerner’s annual filing said.

Financially, the ruling’s impact would reduce earnings 18 or 19 cents a share, Cerner said in December.

The North Kansas City-based company’s earnings announcement said the charge cut 19 cents from fourth-quarter earnings and amounted to $68.078 million after being reduced by a tax benefit $38.1 million.

In an earlier filing, Cerner had said Trinity claimed damages of $240 million and that Cerner’s expert witness had estimated the hospital’s “total damages, assuming any liability by Cerner, of up to $4 million.”

Heading into the arbitration, Cerner had said that 147 hospitals and 735 clinics were using its patient accounting product.

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