Labs In Court

Lab Gets Chance to Prove Fraud Claims against Software Vendor at Trial

Case: After being hit with a slew of CLIA penalties, a toxicology lab hired a software and IT services firm to help get its information systems back into compliance. But while progressing toward recertification, the lab discovered glitches in the software, including a defect leading to duplicate container numbers for patients and a Trojan Horse resulting in passwords and other security information being discoverable on Google. The lab sued the firm for fraud. The firm asked for summary judgment, i.e., dismissal without a trial but the Louisiana court said no dice.

 Significance: To prove misrepresentation, the lab would have to show three things: (i) the firm made a misrepresentation about the software; (ii) it did so deliberately to gain an unjust advantage or damage the lab; and (iii) the lab relied on the misrepresentation in buying the software. The lab had evidence to support each of these allegations. Although not enough to prove the allegations, at this point in the proceedings it was adequate to allow the case to go forward and give the lab the opportunity to prove the claims at trial [Trinity Med. Servs., LLC v. Merge Healthcare Sols., 2020 U.S. Dist. LEXIS 2424, 2020 WL 97162].

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