Exclusive: Major E-Health Records Project Unravels Into Legal Battle

Electronic health systems are supposed to help improve health care. But apparently, if you're involved with a big project to build an e-health records system, it can be harmful to your own health. Side effects may include headaches, lost sleep, and lawsuits.

Those are just some of problems being faced by those involved with the ambitious e-health record systems project launched in December by the Dossia Consortium, an employer coalition that includes Wal-Mart, Intel, Pitney Bowes, Applied Materials, British Petroleum, and Cardinal Health.

Dossia's ambitious project to provide e-health records to more than 2.5 million employees, retirees, and dependents is unraveling, at least when it comes to the relationship it has with Omnimedix Institute, the nonprofit organization that Dossia hired to develop the system, which was to include a massive, federated data warehouse.

Legal papers are starting to fly. A temporary restraining order was quietly filed in late June by Dossia against the Portland, Ore.-based Omnimedix in the circuit court of the state of Oregon for the county of Multnomah. According to court papers filed by Dossia, Ominmedix is temporarily restrained from filing any suit of its own except under seal.

In its court papers, Dossia says it will "suffer immediate and irreparable harm" if Omnimedix files a public suit that reveals confidential details of the parties' agreement. Dossia is seeking to settle its disputes with Omnimedix through arbitration.

"They went ahead to file a restraining order to prevent us from suing them," Ominmedix chairman and CEO J.D. Kleinke said in an interview. "They've gone ahead and filed a restraining order against us, a 13-employee, 501-C," or tax-exempt nonprofit organization, Kleinke said.

A source familiar with the situation says trouble had been brewing for months, even though the alliance between Omnimedix and Dossia is only about six or seven months old. The source says Omnimedix was seeking payment from Dossia, but that Omnimedix had failed to provide "deliverables" for the project so far, and that Dossia was demanding money back that it had already paid to Omnimedix. Neither Kleinke nor a Dossia spokeswoman would comment on those allegations.

Kleinke said that under the contract signed last year between Omnimedix and Dossia, Dossia was to pay Omnimedix $15 million to build a system that would allow Dossia members' employees to access their own personal health records via the Web. By mid-2007 -- about now -- some Dossia members were expected to begin using the system. Kleinke admits that has not happened and the system hasn't yet gone online. Kleinke says details discussed with InformationWeek about Dossia appear in "public documents," including court papers related to the restraining order, and that he's not revealing confidential information.

Each Dossia employer company was to pay $1.5 million toward the Omnimedix effort, Kleinke said, and Dossia had expected to grow to at least 10 founding employers. Right now, there are six companies publicly involved with Dossia, although a spokeswoman for Dossia said two additional companies have joined, are participating in the effort, and expect to announce their membership at some point. The spokeswoman denied that Dossia ever set a goal of having 10 employer members.

Despite the trouble between Dossia and Ominmedix, "Dossia is committed to providing lifelong health records to its employees," said the spokeswoman, who wears dual hats for Dossia and Intel.

Dossia "knew we'd need multiple vendors" said the spokeswoman, who admits that the coalition is "talking to other vendors" about providing technology and other services for the worker e-health record project. Dossia remains committed to offering e-health records to at least some employees by the "end of 2007," she said.

While the Dossia effort is ambitious in that it's the largest employer coalition currently attempting to provide workers with personal e-health records, Dossia isn't alone in the problems it's encountering in getting its e-health system moving along.

The e-health record landscape is littered with promising but complex projects that have had disappointing outcomes or quiet deaths because of a number of factors, including lack of funding, underutilization by doctors and others, concerns about patient privacy, medical liability, competition, and technology glitches.