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Allscripts Healthcare, LLC v. DR/Decision Resources, LLC

United States District Court, D. Massachusetts

July 3, 2019

Allscripts Healthcare, LLC, Plaintiff,
v.
DR/Decision Resources, LLC, d/b/a Decision Resources Group, Defendant.

          MEMORANDUM & ORDER

          Nathaniel M. Gorton United States District Judge.

         This suit arises out of a contractual dispute. Plaintiff, a healthcare company that collects sensitive, patient-level data, licenses that data to the defendant, a healthcare consulting company that compiles and/or repackages that data and sells it to third parties. In addition to claiming breach of contract, plaintiff alleges trade secret misappropriation (under federal and state law), unfair and deceptive practices under Massachusetts law and fraud in the inducement. Defendant has filed a counterclaim for declaratory judgment, unfair competition, misleading statements under the Lanham Act and breach of contract. The parties have filed cross motions for injunctive relief.

         I. Background

         A. Factual Background

         Allscripts Healthcare, LLC (“Allscripts” or “plaintiff”) is a health information technology company that collects, aggregates and de-identifies sensitive, patient-level data from a network of medical practices. It collects such data in compliance with applicable privacy and security laws and regulations, including the Health Information Portability and Privacy Act Privacy Rule (“HIPAA Privacy Rule” or the “Privacy Rule”).

         As part of its business model, Allscripts licenses its data to third party recipients, provided that they can assure Allscripts of their ability to protect the data and an independent statistician certifies that the data has been de-identified in compliance with HIPAA.

         In June, 2014, Allscripts entered into a Master Data License Services Agreement (“the Agreement”) with DR/Decision Resources, LLC d/b/a Decision Resources Group (“DRG” or “defendant”), a healthcare data and consulting company that creates and sells reports containing healthcare data.

         1. Terms of the Agreement

         Pursuant to the terms of the Agreement, which is governed by Delaware law (§ 9.2), either party can terminate the contract if the other party commits a material breach and fails to cure within 30 days of receiving written notice (§ 8.2).

         The relevant provisions in the Agreement that delineate use and disclosure of Allscripts' data are excerpted as follows:

Section 3.1 defines “data” as the
aggregated, de-identified patient data set derived from Allscripts' network of participating medical practices which use Allscripts electronic health records software
. . . If Data is de-identified in accordance with a statistician certificate, both parties shall comply with the terms of such statistician certificate.

         Section 3.2 further states the terms of the license agreement, in relevant part:

Subject to Client's compliance with the terms of this Agreement, Allscripts hereby grants to Client a limited, revocable non-exclusive license to use the Data to create analyses, reports and products (“Client Products”) using the Data and to commercially distribute such Client Products to its customers. If the Data is de-identified using a statistician certification, such license is subject to the terms and restrictions set forth in the statistician certificate.
Section 3.3 provides that the client shall have no right to
sell, license, transfer or distribute the Data to any third party other than as permitted under this Agreement.

         Finally, Section 5.2 states that DRG has a duty of confidentiality that extends for five years after either expiration or termination of the contract but that Allscripts data, trade secrets and software systems and related information must be kept confidential in perpetuity.

         2. Terms of the Certification

         In 2014, Allscripts commissioned Dr. Patrick Baier (“Dr. Baier”) to issue a statistician certification with respect to the data DRG receives from Allscripts, entitled HIPAA Certification for Allscripts Descriptions Resources Group Site Certification (“the Certification”). Dr. Baier issued another certification in 2018, which contains the same language with respect to the disputed provisions. For ease of reference, the Court will use the paragraph citations from the 2018 Certification. The Certification provides, in relevant part, that

Decision Resources Group will either keep the Allscripts data internally for its own use, or may create analyses, reports and products using data and other data and distribute such products to its customers under the condition that Decision Resources Group will not disclose the Allscripts data to any further parties.
Decision Resources Group and any third party clients of Decision Resources Group receiving Allscripts data as above may however as part of their business activities produce summary works and aggregated derivative works as part of its product offerings. Such works must be sufficiently ...

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