Editor's note: This story has been updated with a statement from Epic
What began as a dispute between two health tech companies over healthcare data exchange practices has now led to a federal lawsuit alleging antitrust violations.
Venture-backed health tech company Particle Health filed an antitrust lawsuit against Epic in the Southern District of New York alleging that the electronic health records (EHR) giant is trying to muscle out competition.
The 81-page lawsuit (PDF), filed today, alleges Epic engaged in monopolistic, anti-competitive practices, using its "power over EHRs to expand its dominance into the fledgling market for payer platforms," according to the lawsuit, which was reviewed by Fierce Healthcare.
"Epic has used its position of dominance to worm its way to the core of the U.S. healthcare system and stamp out competition in a wide variety of interrelated markets, thereby generating billions of dollars for itself," Particle claimed in the complaint.
Particle Health argues in its federal complaint that Epic has not only engaged in anticompetitive behavior but has purposefully blocked the exchange of patient information.
In an emailed response to Fierce Healthcare, an Epic spokesperson said Particle’s claims are baseless.
"This lawsuit attempts to divert attention from the real issue: Particle’s unlawful actions on the Carequality health information exchange network violated HIPAA [Health Insurance Portability and Accountability Act] privacy regulations. Particle’s complaint mischaracterizes Carequality’s decision, which in fact proposes banning Particle customers that were accessing patient data for impermissible purposes," the Epic spokesperson said.
"Epic’s software is open and interoperable, allowing healthcare organizations to easily share data under HIPAA and all relevant regulations. Epic will continue to protect patient privacy and vigorously defend itself against Particle’s meritless claims," the spokesperson said.
The suit seeks an adjudication that Epic has violated the Sherman Act as well as monetary damages and injunctive relief compelling Epic to cease its anticompetitive conduct.
"Epic is using its monopoly power over electronic health records (EHRs) to bar Particle from the fledgling payer platform market —just one example of Epic plotting to 'snuff out' competition in new markets that leverage medical records," Particle Health executives said in a press release.
“Epic Systems controls the medical information of nearly every American—meaning one private company has unchecked power over our health care,” said Particle Health CEO Jason Prestinario in a statement. “Now, Epic is using that power to thwart an emerging industry intended to bring payers and providers into closer collaboration for better patient care.”
With a 36% market share of the hospital sector, Epic is a dominant force in the health IT industry. Particle Health claims that Epic controls the health information of up to 94% of Americans. Epic launched its payer platform in 2021.
Particle Health, founded in 2018, is a data platform that aggregates health information for digital health companies through APIs, providing access to more than 300 million patients’ medical records. Particle’s platform provides both a record retrieval service, which allows users to interface with EHR companies like Epic to smoothly request medical records at scale, and an analytics service, which allows users to efficiently store and monitor trends in the medical records they request.
It’s one of many startups that act as data connectors between Epic and its provider customers, like hospitals and medical practices, and other healthcare stakeholders, like digital health companies. Much like Stripe makes using credit care networks easier, companies like Particle Health, Health Gorilla and Zus Health provide an easier connection to data networks so organizations can get access to the data they need.
Growing tensions between Epic and Particle Health
Starting last year, Particle expanded its services to payers to assist so-called "pay-viders" with accessing patients records for “secondary” purposes more typically associated with health insurance, like population health analytics or processing claim, which is allowed under HIPAA and the rules of health information networks, the company said in the lawsuit. This new payer market put Particle on a "meteoric growth path," the company claims.
Tensions between the two companies ramped up earlier this year when Epic cut off data requests from some Particle Health customers, citing concerns about potentially inappropriate disclosures of protected health information and privacy risks to patients’ medical data, according to a notice sent to Epic customers April 10.
Particle Health alleges that over the past year, Epic has "not only engaged in anticompetitive behavior but has purposefully blocked the exchange of patient information."
"Doctors need the full medical records of their patients, and this lawsuit represents more than just a business dispute. It's about medical ethics and protecting patients' rights to their health data," Particle Health executives wrote in a press release.
In the complaint, Particle Health argues that Epic violated the Sherman Act by "leveraging its chokehold over EHRs to coerce Particle’s customers—both its newer payer customers and its older healthcare provider customers—into ending their relationships with Particle.
Because Epic is the dominant supplier of EHRs to third parties, nearly every one of Particle’s customers using its platform must request patients' medical records from Epic, the company claims.
The health IT giant also used its "EHR monopoly to cut off customer access to EHRs and only resume sharing of records if the customer agreed to not use Particle's platform," the company alleges in the complaint.
Epic also "slow-walked" approvals of access to records, which obstructed Particle’s onboarding of new customers and expansion of its relationships with existing customer, the company argued in the lawsuit.
Particle Health executives allege Epic has used a "multi-tentacled approach to try to squash Particle," including cutting off access to data for Particle’s customers, launching a smear campaign and "tying up Particle resources with a manufactured dispute," which was brought to Carequality, a private body overseeing interoperability.
Carequality's role in the dispute
Both Epic and Particle Health are connected to Carequality, which operates a nationwide health data exchange service used by more than 600,000 care providers, 50,000 clinics and 4,200 hospitals to access patients’ medical records. Carequality says it supports the exchange of 400 million clinical documents each month.
Carequality is made up of dozens of implementer organizations that in turn onboard their participant organizations to the framework. Epic connects its provider customers to Carequality as an extension of its Care Everywhere network.
Organizations that connect to Carequality agree to an “interoperability framework,” which is a collection of legal, governance and technical documents used to operationalize trusted exchange of health information nationwide, according to the organization.
Epic filed a formal dispute with Carequality on March 21, claiming that Particle was sharing patient data with some companies who were then using the data for reasons unrelated to treatment. "This poses potential security and privacy risks, including the potential for HIPAA Privacy Rule violations in the event disclosures of protected health information were made under the Treatment Permitted Purpose when the requesting entities did not have treatment relationships with the patients to whom the records related,” Epic said in the notice to its customers.
At the time, Epic said its 15-member Care Everywhere Governing Council flagged three companies, who are Particle Health customers, for questionable use of patient data not related to patient care or treatment.
The “treatment” purpose of use is the only data request healthcare organizations are required to respond to, according to health IT experts.
In the lawsuit, Particle alleges that Epic's "baseless complaints" were a ploy to "intimidate it into exiting the market."
The health data company also detailed the Carequality Steering Committee's decision in the dispute, the first time it's been publicly disclosed. Particle said the steering committee fully agreed with Particle’s arguments, "expressly finding that Particle did absolutely nothing wrong and that Particle acted within the law and Carequality rules."
The Steering Committee, however, imposed a 'corrective action plan' on Particle that "gave Epic much of what it wanted while expressly disclaiming any finding of wrongdoing by Particle," the company wrote in the lawsuit.
Epic's actions have hurt Particle Health in the form of current and future lost customers and revenue. And, the Carequality dispute hindered Particle’s ability to compete and "is yet another example of Epic’s anticompetitive tactics," the company argued.
And, the company alleges that Epic's actions have led to negative consequences for doctors and patients by "blocking important clinical information to doctors who work on Epic’s EHR software."
"If left unfettered, Epic’s conduct will snuff out meaningful competition in the still-fledgling payer platform market, relegating yet another market to Epic’s monopoly control. That outcome would not only harm the customers of payer platforms (health plans), but also the patients, doctors, and hospitals affected by prices and plans that payer platforms establish for their health care reimbursements," Particle Health alleges in the lawsuit.
"Even putting that aside, Epic’s increasingly obstructive efforts to box out Particle also create inefficiencies and delays in the treatments actual patients need and receive, thereby harming the very constituents Epic purports to help," the company alleged.
Particle has also filed an information-blocking complaint with HHS' health IT arm, the Office of the National Coordinator for Health IT, which has now been referred to HHS' Office of Inspector General (OIG).
"Our goals are straightforward: first, we need to end the information blocking that's actively harming patients," Prestinario said in a video posted this morning to LinkedIn. "Then, we need to ensure a level playing field where companies like Particle—but not just Particle—can continue to innovate, where providers and payers have choices, and where patients ultimately benefit from better, more efficient care."