Appeals court tosses CliniComp's legal protest over VA-Cerner EHR contract

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A panel of appellate judges affirmed a lower court's decision to dismiss CliniComp's suit against the VA. (Matthew Henry/Burst)

A federal appeals court affirmed a lower court’s decision to dismiss a lawsuit from EHR vendor CliniComp challenging the Department of Veterans Affairs’ $10 billion no-bid contract with Cerner.

The decision, handed down by three judges with the U.S. Court of Appeals for the Federal Circuit on Wednesday, effectively ends CliniComp’s protest of the VA’s sole-source EHR contract with Cerner that was finalized in May. A CliniComp spokesperson said the company does not plan to file an appeal with the Supreme Court. 

The trio of judges agreed with a circuit court’s ruling last year that CliniComp lacks the standing to challenge the VA’s no-bid contract because it failed to show it has the experience or resources to meet the demands of the proposed contract, which includes EHR implementation at 1,600 inpatient and outpatient sites.

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In announcing the decision last year, then-VA Secretary David Shulkin, M.D., said the agency bypassed the bidding process out of an urgent need to overhaul the health system’s EHR platform.

RELATED: CliniComp offers to drop its lawsuit against the VA pending an interoperability benchmark test

The appeals court agreed with the lower court’s ruling that CliniComp “failed to demonstrate a capability even approaching what would be required under a contract of this size and scope,” noting that the company has previously provided EHR services at just 100 facilities.

“This is not a case where a plaintiff is unable to demonstrate its ability to compete due to a lack of information about what is required,” the appellate judges wrote (PDF). “Here, CliniComp lacks standing because it failed to demonstrate an ability to perform specific requirements that are set forth in the administrative record.”

The court likewise rejected CliniComp’s “vague, cursory references to using subcontractors to perform the work,” adding that the company remains an “insufficient bidder” in the VA’s massive contract.

“Veterans and taxpayers are the real losers here," CliniComp CEO Chris Haudenschild said in a statement to FierceHealthcare. "The VA has never performed any meaningful analysis of whether CliniComp is capable, as I know it is, of exceeding the VA’s requirements - for billions less."

RELATED: Senior health IT official Genevieve Morris resigns from her positions at ONC, VA

Cerner’s implementation is already underway following extended delays to the final contract. However, the VA has already run into several speed bumps, as two top officials spearheading the efforts have resigned, including acting Chief Health Information Officer Genevieve Morris, who said VA leadership was “taking the EHR modernization effort in a different direction than we were headed.”

CliniComp has been on a litigious streak following the VA’s contract, in part because it will cut into the company’s existing contract with the government agency. The company also sued Cerner for patent infringement last year, but that case was tossed in May.

Editor's Note: This story has been updated to include comments from CliniComp.