A Tampa, Fla.-based healthcare software company last week was slapped with a class-action lawsuit alleging it aggressively sold a product it knew would be unusable in the year 2000.
What's more, according to the suit, Medical Manager Corp. told its more than 20,000 customers they will have to pay the $7,000 to $20,000 cost of a software upgrade just to fix a "latent defect" in the original product.
The lawsuit, filed in New Jersey, brings to healthcare a class-action scenario that is already being played out in several other industries. At issue is the sale of software infested with a date-related computer bug Because programmers coded years by their last two digits, the software cannot recognize 00 as 2000 or handle routine computations of dates based on subtraction.
Since the coding shortcut has been around since the dawn of computers, a key line to draw is the point at which customers had a right to expect that the products they bought had a useful life beyond 1999 and that they would work as promised, said Seth Lesser, a partner with Bernstein Litowitz Berger & Grossmann.
The New York-based law firm represents a Somers Point, N.J.-based physician whose practice bought the Medical Manager in November 1996.
The medical practice management system went on the market in 1982, before anyone began to consider the harmful consequences of representing years as two digits in computers.
But the suit contends the company marketed its millennium-flawed product until late last year, well after the consequences were clear.
It also contends Medical Manager viewed the plight of purchasers as "an opportunity to reap substantial profits from new sales" of a software version released in November 1997 that fixes faulty date programming.
Medical Manager Corp. issued a statement last week saying the lawsuit is without merit and will be vigorously contested.
"Preparing for the year 2000 is a significant issue not only for Medical Manager Corp. but is also an industrywide phenomenon," the statement said, adding that the release of its latest version in 1997 "has provided its clients with a timely solution."
Through a spokesman, officers declined a request for further comment.
The class action seeks restitution for all customers, including installation of the bug-free version of Medical Manager software free of charge. The suit contends other vendors are providing year-2000 fixes free to their customers.
The question of who pays is a common thread among several class-action lawsuits, said Laurin Mills, an attorney with Nixon Hargrave Devans & Doyle. The Rochester, N.Y.-based law firm's recent newsletter on year-2000 issues lists actions against the Quicken financial software package, older versions of the Norton antivirus program and two makers of accounting software.
"So far no one has been sued for selling something that's not compliant (with the year 2000)," Mills said. "They've been sued for selling something noncompliant and charging for the upgrade."
A ruling in favor of free upgrades could affect healthcare vendors that refused to pay for a solution because customers didn't have a maintenance contract, Mills said.
Many healthcare software companies have pledged to update their customers' systems for the year 2000 as long as they had a support agreement entitling them to the latest software releases (Feb. 17, 1997, p. 106).
But depending on when the software was purchased, vendors may not be able to refute their liability for the problem and claim the customer was responsible for being diligent about product risks.
"The caveat emptor argument is going to ring hollow for products that were sold in the late 1990s," Mills said. "At a certain point, you get so close to the year 2000 that people are going to assume that it works."
After all, he said, the first Dilbert cartoon on the subject appeared in September 1996. "That's a good pop measure that it was getting well known enough that people would make a comic about it."
