Computer Program for Hospitals Sparks Suit
The spirited competition that has supplanted the once-genteel ways of the hospital industry has spawned a legal confrontation in San Diego between two large businesses and a pair of former employees who quit to challenge their ex-bosses.
The entrepreneurs, originators of a computerized physician referral system, portray themselves as Davids battling corporate Goliaths. The businesses--Scripps Memorial Hospital and the national accounting firm of Arthur Young & Co.--contend that their former employees are computer-era pirates who are taking advantage of inside knowledge to compete unfairly.
Scripps and Arthur Young filed suits last week in federal and state court seeking to shut down HealthLine Systems, a company formed early this year by David Albachten, a former special projects coordinator for Scripps, and Dan Littrell, previously a principal in Arthur Young’s San Diego office.
HealthLine’s primary product is PhysicianLine, a computer software package. With the system, a hospital can refer prospective patients to members of its medical staff who meet their criteria in 17 areas, from sex and race to office location or years in practice.
PhysicianLine is one of a handful of computerized referral systems in competition with HealthCareFinder, the system Albachten and Littrell helped devise for Scripps and Arthur Young about two years ago.
The lawsuits allege that PhysicianLine is a rip-off of HealthCareFinder and that the two men began plotting in July to steal Scripps’ technology and customers by pirating the system and going into competition with their former employers.
Scripps’ suit, filed in U.S. District Court in San Diego, accuses the men of violating the Racketeer Influenced and Corrupt Organizations Act. It seeks $1.1 million in damages, restitution for any profits HealthLine may have diverted from Scripps and a court order barring Albachten and Littrell from using the knowledge they gained in their previous jobs to in any way compete with Scripps and Arthur Young.
Arthur Young’s suit, filed in San Diego County Superior Court, also seeks to bar unfair competition by HealthLine and claims Littrell and another HealthLine employee who previously worked for Arthur Young are violating provisions of their employment contracts that prohibited them from competing with the accounting firm for two years after they quit.
The competing products are not big-ticket items--each sells for about $10,000--but the market for referral systems is new and wide open, and both competitors see it as holding the potential for generating a tidy flow of revenue.
“It is obvious that it’s an attractive market to help in this era when hospital costs, and the need for cost efficiency, are greatly increased,” said Mike Bardin, director of communications for Scripps.
Nonetheless, Albachten, 27, and Littrell, 35, say they had no reason to expect a legal double-whammy when they went into business to advance a project they believed their former employers had little interest in developing.
“They claim we stole the software,” Littrell said in an interview at HealthLine’s spartan Mira Mesa office, where the only furnishings are a couple of folding tables, a personal computer and three chairs. “But there’s no similarity to the programing code. There’s no similarity to the capabilities of the system. The similarity stops at the fact they both do physician referral.”
The two sides in the dispute paint conflicting pictures of the men’s behavior in the months since they left the Scripps venture.
According to the lawsuits, Albachten and Littrell stole customers from Scripps, misled potential customers about their affiliations and claimed that PhysicianLine was an updated version of the Scripps-Arthur Young system.
Albachten, however, insists that he and Littrell have bent over backward to make clear they have broken away from the hospital’s venture. He said he continues to carry Scripps’ phone number in his briefcase to give to customers who prefer to deal with the hospital.
“We never sought to confuse anyone,” Albachten said. “The products are so different it would not be to our advantage to confuse anyone.”
Scripps and Arthur Young representatives met with the two men a few days after the suit was filed. According to Albachten, they offered to drop the suit if HealthLine ceased doing business.
Scripps and Arthur Young spokesmen would not comment on the meeting.
