Federal lawsuit alleges Verona-based Epic Systems violated antitrust law

Epic Systems, a Verona-based health care software company, is being accused of violating antitrust law in a lawsuit filed in a New York federal court on Monday.

The lawsuit was filed on behalf of Particle Health, a New York health data startup. It said nearly every large health care provider in the country uses Epic’s electronic health records platform and software.

In court documents, Particle Health estimates that between 81 and 94 percent of the U.S. population has at least one record in an Epic database, making the Verona company “the dominant supplier of electronic medical records to third parties.”

The suit says Epic used its dominant position in the market to “stamp out competition” to generate billions of dollars for itself. 

“Epic Systems controls the medical information of nearly every American — meaning one private company has unchecked power over our health care,” Particle Health CEO Jason Prestinario said 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.”

The lawsuit accuses Epic of interfering with contracts and prospective business operations, as well as violating the Sherman Act, an 1890 antitrust law. It also accuses Epic of violating a New York state business law. 

The suit asks the court to declare that Epic broke the law and seeks damages for Particle Health.

Epic has denied that it violated antitrust law.

Lawsuit centers around ‘payer platform’ market

The lawsuit alleges Epic used its market power to block competition in the “payer platform” market. A payer platform is a software that allows insurance providers to request and retrieve medical records directly from electronic health records platforms, automating a previously manual process.

The suit says Epic launched its payer platform in 2021, and it quickly became the largest platform in the nation. It says Epic made it “commercially impossible” for other payer platforms to access the records stored in its electronic health records software.

“Without the ability to pull Epic-stored records — which constitute a substantial majority of all medical records in the United States — and provide those records to payers at scale, any hypothetical competing payer platform was dead on arrival,” the suit said.

In 2023, the suit says Particle Health figured out how to compete with Epic’s payer platform, helping insurance companies access records through customer relationships and contracts with other software vendors. 

After learning about Particle’s payer platform, the suit alleges Epic launched a “multi-pronged campaign to destroy Particle and actively snuff out competition.” The lawsuit said Epic cut off records access to Particle’s customers and began “a smear campaign” against Particle.

That forced customers to end their relationships with Particle, blocked Particle from bringing on new customers and flooded Particle with inquiries about alleged “security and privacy” risks it posed to existing customers, the lawsuit said.

“Epic’s conduct will snuff out meaningful competition in the still fledgling payer platform market, relegating yet another market to Epic’s monopoly control,” the lawsuit said. “That outcome would not only harm the customers of payer platforms (health plans), but also the patients, doctors, and hospitals.”

Epic responds to allegations, antitrust expert weighs in

In a statement, an Epic spokesperson called Particle Health’s claims baseless and accused Particle of violating health care privacy laws. 

“Epic’s software is open and interoperable, allowing health care organizations to easily share data under HIPAA and all relevant regulations,” the spokesperson said. “Epic will continue to protect patient privacy and vigorously defend itself against Particle’s meritless claims.”

Peter Carstensen is a professor emeritus at the University of Wisconsin-Madison Law School, who specializes in antitrust law. He said the case against Epic is “broadly similar” to cases brought against companies like Amazon and Facebook’s parent company Meta.

“All involve similar kinds of claims,” he said. “That is, that this dominant firm has used its power in a variety of ways to exclude competition and, by implication, exploit the customers or suppliers.”

Carstensen said Particle Health is represented by a “well known, very able” law firm and that preparing the lawsuit likely already cost the company more than a million dollars. He also said law firms and clients don’t do that unless they think they’ve got a “plausible case.”

After reading the civil complaint, Carstensen said he anticipates the suit will survive an initial motion to dismiss. 

“The question will be,” he said, “can Particle produce the evidence to support its claim?”