As 2012 drew to a close, XIFIN Inc. entered into a lucrative contract to help manage the billing for Spokane, Wash.-based PAML. But not long after the San Diego-based firm headed north to begin the work, the whole pact began to go south.
As a result, the two high-profile firms briefly duked it out in a very public manner, with XIFIN suing PAML in federal court, claiming it breached a multimillion-dollar contract, acted in bad faith during the course of the contract, and defamed it to another potential client.
However, XIFIN and PAML apparently reached a settlement earlier this week. A statement issued by a XIFIN spokesperson late on June 4 declared that the two sides “have had productive meetings and found an amicable way forward. Both companies continue to have great respect for each other’s high quality products and services. This respect and collaboration has allowed PAML and XIFIN to resolve the issues that were the subject of litigation.”
XIFIN had previously claimed that PAML only paid it $700,000 out of a minimum of $5.7 million it was owed for the pact and that PAML systematically delayed providing the information required for XIFIN to install the billing system.
“PAML’s executive leadership did not provide guidance and staff prioritization or make the decisions needed to implement the implementation project plan, and PAML IT did not perform or did not timely perform the PAML obligations in the agreed upon . . . plan,” the lawsuit had claimed.
The lawsuit claimed that PAML’s recalcitrance was due in part to the hiring of a new chief financial officer and chief information officer not long after the contract was signed, and neither was onboard with working with XIFIN.
The suit also had claimed that PAML executives asked that XIFIN program its software in a way that it would no longer be compliant with state and federal guidelines. XIFIN alleges that was in contravention to a request by PAML Chief Executive Francisco Velázquez, M.D., that it be compliant with both federal and state rules.
Eventually, the suit claimed, PAML’s executives realized it was not going to meet implementation deadlines and, as a result, “compile[d] an exhaustive list of all pending implementation details, or issues that PAML didn’t understand about the XIFIN system, label[d] them as ‘material breaches,’ then harass[ed] XIFIN, by sending multiple letters from counsel, articulating an ever changing list of implementation details as material breaches” to the contract. Eventually, PAML claimed 98 instances of breaches to the contract, according to the suit.
XIFIN had claimed in the suit that it made attempts to address PAML’s concerns, but the lab showed little concern whether the breaches it claimed had occurred were fixed or not. The suit also claims that in December of last year, PAML’s chief financial officer defamed XIFIN to another potential client, Integra Imaging, by telling an executive with that firm that PAML had to push back implementation deadlines due to XIFIN and that XIFIN’s products would likely not meet its needs. According to XIFIN, it believed it was the top candidate for a contract with Integra, and it never received the company’s business. PAML formally terminated the contract on March 3 of this year, the suit claimed.
Founded in 1997, XIFIN has grown into one of the largest financial intermediary and revenue management firms for laboratories in the United States. PAML is one of the largest independent labs in the western United States.
Neither Velázquez nor XIFIN Chief Executive Officer Lâle White were available to discuss the litigation and apparent settlement.
Takeaway: Service contracts between laboratories and other firms do not always go smoothly as originally envisioned.
