On Monday, HealthCor Management filed a lawsuit against Allscripts Healthcare Solutions -- a provider of electronic health record systems and other health IT tools -- after Allscripts CEO Glen Tullman rebuffed HealthCor's demands that he resign, Reuters reports.
HealthCor is one of Allscripts' largest shareholders, owning about 5% of the company's outstanding shares. HealthCor filed the suit in the Delaware Court of Chancery (Hals, Reuters, 5/21).
Last month, Allscripts terminated its board chair Phil Pead, and three other board members resigned in protest.
After the resignations, the price of Allscripts' shares dropped by 40% (Monegain, Healthcare IT News, 5/22). HealthCor then called for Tullman to resign, but he refused.
Details of the Lawsuit
In its lawsuit, HealthCor said that the members who left Allscripts' board represented the entire leadership team that the company gained when it merged with the health IT firm Eclipsys.
The lawsuit stated, "These now departed directors were those most able to protect critical product lines which Eclipsys brought to Allscripts from the continuing failures of execution by Tullman."
HealthCor also criticized Allscripts for proposing nominees to fill vacant board positions at the company's annual meeting but not allowing shareholders to nominate candidates for the positions.
HealthCor has asked the court to postpone Allscripts' June 15 annual meeting to give HealthCor an opportunity to nominate board members. The suit also is seeking to eliminate a company bylaw requiring board nominees to be proposed in January.
Response From Allscripts, Tullman
Ariania Nikitas, spokesperson for Allscripts, said that the company is reviewing the lawsuit and that it does not discuss pending legal action (Reuters, 5/21).
In an interview with Healthcare IT News, Tullman said, "We have had challenges in a number of areas and have plans in motion to address them."
He added that the company is focusing on client experience and product delivery, investing $190 million this year to improve performance, product integration and innovation (Hall, FierceHealthIT, 5/21).