The suit alleges that CHS stonewalled an independent IT audit, which would show that the for-profit hospital chain was giving hospitals it had sold unlicensed access to software.
The troubles continue for Community Health Systems Inc.
Microsoft Corp. filed suit against the Franklin, Tennessee-based for-profit hospital chain this week, claiming that CHS has been "willfully infringing" on Microsoft's copyrights with extensive, unlicensed use of its software.
In the suit, Redmond, Washington-based Microsoft said it began investigating CHS' possible violations of its volume licensing agreement in 2016, when CHS began an extended string of hospital divestitures.
Since then, Microsoft said, its contractual right to an independent audit of the use of its software has been hobbled by CHS.
Under the contract, if an audit reveals 5% or more of CHS' use is unlicensed, the hospital chain has to reimburse Microsoft for the cost of the audit, and buy the licenses at 125% of the price for each product.
"CHS has been largely not responsive to, if not obstructionist of, Microsoft's contractual right to an independent verification," the Redmond, Washington-based software giant said in court documents.
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Microsoft claims it has given CHS "every opportunity to comply with the independent verification process, and Microsoft has exhausted its best efforts to resolve this matter without judicial intervention."
"CHS' pattern of conduct, including missing numerous mutually agreed upon deadlines and providing incomplete data, demonstrates its unwillingness to comply with its contractual obligation and/or with the independent verification process," the complaint read.
In October 2016, Deloitte & Touche LLP was retained to audit CHS' usage of Microsoft software. Thus began a 16-month-long series of stonewalling tactics that included oft delayed or cancelled meetings, "ostensible technical issues," incomplete data submissions, and repeated missed deadlines, the suit alleges.
At one point, the suit alleges, CHS tried to include a non-disclosure agreement that would limit both the audit and the release of the information to Microsoft.
"Restricting the release of information to Microsoft would defeat the purpose of the independent verification process," the complaint read, "as it would prevent Microsoft from being able to fully verify CHS' licensing and contract compliance."
Finally, after months of badgering by Deloitte, CHS submitted data in December, 2017, that was still incomplete, but which showed that CHS' use of the software was more than 500% larger than what it had disclosed the previous January.
CHS did not return calls seeking comment.
The troubled company has been selling hospitals over the past two years in an effort to reduce a debt burden created with the ill-fated $7.6 billion acquisition of Naples, Florida-based Health Management Associates Inc. in 2013.
The Microsoft suit was filed in U.S. District Court in Murfreesboro, Tennessee. Read the complaint below:
John Commins is the news editor for HealthLeaders.