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Item 3. Legal Proceedings

2022-03-14 compared with 2021-02-25 · 56 added, 43 removed, 4 unchanged (96% of the section changed)

Legal Proceedings

April 4, 2017, Randolph Pain Relief and Wellness Center (“RPRWC”) filed an arbitration demand with the American Arbitration

Association (the “Arbitration”) seeking to arbitrate claims against MTBC, Inc.

(“MTBC”) and MTBC Acquisition

(“MAC”).

The claims relate solely to services provided by Millennium Practice Management Associates, Inc.

(“MPMA”),

a subsidiary of MediGain, LLC, pursuant to a billing services agreement that contains an arbitration provision.

MTBC and MAC jointly

moved in the Superior Court of New Jersey, Chancery Division, Somerset County (the “Chancery Court”) to enjoin the

Arbitration on the grounds that neither were a party to the billing services agreement.

On May 30, 2018, the Chancery Court denied

that motion and MTBC and MAC appealed.

The Chancery Court ordered the Arbitration stayed pending the appeal.

April 23, 2019, the Appellate Division reversed the Chancery Court’s ruling that MTBC is required to participate in the

Arbitration and remanded the case for further proceedings before the Chancery Court on that issue.

May 30, 2018, the Superior Court of New Jersey, Chancery Division, Somerset County (the “Chancery Court”) denied the Company’s

and MTBC Acquisition Corp.’s (“MAC”) request to enjoin an arbitration proceeding demanded by Randolph Pain Relief and

Wellness Center (“RPRWC”) related to RCM services provided by parties unaffiliated with the Company and MAC.

2018, the Company and MAC filed an appeal of the Chancery Court’s decision with the New Jersey Superior Court, Appellate Division.

On July 19, 2018, the Chancery Court ordered that the arbitration be stayed pending the Company’s and MAC’s appeal.

the Company and MAC contended they were never party to the billing services agreement giving rise to the arbitration claim, did not assume

the obligations of Millennium Practice Management Associates, Inc.

(“MPMA”) under such agreement, and any agreement to arbitrate

disputes arising under such agreement did not apply to the Company or MAC as RPRWC terminated the agreement before the APA took effect.

On January 30, 2019, the parties conducted oral arguments before the Appellate Court.

April 23, 2019, the Appellate Division affirmed in part and reversed in part the trial court’s order.

The Appellate Division upheld

the Chancery Court’s ruling that MAC was required to participate in the Arbitration.

The parties completed discovery in

the remanded matter, and both MTBC and RPRWC filed cross-motions for summary judgement in their favor.

On February 6, 2020, the

Chancery Court denied RPRWC’s motion for summary judgment and granted MTBC’s motion for summary judgment, holding

that MTBC cannot be compelled to participate in the Arbitration.

RPRWC has informed MTBC that it does not intend to appeal the

Chancery Court’s ruling and that it intends to move forward solely against MAC in the Arbitration.

On March 25, 2020, the

Chancery Court lifted the stay of arbitration relative to RPRWC and MAC.

to conflicting information provided by RPRWC, it is unclear what the extent of the claimed damages are in this matter which at

this time appear to be entirely speculative.

According to its arbitration demand, RPRWC seeks compensatory damages of $6.6 million,

plus costs, for MPMA’s alleged breach of the billing services agreement.

On June 12, 2020, in response to a directive from

the arbitrator, RPRWC disclosed a statement of damages to MAC in which it increased its alleged damages from $6.6 million and

costs to $20 million and costs.

On July 24, 2020, RPRWC disclosed a declaration to MAC, in which RPRWC estimates its damages to

be approximately $11 million plus costs.

MAC intends to vigorously defend against RPRWC’s claims.

is successful in the Arbitration, MTBC and MAC anticipate the award would be substantially less than the amount claimed.

see “Risk Factor - Acquisitions may subject us to liability with regard to the creditors, customers, and shareholders

of the sellers.”

in Part 1, Item 1A of this Annual Report on Form 10-K.

the portion of the trial court’s order requiring MAC to participate in the arbitration based on the trial court’s finding

that MAC had assumed MPMA’s contractual responsibilities.

The Appellate Division reversed the trial court’s order requiring

the Company to participate in the arbitration on the grounds that insufficient facts had been provided by Randolph Pain from which the

court could conclude the Company was required to participate in the arbitration.

As a result, the Appellate Division remanded the issue

of whether Company is required to participate in the arbitration back to the trial court for further proceedings.

parties completed discovery in the remanded matter on November 29, 2019, and thereafter both the Company and RPRWC filed cross-motions

for summary judgment in their favor.

On February 6, 2020, the Chancery Court denied RPRWC’s motion for summary judgment and granted

the Company’s cross-motion for summary judgment.

The Chancery Court held that the Company cannot be compelled to participate in

the Arbitration.

RPRWC has informed the Company that it does not intend to appeal the Chancery Court’s ruling and that it intends

to move forward solely against MAC.

On March 25, 2020, the Chancery Court lifted the stay of arbitration relative to RPWC and MAC.

its arbitration demand RPRWC alleges that MPMA, a subsidiary of MediGain, LLC, breached the terms of the billing services agreement the

parties had entered into and sought compensatory damages of $6.6 million and costs.

May 28, 2020, the arbitrator handling the matter conducted a scheduling conference with the parties in order to establish deadlines for

the parties to exchange discovery requests and responses.

During the conference the arbitrator directed RPRWC to produce statement of

damages on which it bases its claim.

RPRWC disclosed its statement of damages to MAC on June 12, 2020.

RPRWC’s June 12, 2020 statement

of damages increased its alleged damages from $6.6 million and costs to $20 million and costs.

On July 24, 2020, RPRWC disclosed a declaration

to MAC, in which RPRWC estimates its damages to be approximately $11 million plus costs.

At this time, RPRWC has not provided any evidence

to support its increased claim for damages.

RPRWC recently served expert reports in this matter.

Plaintiff’s expert analyzed only

a minute portion of the claims alleged to have been mishandled and then extrapolated damages to be in the range of $9.8 million to $10.8

however, this is unrealistically based on an alleged 90-100% collection rate on charges.

MAC is preparing rebuttal expert reports

to be submitted shortly.

Currently, the arbitration hearing is scheduled for April 2022.

the allegations of breach of contract made by RPRWC are the subject of the ongoing legal proceedings, MAC believes RPRWC’s allegations

lack merit on numerous grounds.

The Company and MAC plan to vigorously defend against RPRWC’s claim and in the event of a loss,

if any, they anticipate the loss to be substantially less than the amount claimed.

see “Risk Factor - Acquisitions may subject us to liability with regard to the creditors, customers, and shareholders of the

sellers.” in Part 1, Item 1A of this Annual Report on Form 10-K.

time to time, we may become involved in other legal proceedings arising in the ordinary course of our business.

Including the

proceedings described above, we are not presently a party to any legal proceedings that, in the opinion of our management, would

individually or taken together have a material adverse effect on our business, consolidated results of operations, financial position

or cash flows of the Company.

Including the proceedings

described above, we are not presently a party to any legal proceedings that, in the opinion of our management, would individually or

taken together have a material adverse effect on our business, consolidated results of operations, financial position or cash flows of

Mine Safety Disclosures

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings