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Item 3. Legal Proceedings

2023-03-02 compared with 2022-03-14 · 45 added, 55 removed, 5 unchanged (95% of the section changed)

Legal Proceedings

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 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.

December 9, 2022, an arbitrator rendered a decision in favor of MTBC Acquisition Corp.

(“MAC”) and dismissed the claims brought

against MAC by Randolph Pain Relief and Wellness Center (“RPRWC”), determining that RPRWC failed to prove any breach of the

applicable billing services agreement and failed to prove that any alleged damages were due.

RPRWC has until April 5, 2023 to file a

summary action in Superior Court of New Jersey should it seek to have the decision overturned.

was a client of Millennium Practice Management Associates, Inc.

(“MPMA”), a subsidiary of MediGain, Inc., whose assets were

purchased by MAC on October 3, 2016, after RPRWC terminated its billing services agreement with MPMA.

After MAC’s purchase of MediGain’s

assets, RPRWC demanded an arbitration proceeding against CareCloud and MAC before the American Arbitration Association for damages they

alleged were caused by MPMA prior to the asset purchase.

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

and MAC’s request to enjoin the arbitration proceeding demanded by RPRWC.

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

The Chancery Court

stayed the arbitration pending the appeal.

On appeal, CareCloud and MAC contended they were never party to the billing services agreement

giving rise to the arbitration claim, did not assume the obligations of MPMA under such agreement, and any agreement to arbitrate disputes

arising under such agreement did not apply to CareCloud or MAC as RPRWC terminated the agreement before the applicable asset purchase

agreement took effect.

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

The Appellate Division

upheld the portion of the Chancery Court’s order requiring MAC to participate in the arbitration based on the Chancery Court’s

finding that MAC had assumed MPMA’s contractual responsibilities.

The Appellate Division, however, reversed the Chancery Court’s

order requiring CareCloud to participate in the arbitration on the grounds that insufficient facts had been provided by RPRWC from which

the court could conclude CareCloud was required to participate in the arbitration and remanded the matter back to the trial court for

further proceedings.

February 6, 2020, the Chancery Court held that CareCloud cannot be compelled to participate in the arbitration.

On March 25, 2020, the

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

In its arbitration demand, RPRWC alleged 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.

the discovery phase of the arbitration, RPRWC served expert reports whereby RPRWC’s expert alleged that damages were estimated

to be in the range of $9.8 million to $10.8 million.

MAC served an expert report refuting the alleged damages.

the event RPRWC files a summary action, MAC will continue to vigorously defend against RPRWC’s claim.

It remains that since MAC

is not a significant subsidiary of CareCloud pursuant to Rule 1-02(w) of Regulation S-X and CareCloud is not a party to this proceeding,

we do not expect any outcome to have a material impact on the Company’s consolidated financial statements.

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

Including the proceedings

Including the proceeding

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

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.

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