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Item 3. Legal Proceedings

2024-03-21 compared with 2023-03-02 · 13 added, 42 removed, 8 unchanged (87% of the section changed)

Legal Proceedings

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.

December 22, 2023, an arbitrator rendered a decision in favor of Ramapo Anesthesiologists, PC (“Ramapo”) and granted in part

and denied in part certain claims brought against Origin Healthcare Solutions, LLC;

Meridian Medical Management, Inc.;

and the Company

for alleged breach of contract and other allegations.

Ramapo was awarded mitigation related costs of $117,000.

The payment for such an

award was made during the first quarter of 2024.

The deadline for Ramapo to file a summary action in New Jersey seeking to overturn the

arbitrator’s decision is April 20, 2024.

The Company’s portion of the settlement is approximately $32,000 and our insurance

will pay the balance.

The Company’s portion has been recorded in accrued expenses in the December 31, 2023 consolidated balance

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

6 unchanged sentences

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