Item 3. Legal Proceedings
Item
3. Legal Proceedings
On
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 Company’s portion of the settlement was approximately $32,000 and the insurance
company paid the balance. The Company’s portion was recorded in accrued expenses at December 31, 2023 in the consolidated balance
sheet.
In
March 2019, a former customer filed a complaint against the Company in New Jersey State Court to recover damages claimed to have been
caused by the mishandling of their account. Plaintiff alleged at least approximately $750,000 in damages which was disputed by the Company.
The parties participated in a one-day court-ordered, non-binding arbitration. At that time, the arbitrator awarded Plaintiff $288,750
on its contract claims, and awarded the Company $21,698 on its cross-claim for unpaid fees. Plaintiff filed to reject this award. The
Company previously filed a partial motion for summary judgment on the alleged punitive damages, but the court denied that motion finding
there is an issue of fact as to whether those can be awarded at trial. The Company filed an offer of judgment for $200,000 during April
2024 which was accepted and paid in July 2024.
In
connection with a prior acquisition, the seller had alleged that the Company owed approximately $800,000 in transition related costs
to them. The parties agreed to settle the claim for approximately $316,000, which was paid in September 2024.
A
former customer had a dispute with the Company that was based on services before and after the account was acquired in an acquisition.
A complaint was filed in Massachusetts State Court, Essex County in February 2018. Under the terms of the purchase agreement, the Company’s
liability, if any, was solely and expressly limited to damages related to its handling of the account at issue. The parties participated
in formal mediation and at that time, Plaintiff’s starting settlement demand was over $2 million. The mediation was not successful.
The Company made an offer of $100,000 in December 2024 to settle the suit, which was accepted. The settlement amount was recorded in
accrued expenses at December 31, 2024 in the consolidated balance sheet. A settlement agreement with mutual releases was signed by the
parties in January 2025 and payment was made in February 2025.
A
dispute occurred with a former customer regarding previous services rendered and they filed a complaint in New York Supreme Court, Onondaga
County in January 2024. During settlement communications, Plaintiff’s initial settlement demand was over $2.5 million. During ongoing
settlement communications, the Company made an offer of $29,000 in March 2025, which was accepted. A settlement agreement with mutual
releases was signed by the parties in May 2025 and payment was made in June 2025.
In
April 2025, a dispute arose with a current customer utilizing one of the Company’s systems and they filed a complaint in Connecticut
Superior Court, Judicial District of Middlesex. The parties agreed to settle the claim for $24,000. This amount was accrued at December
31, 2025 and was paid during January 2026.
From
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.
Please
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.
Item
4. Mine Safety Disclosures
None.
41
PART
II