Software companies versus doctors: Who owns electronic health records?

Issue January/February 2016 By Deborah W. Hemdal and Sean S. Nabi

Congress enacted the American Recovery and Reinvestment Act in 2009. A section of that legislation was the Health Information Technology for Economic and Clinical Health Act (HITECH Act). The provisions of the HITECH Act included the Meaningful Use Program operated by the Centers for Medicare and Medicaid Services and mandated by the Affordable Care Act. (42 U.S.C. §§ 3002 and 3013 (2010)) Providers are given financial incentives by the Meaningful Use program to implement electronic health records (EHR). The incentives can amount "up to $44,000 through the Medicare EHR Incentive Program and up to $63,750 through the Medicaid EHR Incentive Program." (Affordable Care Act Implementation and Information, American Medical Group Association, available at As providers have begun taking advantage of this cash-for-EHR system, many have overlooked the terms and implications of the contractual relationship binding providers and EHR software companies.


In order to understand who owns EHR, one has to start with the paper records in a traditional doctor's office. The doctor owned the paper, therefore he owned the record. Let's fast forward to the transfer of patient records to a digital format. Now who owns the record? The doctor does not own the paper any more. He or she generally contracts with a third party to purchase or lease storage devices or data storage space in the cloud. Further, software isn't purchased; it is licensed, which can lead to other complications.

One of the first cases to touch upon ownership of electronic health records is H.M.O. Systems, Inc. v. Choicecare Health Services, Inc., 665 P.2d 635 (Colo. App. 1983). In 1977, Choicecare leased computer hardware for 48 months with an option to buy from H.M.O. Systems and executed a non-expiring software license for a lump sum with H.M.O. Systems. Unfortunately, Choicecare declared bankruptcy three years later. H.M.O. Systems tried to repossess the hardware and terminate the license agreement with Choicecare. The Colorado Appellate Court ruled that the hardware lease had intended to create a security interest for Choicecare and thus was subject to Article 9 of the U.C.C. Since H.M.O. had already received the payment for the software license, it could not repossess the software. Because Choicecare had missed only one lease payment and was in receivership, the court decided that the hardware could not be repossessed either. The contracts in this case were treated as traditional contracts between lessees and lessors. The court was able to sidestep consideration of the ownership of the patient data stored on the computer system.

Two recent cases have highlighted the problem with treating ownership of electronic health records through the perspective of a simple contract dispute. In Milwaukee Health Services, Inc. v. Business Computer Applications, Inc., Civil Action No. 13-CV-797 (U.S. District Court Eastern District of Wisconsin 2013), Business Computer Applications, Inc. (BCA) blocked access to all of Milwaukee Health Services, Inc. (MHSI) patient records in a dispute over unpaid licensing fees. MHSI applied for preliminary injunction to gain access to its records. The court denied the injunction ruling that MHSI did not meet the threshold requirements for an injunction. The court stated that MHSI could access its patient records if it " … simply complies with BCA's demands." (U.S. Dist. Ct. Case No. 13-C-797, Order and Decision on Injunction July 31, 2013). The parties finally reached a settlement in December 2013. The agreement required MHSI to return all of BCA's software and associated media and allowed MHSI to transfer patient data to another EHR system.

A similar case is currently working its way through the Maine courts. ( Full Circle Health Care is in a dispute over payments for software support with CompuGroup. CompuGroup has blocked Full Circle's access to its patients' electronic health records.

This case brings to the fore the unique issue regarding disputes over ownership of health records as data being manipulated by an EHR software system. The patient does not control his own medical record in an EHR system, and cannot transfer his record without assistance from the doctor or the software provider. The patient cannot obtain his medical history from another doctor; the history is unique and irreplaceable. While the courts interpret EHR disputes as contract matters, patients are held hostage. They are not parties to the contracts and do not have standing to seek recourse or even to transfer their information to another doctor.

Software Licensing

Another problem area with EHR is software licensing agreements. In the settlement between BCA and MHSI, MHSI has to return all of BCA's software and documentation. MHSI must necessarily transfer its medical records to another EHR system. Who is responsible for performing that transfer of information? Who is responsible for confirming the completeness and integrity of the transfer? If there are errors or omissions in the transfer who is liable? We consider questions like these in the next section.

When providers contract with EHR software companies to provide software, they are not purchasing goods as understood in the U.C.C. Instead providers are purchasing a software license to operate the system during the duration of a license agreement. This may seem like an ordinary contract however software-licensing agreements are structured differently.

In general, licenses are "a grant of rights by an owner of intellectual property to use, make, have made, or sell the owners' intellectual property." (O'Brien, Intellectual Property Licensing Agreements, MA-CLE (2012)). Thus, providers who purchase an EHR software license are merely gaining the right to use the program for the duration of the software license agreement. Once that license expires, or has been violated, providers no longer have the right to access the software. This inevitably means that providers who allow EHR software licenses to lapse, or who violate the terms of the license agreement, will be prevented from accessing their patients' electronic health records.

As seen above, courts throughout the United States have been treating the EHR software licensing agreements as a contract for the sale of goods. The underlying reason for this is that "software licensings exist in a legislative void." (O'Brien, Intellectual Property Licensing Agreements, MA-CLE (2012)). Although software licensing laws have been developed, specifically the Uniform Computer Information Transaction Act (UCITA), only two states have adopted the UCITA, Virginia and Maryland. ( Thus, disputes regarding EHR software licenses are treated as a standard contractual dispute such as a dispute regarding the sale of goods.

Although the statutes and regulations, which have "incentivized" the push for EHR's, are devoid of any guidance regarding EHR licensing, many industry insiders have begun to suggest good practices that should be negotiated into every EHR software license.

The first is the perpetual license. (EHR Contracts: Key Contract Terms for Users to Understand, ). A perpetual license would allow providers to have unlimited access to the EHR software. However, there is one catch, once the term of the software license agreement is up, the software company will no longer have to support the provider. Thus, providers will have access to the information, but will not receive upgrades to their system or help from the software company in maintaining the system. Although this may interrupt provider's ability to use the multitude of features included within EHR software, such as integrated billing, providers will still be able to maintain access to their patient's health records without disrupting treatment.

The second important term that should be negotiated in every EHR software licensing agreement is a wind down period. (EHR Contracts: Key Contract Terms for Users to Understand, This would require software-licensing companies to allow and assist providers during a designated a time period to transition off of the EHR software, before providers are locked out. In keeping with the purpose of the EHR software programs, this wind-down period would protect patient's access to health records. If and when providers are locked out of EHR software, patients are also locked out from accessing their records.

Until our legislators and regulators devise laws and rules dealing with EHR software licensing that account for the protection of patient access to health records, those in the position to negotiate these licensing agreements must not forget the underlying purpose of EHR systems. Although doctors are incentivized to use EHR software, and EHR software companies should be compensated for their intellectual property, the continuity of patient treatment and access to records should never be interfered with.

When the health care provider and EHR vendor have a dispute what happens to the patient? We will write about patient standing next.