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Law360 (March 12, 2021, 5:40 PM EST ) A Chicago-based health care information management nonprofit will pay $2.8 million to settle accusations that it committed a "cash grab" by canceling an industry trade show in light of the coronavirus pandemic and pocketing the money other companies paid to participate in it.
The deal provides relief for Washington-based HatchMed Corp. and several other companies that paid fees that Healthcare Information and Management Systems Society Inc., which claims to be a global adviser and thought leader in health information systems, allegedly failed to refund after it canceled an annual industry conference it planned to hold in Florida last March. HIMSS denies any liability and wrongdoing in the litigation.
During a remote hearing, U.S. District Judge Martha Pacold said the parties had presented an "extensive" and "thorough" argument for granting the deal preliminary approval. HatchMed's counsel, Peyton Healey of Hedrick Kring PLLC, told Law360 on Friday that he and his client were "very excited" to get it approved.
"We think that we've obtained a good result for the class that really does get them a significant benefit that will be useful at the end of the day," Healey said.
Representatives for HIMSS did not immediately respond Friday to a request for comment.
While the settlement amount represents HIMSS' financial obligation under the deal, class members will be able to file claims to receive either credit toward their fees for participating in future shows or a mix of cash and credit for future conference participation, according to the parties' preliminary approval motion.
Class members who file a claim for both cash and credit will receive a refund on 20% of the fees they paid to participate in last year's show, a credit equal to 30% of those fees that will help pay for floor space, meeting space and sponsorships at this year's conference, and credit equal to 10% of last year's conference fees that will go toward their participation in HIMSS' 2022 conference, according to the motion.
Settling class members who file all-credit claims will receive a credit equal to 50% of last year's conference fees to go toward this year's conference fees and the same 10% credit for next year's show, according to the motion.
Class members will receive pro rata shares of their cash payments if they submit more claims than the cash fund can fully compensate them for, and any money left unpaid after satisfying all claims will be reallocated in pro rata amounts to class members with previously approved and valid claims, the motion said.
HIMSS typically holds the trade show every year, attracting more than 1,300 exhibitors looking to show off their products and services, according to HatchMed's June complaint.
HatchMed, which sells medical devices, beds and stretchers, paid more than $11,000 in November 2019 to reserve floor space to exhibit its products during the conference, which was to have begun on March 9, 2020, according to the company's suit. Other businesses looking to participate in the five-day show executed similar contracts, it claimed.
Days before the conference was to begin, HIMSS decided to cancel the trade show after the World Health Organization and others declared COVID-19 a global pandemic, HatchMed said in its suit. Unlike the cases of other industry-wide trade shows, HIMSS saw the pandemic as "transparent opportunity for a cash grab" and unilaterally decided to keep the money its exhibitors paid to be a part of the conference, HatchMed claimed. That decision breached the contracts HIMSS entered with with HatchMed and at least 100 other exhibitors, according to the suit.
HatchMed is represented by Peyton Healey of Hedrick Kring PLLC; and Nicholas Peters and Nicole Little of Fitch Even Tabin & Flannery.
HIMSS is represented by Mark Mester, Kirsten Lee and Robert Collins III of Latham & Watkins LLP.
The case is HatchMed Corp. v. Healthcare Information and Management Systems Society Inc., case number 1:20-cv-03377, in the U.S. District Court for the Northern District of Illinois.
--Editing by Peter Rozovsky.
Correction: An earlier story included incorrect defense counsel information. The error has been corrected.
For a reprint of this article, please contact reprints@law360.com.
