October 09, 2001, 11:03 AM — WebMD Corp. said on Tuesday it will appeal an injunction in a federal appeals court, fighting an order forcing the online medical services company to turn over medical claims data to a firm mining the information on behalf of pharmaceutical companies.
The central issue is WebMD's claim that the data-mining firm's use of the information violates privacy laws. Data mining is the technique of searching for commercially useful information in large databases.
A contract dispute over patient data between WebMD and Quintiles Transnational Corp. resulted in the U.S. District Court for the Eastern District of North Carolina issuing a preliminary injunction forbidding WebMD from withholding data. WebMD said it seeks to vacate the injunction, intending to file a brief with the United States Court of Appeals for the Fourth Circuit.
WebMD acquired a contract to sell data to Quintiles when it purchased health claims processing company Envoy Corp. from Quintiles in May 2000. Management turnover at WebMD has been brisk since then -- the founder left last year, the company's chairman in April and the president last month.
The Envoy purchase made WebMD a medical data clearinghouse, subject to stiff fines or even imprisonment of its executives if it violates patient privacy by allowing medical data to be misused. Facing new state and federal medical data compliance rules, WebMD management reviewed Quintiles' data mining practices and decided in February that Quintiles was not adhering to its contract, WebMD said.
WebMD claims that Quintiles' data practices are inconsistent with Envoy's contract to some of its customers, and potentially violate medical privacy laws. Rather than face potential violations of privacy law, WebMD shut off the data pipeline to Quintiles.
North Carolina-based Quintiles sued in federal court, winning a temporary injunction in March. Quintiles and WebMD have been negotiating since then to modify their relationship and the use of the data.
WebMD, in Elmwood Park, New Jersey, can be contacted at +1-201-703-3400 or at http://www.webmd.com/. Quintiles, in Durham, North Carolina, can be contacted at +1-919-998-2888 or at http://www.quintiles.com/.