A federal judge has approved a settlement in a complex class action brought against eye-care practice management technology provider ECL Group LLC by ophthalmology practices that licensed software from ECL and related entities. Womble Bond Dickinson partners Russ Ferguson, Patrick Spaugh and Matthew Tilley represented the class of physician practices in the lawsuit over ECL’s flawed response to a series of ransomware attacks in 2021.

The settlement, which Judge Catherine Eagles of the U.S. District Court for the Middle District of North Carolina called “by far the most complex class action settlement I have seen,” creates a $1.46 million fund for the physician class, along with a $2.6 million settlement fund for patients whose personal information was exposed during the resulting data breaches.

The agreement “gives the classes as a whole the best deal possible in light of the limited funds available,” Judge Eagles said in her ruling. In a hearing on the fairness of the settlement, she noted that the class members “get everything they could have gotten, really, and more than if you had litigated it.”

The 2022 lawsuit focused on a series of ransomware attacks in 2021 that exposed patient data and caused outages impacting patient recordkeeping and billing services provided by ECL. The lawsuit alleged that ECL failed to keep patient data secure and to provide contractually required discounts while ECL’s services were unavailable; it also alleged that ECL made misrepresentations about the ransomware attack and engaged in unfair and deceptive trade practices.

Because, as the court found, ECL’s assets are tied up in a receivership and the defendants have large-scale financial obligations to others, Womble Bond Dickinson negotiated an early settlement on behalf of the class. The settlement included:

• Monetary payments for class members
• Credits to ECL customers for future services (which could value as much as $5.5 million)
• The cessation of collection efforts by ECL for unpaid invoices during periods with service interruptions
• The ability to terminate their contracts with ECL early and without penalty (and with cooperation to obtain their data and transition to a new provider)
• The assignment of two insurance policies to the physician class
• A legal release avoiding liability for any data breach claims brought by patients of the physician practices

“This settlement represents the best possible outcome for doctors across the country who were affected by ECL’s business practices,” WBD’s Russ Ferguson said.

Importantly, the only available assets to pay the settlement class’s claims were ECL’s insurance proceeds. Additionally, those insurance policies were being eroded by ECL’s own legal costs—meaning an early settlement provided more money to the physician practices. Before the settlement was finalized, ECL filed for bankruptcy and put itself up for sale. The buyer of ECL attempted to avoid honoring the physician class’s rights under the settlement agreement, including the ability to receive contractual credits and to terminate their contracts with ECL.

Womble Bond Dickinson objected to that in the bankruptcy court in Texas, an effort led by Wojciech Jung. “Without this work” in bankruptcy court, Judge Eagles wrote, “the class probably would have lost substantial benefits from the settlement.”

Patrick Spaugh added, “In the face of a three-way fight between the physicians, the patients, and ECL, this case could have easily ended up with no one receiving money other than ECL’s attorneys. I am thrilled that we instead achieved an early global resolution on behalf of the physicians that maximized their benefits.”

About Womble Bond Dickinson

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