SOURCE: Greenberg Traurig, LLP

April 03, 2007 14:06 ET

Court Rules That Hospitals' Fraud Claims Against MedQuist Survive Motion to Dismiss

Greenberg Traurig Represents Hospitals in What Is Expected to Be One of the Largest Class Actions by Corporations Against Another Company

WASHINGTON, DC -- (MARKET WIRE) -- April 3, 2007 -- The international law firm Greenberg Traurig announced today that Judge Simandle of the District Court for the District of New Jersey denied MedQuist's motion to dismiss the fraud claim brought by Greenberg Traurig on behalf of a putative class of hospitals. The fraud claim against MedQuist will be going forward.

The Court's ruling now enables Greenberg Traurig to take the next step to take discovery and seek class certification for the Plaintiff hospitals. The class is expected to grow as it's anticipated that as many as 3,000 hospitals nationwide are clients of MedQuist and that the losses due to MedQuist's fraud are expected to be quite significant. The class action is expected to be one of the largest ever taken by corporations against another company.

The class action suit was filed in 2004 by Greenberg Traurig on behalf of Florida's South Broward Hospital District and others, against MedQuist (MEDQ.PK), a publicly traded company based in Mt. Laurel, New Jersey and the number one vendor for electronic medical transcription services, following an independent investigation of MedQuist's billing procedures.

On March 30th, the Court ruled on a number of motions in a 74-page decision. On the motion by MedQuist to dismiss the case and compel arbitration, the Court found that MedQuist had waived its right to compel arbitration and the case will now move forward in the Court. In the opinion, the Court denied MedQuist's motion to dismiss the claim of fraud, finding that the Plaintiff hospitals sufficiently pleaded a cause of action for fraud against all named Plaintiffs.

"We are pleased for our clients that the case is going forward," said Mark Hogge of Greenberg Traurig. "The hospitals have waited a long time to be fully compensated by MedQuist. We hope the wait will not be too much longer."

Claims alleging a violation of RICO and RICO conspiracy were dismissed against MedQuist but are going forward as to individual defendants, certain present and former MedQuist senior executive officers. The Court dismissed claims of negligent misrepresentation and negligent supervision, as well as claims of violation of the New Jersey Consumer Protection Act and the California Unfair Business Practices Act.

About Greenberg Traurig, LLP: Greenberg Traurig, LLP is an international, full-service law firm with 1,600 attorneys and governmental affairs professionals in the U.S., Europe and Asia. The firm is ranked seventh on The American Lawyer's Am Law 100 listing of the largest law firms in the U.S., based on number of lawyers.

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