Connecticut Healthcare Tech Co. Sues Ex-Employees for Starting Rival Firm

Four former Quality Health Ideas, Inc. (QHI) employees and their new venture, The Stellar Health Group, Inc., have been accused of looting QHI of its valuable business assets to create a competing web-based healthcare platform. The Dec. 18 complaint, filed in the District of Connecticut, brings fourteen counts against the defendants for breach of contract, fiduciary duty, fraud, tortious interference with business relations, and trade secret theft, among other charges.

The filing explains that QHI is a Connecticut-based company that developed a “web-based application that delivers actionable information to primary care providers, improving their quality of care and reducing total medical expenses.” Defendant Benjamin Kraus, the founder’s son-in-law, reportedly joined the QHI team as president and COO in 2015. Allegedly, the three other defendants were hired thereafter, including both a high level officer, who later became a board member at Kraus’s behest, and a chief medical director.

The filing states that the new hires proved poor at soliciting business and finding investors. Reportedly, Kraus and one of his business school friend hires, started to work on their duplicative venture when QHI began to stagnate.

The complaint cites various duplicitous actions the defendants took in order to set up Stellar Health. Allegedly, they gleaned technical and other proprietary information about QHI’s core product, CareScreen, through meetings with its software developers. In addition, and before leaving the company in December 2017, Kraus and another defendant reportedly told QHI’s largest customer that the company would not be able to meet its demands once they left. QHI contends that the defendants did so with the intention to “undermine QHI’s relationship with that customer.”

Furthermore, when departing QHI, Kraus allegedly represented to the company that he did not intend to compete with it, and based thereon, was allowed to remain a board member for several more months. Ostensibly seeking to “destroy” QHI, Kraus contracted with QHI personnel, without disclosing those contracts to the board or other leadership. Finally, the filing notes that one of the defendants described Stellar Health’s flagship product in a July 2019 podcast interview, but was, for all intents and purposes, describing QHI’s.

For the alleged harm, QHI seeks compensatory, consequential, and punitive damages, its attorneys’ fees and litigation costs, and accrued interest.

The plaintiff is represented by Shipman & Goodwin LLP.