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Idexx contract spurs lawsuit after veterinary clinic sale

When VCA bought it, practice switched laboratory service providers


May 21, 2019
By Edie Lau


Photo by John Ewing
Like its competitor VCA Antech, Idexx, which is based in Westbrook, Maine, has sued veterinary practices for allegedly breaching laboratory-services contracts. Idexx's latest case involves a clinic now owned by VCA.

Over the years, VCA Inc. has sued many veterinary practices in disputes over contracts for services from Antech, its diagnostic laboratory business. In a twist on the theme, the former owner of a practice that belongs now to VCA is on the defensive side of a contract-breach suit. The plaintiff is Idexx, Antech's chief rival.

The target of Idexx's complaint is Chatsworth Veterinary Center Inc., which owned a Southern California practice bought by VCA in February 2017. Although VCA is not named in the suit, the corporation's involvement is pivotal to the case: As the new owner, VCA switched the practice to using its own laboratory, Antech, rather than continue using Idexx as agreed by the previous owner.

The basics of the dispute are similar to those in which VCA has been the complainant: The diagnostic laboratory offers to veterinary practices rebates and discounts for services in exchange for a specified minimum amount of business for a specified period of time.

In the Chatsworth case, the clinic was to use Idexx for at least 90% of its laboratory business each year for six years, and make at least $4,761 in purchases each month, according to the legal complaint.

The contract period was April 1, 2016, through March 31, 2022.

The suit was filed March 6 in U.S. District Court in Maine, the state where Idexx is headquartered. The plaintiff is Idexx Distribution Inc., which operates some of its laboratory business under the name Idexx Reference Laboratories. The defendant is Chatsworth Veterinary Center Inc., located in Chatsworth, California. The contract signee representing Chatsworth is Dr. Susan Milder.

According to the suit, Chatsworth "substantially stopped" using Idexx laboratory services on or around March 3, 2017. Idexx calculates its lost profits at $203,295, based on the minimum purchase amount; or at least $220,973 based on the hospital's historic purchasing levels and its commitment to use Idexx almost exclusively. Idexx is seeking damages, costs and attorney's fees.

In a response filed Monday, Chatsworth acknowledges the existence and terms of the agreement as described by Idexx, and does not dispute that the practice stopped using Idexx laboratory services. However, Chatsworth denies the allegation of contract breach. Its response invokes a number of legal doctrines that imply the complaint was brought too late and that cast doubt on the fairness of the agreement, but does not provide specifics.

Responding to inquiries from the VIN News Service, Manny Freiser, spouse and business partner of Milder, declined to comment for this article other than to provide a factual history of the practice.

Freiser, a lawyer and singer-songwriter, said by telephone that he and Milder purchased Chatsworth Animal Clinic and began operating it as Chatsworth Veterinary Center in March 1994. They incorporated the business as a limited liability corporation in 2000. VCA acquired the practice effective Feb. 21, 2017. The hospital is now called VCA Chatsworth Veterinary Center. Milder continues to work there as medical director.

Established in 1987, VCA is one of the largest veterinary brands in North America, operating 910 small animal hospitals in the U.S. and Canada. In September 2017, VCA became part of Mars Inc., the world's largest owner of veterinary practices. (Mars also owns Banfield Pet Hospital, the biggest practice brand in the U.S., with more than 1,050 locations.)

Asked why VCA isn't named as a defendant in the suit, Freiser said the dispute "has nothing to do with VCA" because the contract predated VCA's ownership.

VCA CEO Bob Antin had the same response. "We don't have anything to do with the obligation that the doctor made previously with Idexx," he said in a telephone interview.

Whether Idexx agrees is unclear. Idexx attorney Adrianne Fouts did not respond to email or telephone messages from VIN News.
 
Antin noted that in some acquisitions, VCA opts to fulfill contracts executed by a hospital's previous owner. In fact, he said, "We do have hospitals that are still using Idexx. They're transitioning."

But in general, he said, it's the previous owner's responsibility to close out contracts upon selling the hospital. "My personal opinion is, if you have an obligation, go deal with them. Go get it resolved," Antin said. He suggested that a seller could use some of the proceeds from a sale to resolve such obligations.

VCA has pressed dozens of contract-breach claims since 2011. It's largely prevailed in court, but most cases have been settled out of court.

Idexx has pursued fewer contract-breach cases than VCA but the Chatsworth case isn't its first. A database of federal court cases shows four such complaints against veterinary practices filed by Idexx between 2015 and 2017. They are:

  • Idexx Laboratories Inc. and Idexx Distribution Inc. v. Triple R Veterinary PLLC. (See complaint and response.)
  • Idexx Laboratories Inc. and Idexx Distribution Inc. v. Animal Clinic of Hampton Bays, PC. (See complaint and counterclaim.)
  • Idexx Laboratories Inc. and Idexx Distribution Inc. v. Donkate Enterprises Inc. doing business as Veterinary Center at Fishhawk. (See complaint and counterclaim.)
  • Idexx Laboratories Inc. and Idexx Distribution Inc. v. Auburn Inc. doing business as Hagan's Pet Resort. (See complaint and counterclaim.)

Idexx won a judgment of $3.6 million in the case against Triple R. The cases against Animal Clinic of Hampton Bays and Donkate Enterprises settled out of court. The case against Hagan's Pet Resort ended with a confidential court order.




VIN News Service commentaries are opinion pieces presenting insights, personal experiences and/or perspectives on topical issues by members of the veterinary community. To submit a commentary for consideration, email news@vin.com.



Information and opinions expressed in letters to the editor are those of the author and are independent of the VIN News Service. Letters may be edited for style. We do not verify their content for accuracy.




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