Here’s why you need to pay attention to the evolving legal landscape. Some tech companies are way over promising on their AI capabilities. Those of you who are critical thinkers might chalk it up to marketing fluff. But, where is the line between marketing fluff and fraud?
In a novel 2023 argument, two people and one company sued eviCore Healthcare MSI LLC on behalf of 16 individual states. The plaintiffs charged eviCore with fraud for eviCore’s promises of automated, high approval rates in processing Medicaid claims. The plaintiffs alleged that the promise of automated, high approval rates for those 16 states seeking Medicare and Medicaid reimbursement for medical procedures was a recipe for fraud.
The term the plaintiff used was that eviCore’s AI services were “worthless”.
This is what you need to take away: The appellate court’s decision to not decide the allegations that eviCore’s services were “worthless services”.
That leaves open the novel legal theory that flawed or biased AI can constitute a “worthless service”. SUPER interesting legal claim.
This is another line of attack: look at the contract provisions and sue the AI company for breach of warranties. But, to do that, your contract has to identify the use of AI, and all the safeguards needed to ensure that AI performs the services the buying company paid for. That will be in the warranty section of the contract.
Right now, I am not seeing that type of contract language in my practice. I am sure in the very near future we will see warranty provisions regarding AI, as well as indemnification for AI transgressions. Stay tuned.
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