A new Spokane pharmacy faces a lawsuit from the competitor its founders left to start the business.
The owners of ReliantRx LLC, a pharmacy serving long-term care facilities, allegedly used resources and trade secrets of their former employer, Northwest Health Systems Inc., to launch their company, according to a lawsuit Northwest Health filed in Spokane County Superior Court last week.
The suit, which also names ReliantRx CEO Tammy Kroetch, seeks court orders preventing 3-month-old ReliantRx from competing with Northwest Health and unspecified monetary damages. Northwest Health will “continue to suffer a business loss” because of ReliantRx, the lawsuit claims.
However, an attorney for ReliantRx said Kroetch was “very conscientious” in starting the company.
“Nothing prevents Tammy Kroetch from using the knowledge, skills or experience that she acquired through her former employment,” said Jim McPhee, an attorney for ReliantRx. “In the absence of a non-competition agreement, a former employee is generally free to engage in competitive employment.”
Both companies service assisted living centers and adult family homes, a market niche Northwest Health representatives say the 11-year-old company pioneered.
Kroetch left Northwest Health in July, putting her house up for collateral on a federal small-business loan and receiving assistance from technology-business incubator Sirti, she said. ReliantRx employs 12, including three pharmacists, she said.
“I just thought it’s time Spokane had another long-term care pharmacy that’s focusing on customer service,” Kroetch said last week, prior to the lawsuit.
The University District-based startup has picked up contracts, including for roughly 60-resident Rose Pointe Assisted Living, and plans to offer mobile testing, screening and vaccination services, Kroetch said.
ReliantRx will offer services competitors don’t provide,, Kroetch said. But Northwest Health Director of Pharmacy John Prete contended the company had looked to expand into some of those niches. Both companies either use or plan to implement software for records management and interacting with facility staff.
Other competitors include Jones Pharmacy, Bates Pharmacy and Medical Supply and Evergreen Pharmaceutical, Kroetch said.
Northwest Health claims Kroetch used a company computer to create her business plan, which “purloined in large measure the operations of Northwest Health.”
Kroetch left a nearly nine-year tenure at Northwest Health after rising from a bookkeeper to director of operations, a role she held for nearly a year, according to the lawsuit. In the position, she had “unlimited access” to records, operational and financial data, and sales projections,” the suit alleges.”The law recognizes as an employee, you owe a fiduciary duty to your employer,” said Matt Andersen, an attorney for Northwest Health. “You cannot take your employers’ corporate advantage and use it for your own advantage.”
About 11 former Northwest Health employees work at ReliantRx, he said. Northwest Health has between 50 and 60 employees, said Shawna Carlson, pharmacy manager.
Northwest Health alleges Kroetch has a “precise time table to lure away, on a fast track, the known customer base of Northwest Health.”
Kroetch, however, said ReliantRx will pick up clients based on customer service. The company has a sixth-month goal of serving 500 residents, she said.
Using ReliantRx is “very cost-effective” for Rose Pointe, which switched from Northwest Health after being contacted by ReliantRx, said Al Griffone, co-owner. The pharmacy puts all the residents’ medications in plastic bubble packs and offers a system that’s “just about foolproof” to ensure people don’t misappropriate medication, he said.
The suit also lists Kroetch’s husband and ReliantRx Chief Operating Officer Mike Kroetch and several unnamed former employees as defendants, alleging some or all of the defendants violated their fiduciary duties to the company, interfered with contractual relationships, committed fraud and computer fraud, and violated the Uniform Trade Secrets and Racketeer Influenced and Corrupt Organizations acts.