A local dialysis firm is set to collect $305,000 in damages from a medical billing software vendor following a breach of contract dispute.

Colorado-based Gaia Healthcare Systems had filed a claim with the American Arbitration Association against National Renal Alliance in October 2008, seeking more than $178,000 in unpaid software license fees and other damages from the Brentwood-based company. According to the document, available here, National Renal stopped making payments on its system in July 2007 but continued to use its software and make “untrue and disparaging statements” about Gaia.

National Renal — which was purchased by local competitor Renal Advantage early last year — denied Gaia’s allegations and issued a counterclaim against the vendor, here, alleging breach of contract and fraud and misrepresentation. National Renal argued Gaia’s software did not perform as promised, causing billing delays that interfered with its ability to collect payments and forced it to draw on its line of credit, pay its employees overtime, and “hire temporary employees to correct errors generated by the software.”

According to a petition filed last week in the U.S. District Court for Middle Tennessee, an arbitrator with the American Arbitration Association on Sept. 13 sided with National Renal, denying Gaia’s claim in its entirety and awarding $305,000 to National Renal. The petition seeks entry of a court order confirming the award.

National Renal was represented by Steven A. Riley and Tim Harvey of Riley Warnock & Jacobson PLC. Barry A. Schwartz and Elizabeth J. Peros of Denver-based Kamlet Shepherd & Reichert LLP represented Gaia.