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eClinicalWorks Settles False Claims Act Allegations for $155 Million

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  • Posted on: Jun 13 2017

The Department of Justice recently announced a settlement with eClinicalWorks (“ECW” or the “Company”) related to alleged False Claims Act violations. The Massachusetts-based company, one of the largest electronic health records (“EHR”) vendors in the U.S., had been accused of misrepresenting its software capabilities and paying kickbacks to customers in exchange for promoting its product.

What is the False Claims Act?

The False Claims Act is designed to protect the government from being overcharged for goods or services. These cases involve various types of fraud, such as Medicaid and Medicare fraud, defense contractor fraud, overcharging the government, billing for services that were never provided, paying kickbacks, and so on. Under this law, a whistleblower that reports someone for defrauding the government can receive a portion of any funds that are recovered.

The $155 million settlement arose from a lawsuit brought by a whistleblower who will receive an award of about $30 million out of the settlement. During the Obama Administration, the Department of Health and Human Services (“HHS”) created the Electronic Health Records Incentive Program to reward healthcare providers that adopted and demonstrated the “meaningful use” of EHR certified technology. In order to obtain certification for their products, EHR vendors had to attest that their products satisfied specific HHS criteria that passed testing by an accredited independent certifying entity approved by HHS. 

The Government’s Allegations And The Settlement

In its complaint-in-intervention, the government alleged that ECW falsely obtained that certification when it concealed from its certifying entity that its software did not comply with the requirements for certification. For example, in order to pass certification testing without meeting the certification criteria for standardized drug codes, the Company modified its software by “hardcoding” only the drug codes required for testing.  In other words, rather than programming the capability to retrieve any drug code from a complete database, ECW simply typed the 16 codes necessary for certification testing directly into its software.  ECW’s software also did not accurately record user actions in an audit log and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks.  In addition, ECW’s software failed to satisfy data portability requirements intended to permit healthcare providers to transfer patient data from ECW’s software to the software of other vendors.  As a result of these and other deficiencies in its software, ECW caused the submission of false claims for federal incentive payments based on the use of ECW’s software.

Additionally, the Company allegedly paid customers up to $500 to recommend its EHR software to clients in violation of the federal Anti-Kickback Statute. 

“Every day, millions of Americans rely on the accuracy of their electronic health records to record and transmit their vital health information,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “This resolution is a testament to our deep commitment to public health and our determination to hold accountable those whose conduct results in improper payments by the federal government.”

The settlement calls for eClinicalWorks and three of its founders to pay the federal government $155 million. Of that, $154.92 million will be paid by the Company while the remaining $80,000 will be paid by the three principals. eClinicalWorks also entered into a Corporate Integrity Agreement that imposes quality control and other obligations on the Company for 5 years.

The Takeaway

Ultimately, this case highlights how far-reaching efforts to defraud the federal government can go. If you have knowledge of a False Claims Act violation, an experienced attorney can advise you of your legal options for compensation.

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