DOJ Joins Whistleblower Suit Against EHR Company for Alleged False Claims Act Violations

Earlier this year, the United States Department of Justice filed a notice of partial intervention into a whistleblower suit against Modernizing Medicine (ModMed), an electronic health records (EHR) vendor. The original lawsuit, filed in 2017, alleges that ModMed violated the False Claims Act several ways, including misuse of federal EHR incentive programs that resulted in illegal kickbacks for physicians.

Allegations

According to the lawsuit, ModMed develops and sells EHR software to healthcare providers throughout the country. ModMed allegedly falsely represented to its certifying bodies and the United States that its software complied with requirements for certification and for the payment of incentives under the Meaningful use program.

Specifically, ModMed allegedly (a) falsely attested to its certifying body that its software met the certification criteria; (b) obtained certification of its software without ensuring that the software released to customers met certification criteria; (c) caused its users to falsely attest to using a certified EHR technology when its own software could not support the applicable certification criteria in the field; and (d) caused its users to report inaccurate information regarding Meaningful Use objectives and measures in attestations to the Centers for Medicare and Medicaid Services (CMS).

Those failures and lies led to inaccurate upcoding – in some cases even putting patient health at risk. The complaint alleges that instead of spending time and resources to correct the flaws in its software, the company “continuously de-prioritized high priority defects in favor of development of new products and new sources of revenue.” The complaint states that the most serious problems with respect to patient safety involved inaccurate medication prescribing, but that there were also issues with inaccurately charting medical history, date and time of encounter note entries, confusing chart entries between patients, improper prescriptions to children, mix-ups of lab specimens, and inaccurate association of lab results with orders.

The DOJ filing also names Daniel Cane and Michael Sherling, M.D., ModMed’s CEO and Chief Medical Officer, respectively, as individual defendants in addition to the company.

The DOJ will continue to investigate the relator’s allegations as to which it has not yet made an intervention decision and intends to file a complaint-in-intervention within 90 days that fully outlines the allegations it will pursue against the three named defendants.

Statements

The suit was initially filed by a former ModMed executive who joined the company as a product director in 2014 and resigned in 2017 as the vice president of produce management. She released a statement, saying, “I am pleased the Justice Department recognizes the seriousness of this matter and is intervening in the case after investigating my allegations.”

ModMed, has stated it disagrees with the allegations and will defend vigorously, “At ModMed, we stand behind the integrity of our products and our people. We remain steadfast in our mission to place doctors and patients at the center of care through an intelligent, specialty-specific cloud platform. The Company disagrees strongly with the allegations in the qui tam complaint and we intend to defend vigorously against them.”