DOJ Announces $45 Million Settlement with EHR Vendor Over False Claims Act Violations
On November 1, 2022, the United States Department of Justice (DOJ) announced a $45 million settlement with Modernizing Medicine, Inc., an electronic health record (EHR) company over allegations that it violated the False Claims Act. According to the DOJ, Modernizing Medicine accepted and provided illegal remuneration in exchange for referrals, and caused users of its software to report inaccurate information in connection with claims for federal incentive payments.
The case against Modernizing Medicine was initially brought by a former Vice President of Product Management at the company under the qui tam provisions of the False Claims Act.
The DOJ alleges that between 2010 and 2013, Modernizing Medicine violated the False Claims Act and the Anti-Kickback Statute through three schemes. First, Modernizing Medicine solicited and received kickbacks from Miraca Life Sciences, Inc., in exchange for Miraca recommending and arranging for Modernizing Medicine customers to use Miraca’s pathology lab services. Second Modernizing Medicine and Miraca conspired to donate the EHR to certain health care providers to increase lab orders to Miraca and add users to Modernizing Medicine’s customer base. In that case, the donation decisions accounted for the volume/value of the laboratory test referrals. Finally, Modernizing Medicine paid kickbacks to its health care provider customers (and other influential health care industry members) to recommend Modernizing Medicine’s EHR and refer potential customers.
DOJ alleged that Modernizing Medicine, therefore, improperly induced sales for both itself and Miraca, while leading health care providers to submit false claims for reimbursement to the federal government for pathology services.
In addition, the government alleged that Modernizing Medicine caused improper incentive payments from the Department of Health and Human Services (HHS) from January 2010 through July 2017. Under the HHS EHR Incentive Programs, HHS offered incentive payments to health care providers that adopted certified EHR technology and met the “meaningful use” requirements of the technology. Eligibility for the incentive payment hinged on using certified EHR technology that used certain standardized vocabularies for drugs and clinical terminology to conduct certain transactions. The government alleged that Modernizing Medicine knew that its EHR did not always allow physician users to use the required standard vocabularies, thereby causing certain users to submit false incentive payment claims.
The relator in this case will receive roughly $9 million.
This settlement follows the January 2019 settlement with Miraca. In that case, Miraca agreed to pay $63.5 million to resolve allegations that it violated the law by providing subsidies for EHR systems and free or discounted technology consulting services to physicians in exchange for referrals.