NextGen Healthcare Reaches $31 Million Settlement, Resolving Alleged FCA Violations

Earlier this year, NextGen Healthcare Inc. agreed to pay $31 million to resolve allegations that the company violated the False Claims Act (FCA) by misrepresenting capabilities of certain versions of its electronic health record (EHR) software and by providing illegal remuneration to its users to entice them to recommend the software.

The lawsuit was initially brought in 2018 under the qui tam provisions of the False Claims Act by health care professionals at a facility that used NextGen’s EHR software. The Relators alleged that NextGen’s EHR system had pervasive flaws that rendered it incapable of meeting CMS Meaningful Use Standards and that NextGen violated the Anti-Kickback Statute by providing remuneration to decision-makers in health care companies to influence their decision to purchase NextGen EHR products.

The United States alleged that NextGen falsely obtained certification for its software in connection with the 2014 Edition certification criteria published by the Department of Health and Human Services (HHS) Office of the National Coordinator (ONC) for the Center for Medicare and Medicaid Services (CMS) EHR Incentive Program. Specifically, NextGen allegedly relied on an auxiliary product that was designed only to perform the certification test scripts, which concealed from the certifying entity that NextGen’s EHR lacked important functionality. Therefore, the government alleged, the EHR that NextGen released to its users lacked required functionalities, including the ability to record vital sign data, to translate data into required medical vocabularies, and to create complete clinical summaries.

The government further alleged that NextGen violated the Anti-Kickback Statute as it knowingly gave credits – often worth as much as $10,000 – to current customers who recommended NextGen’s EHR software and the recommendation resulted in a sale. The government also alleged that other remuneration, including tickets to sporting and entertainment events, was provided to induce purchases and referrals.

Under the settlement, NextGen agreed to pay $31 million – double the alleged injury suffered by the United States due to NextGen’s actions, plus $1.2 million in attorneys’ fees for the Relators. The settlement did not require NextGen to admit any liability, make changes to its EHR software, or submit to any corporate compliance monitoring.

This is one of the most recent settlements by the Department of Justice (DOJ) against an EHR vendor, showing that the DOJ continues to scrutinize health care technology companies as providers continue to rely heavily on technology and third-party software to improve and support patient care.

“Medical providers must be able to rely on electronic health records systems to correctly document and process important health data for continuity of patient care,” said Special Agent in Charge Maureen R. Dixon for the HHS, Office of the Inspector General (HHS-OIG). “We will continue to work with our valuable law enforcement partners to evaluate allegations brought under the False Claims Act and ensure the integrity of Medicare programs.”

For their part, the two whistleblowers will receive $5,580,000 of the settlement.