On April 30, 2021, the United States Department of Justice (DOJ) announced a $3.8 million settlement with CareCloud Health, Inc., (f/k/a CareCloud Corporation) to resolve allegations that the company paid illegal kickbacks to generate sales of its electronic health records (EHR) software products.
The United States alleged that between January 1, 2012 and March 31, 2017, CareCloud violated the Anti-Kickback Statute and False Claims Act through the “Champions Program,” a marketing referral program run by the company. Under the Champions Program, CareCloud allegedly offered existing clients cash equivalent credits, cash bonuses, and percentage success payments in exchange for recommendations of its EHR products to prospective clients.
In addition, CareCloud had clients who participated in the program sign written agreements that prohibited them from giving any negative information about its EHR products to prospective clients to whom they were paid to serve as references. Prospective clients were not told about the referral-kickback arrangement, nor the written agreement between CareCloud and current clients that prevented the client from sharing any negative company information.
The payments from CareCloud to clients in the Champions Program violated the Anti-Kickback Statute and False Claims Act because the kickbacks resulted in false Meaningful Use and Merit-Based Incentive Payment System (MIPS) payments.
Of the total $3,806,966.70 settlement payable to the United States, $1,464,217.96 is restitution to the United States.
The case was brought under the qui tam provisions of the False Claims Act by a former senior manager at CareCloud. The Relator will receive $803,269.97 from the total settlement (to come out of the total settlement amount). CareCloud will pay an additional $405,000 directly to the Relator for attorneys’ fees, expenses, and costs.
CareCloud has admitted no wrongdoing in connection with the settlement and opted to settle “in an effort to move forward, focusing its efforts fully on the vital support and services it provides to its clients, and avoid costly litigation.”
“Product functionality, reliability, and safety should drive a medical software company’s success, not illegal kickbacks paid to promote its products,” said Acting United States Attorney Juan Antonio Gonzalez. “There is simply no place for kickbacks in our country’s healthcare system. Companies who ignore this will be held accountable.”
“Medical software executives who unlawfully promote the capabilities of their electronic health record technology, and pay others to do the same, diminish their credibility and waste taxpayer money,” said Special Agent in Charge Omar Pérez Aybar. “My Office will continue to investigate such actions to protect the funding for federal health care programs.”
CareCloud was acquired by MCBC, Inc. in January 2020 and has since discontinued the Champions Program in this format.