MIAMI, Florida, April 30, 2021 – CareCloud Health Inc., a Miami-based healthcare technology company, has agreed to pay $3.8 million to the federal government to settle a “qui tam” lawsuit filed on behalf of a whistleblower by Phillips & Cohen LLP that alleged CareCloud paid kickbacks to healthcare providers to boost sales of its electronic health records products.
The US Department of Justice joined the case against CareCloud and intervened in the kickback claims after it investigated the allegations in the qui tam lawsuit, which was filed “under seal” in 2017 in federal district court in Miami and announced today after the court unsealed the case.
The qui tam complaint also alleged that CareCloud’s EHR software had flaws “that not only rendered the system unreliable and unable to meet Meaningful Use [federal] standards, but the flaws also created a risk to patient health and safety.” DOJ did not intervene in those particular claims.
CareCloud was founded in Miami and headquartered there until last year, when it was acquired by MTBC, which is based in Somerset, NJ. MTBC recently renamed the entire company CareCloud.
According to the qui tam complaint, CareCloud paid kickbacks to customers who participated in its so-called “Champions Program.” Existing customers signed written agreements with CareCloud to recommend its EHR products to potential customers in exchange for cash payments and cash credits and were expressly prohibited from saying anything negative about CareCloud’s EHR products.
“Paying kickbacks to healthcare providers corrupts the clinical decision-making process and is prohibited by law,” said Colette Matzzie, a whistleblower attorney and partner with Phillips & Cohen LLP.
“The written agreements CareCloud had with its customers blocked candid discussion between healthcare providers about potential problems,” Matzzie said. “Prospective CareCloud clients were not informed that the information they received from CareCloud’s existing customers in the Champions Program was limited by contractual agreement prohibiting negative information.”
CareCloud was an upstart health tech company that grew quickly. During most of the time that CareCloud allegedly paid illegal kickbacks, 2012 to 2017, the company was run by its founder, Albert Santalo, a high-profile South Florida entrepreneur. He was replaced as chief executive officer in 2015 by Ken Comee, but Santalo remained as chairman of the board and chief strategy officer until he left in 2016. Comee left the company last year.
Both Santalo and Comee were named as defendants in the whistleblower lawsuit. Today’s settlement is only with CareCloud. No additional litigation is expected in the case, and the case will be dismissed.
The “relator” (whistleblower) in the qui tam lawsuit, Ada de la Vega, was a senior manager at CareCloud who has since left the company.
“Our client is a dedicated and conscientious professional who has always made patients her top priority,” said Matzzie. She has worked in the healthcare industry for over 15 years.
“I filed the qui tam lawsuit because I was hearing concerns from doctors, so I wanted the government to investigate,” de la Vega said. “I was worried about patient safety and believe it is important that companies follow the rules.”
She said she learned that qui tam lawsuits are an effective way to report concerns about EHR systems to the government after she read news stories about a whistleblower lawsuit against eClinicalWorks, another EHR vendor.
Phillips & Cohen represented the whistleblower in the eClinicalWorks case, which the company paid $155 million to the federal government to settle in 2017. The whistleblower and government alleged that eClinicalWorks misrepresented the capabilities of its software and paid kickbacks to certain customers for promoting its product. It was the first, and so far, the largest settlement of its kind.
The whistleblower lawsuit against CareCloud alleged the company violated the Anti-Kickback Statute and the False Claims Act. The False Claims Act prohibits entities from causing the submission of false claims for payment to the federal government.
Under the “Meaningful Use” program, healthcare providers who purchased electronic health record software could submit claims for federal incentive payments if they attested to having met certain objectives and measures for using that software. Since 2017, Medicare has incentivized use of certified electronic health technology by including it as one factor under the Merit Incentive Payment System (MIPS), a value-based reimbursement program.
If EHR system purchases are tainted by kickbacks, claims submitted to Medicare for incentive payments are false claims.
The False Claims Act allows whistleblowers to file qui tam lawsuits against companies that are defrauding the government and gives them rewards and protection against job retaliation. When the government joins the case and it is successful, whistleblowers are awarded 15% to 25% of the amount collected.
The government has awarded de la Vega approximately 21% of the settlement, or $803,269.
Larry Zoglin, of counsel to Phillips & Cohen, joined Matzzie in representing de la Vega in the qui tam lawsuit.
Phillips & Cohen and de la Vega expressed their thanks to the government team for its work on the case, particularly Assistant US Attorney Matthew J. Feeley of the Southern District of Florida and DOJ Trial Attorney Kelley C. Hauser.
About Phillips & Cohen
Phillips & Cohen is the nation’s most successful law firm representing whistleblowers. The firm’s cases have helped recover more than $12.8 billion in civil settlements and criminal fines. Phillips & Cohen represents whistleblowers in qui tam lawsuits as well as whistleblower claims with the reward programs of the SEC, CFTC and IRS. www.phillipsandcohen.com