BURLINGTON, VT, March 25, 2022 – The US Department of Justice has filed notice that it intends to join a whistleblower lawsuit against Modernizing Medicine and a co-founder alleging serious violations of the False Claims Act involving the company’s electronic health records (EHR) software and illegal kickbacks to physicians.

ModMed sells a cloud-based electronic health records (EHR) system, through subscription services, to specialty medical practices, including, gastroenterology, orthopedics, ophthalmology, otolaryngology, pain management, plastic surgery, rheumatology, urology and dermatology practices. Medical practices use the software for clinical documentation, prescribing medications, telemedicine, billing and more.

The “qui tam” (whistleblower) complaint was filed under seal in 2017 by Phillips & Cohen LLP on behalf of a former ModMed executive. The case became public yesterday when a federal district court in Vermont lifted the seal. DOJ filed a notice of partial intervention on March 15 and is continuing to investigate the allegations. The government is expected to file its complaint against ModMed, specifying what charges it is making against the EHR company, in the next 90 days or so.

The whistleblower complaint is posted here.

The complaint names as defendants ModMed, based in Boca Raton, Florida, and its CEO Daniel Cane. A founder of ModMed, Cane previously founded the educational software company, Blackboard.com, which he later sold.

The “relator,” or whistleblower, in the False Claims Act case is Amanda (Mandy) Long. She was recruited as a product director by Cane in 2014 and was promoted multiple times, eventually becoming Vice President of Product Management. She resigned in 2017.

“I am pleased the Justice Department recognizes the seriousness of this matter and is intervening in the case after investigating my allegations,” said Long.

The False Claims Act and the government’s investigation

The False Claims Act empowers whistleblowers to file qui tam lawsuits to sue entities that are defrauding the government. The law requires that the cases be filed under seal. The government then investigates the allegations and decides whether to join the case before it is made public. Whistleblower rewards range from 15% to 25% of any recovery resulting from allegations in which the government intervenes and 25% to 30% of any recovery resulting from allegations in which the whistleblower pursues without government intervention.

Long and her attorneys expressed appreciation to the government for its quick response to her qui tam complaint. In particular, they thanked US Attorney Nikolas Kerest of the District of Vermont, Assistant US Attorney Owen C.J. Foster, Assistant US Attorney Lauren Lively, DOJ Civil Frauds Assistant Director Edward Crooke, DOJ Trial Attorney Kelley C. Hauser and DOJ Trial Attorney Sarah A. Hill.

The US Attorney’s Office for the District of Vermont has been at the forefront in pursuing fraud and kickbacks cases against EHR companies. They have settled cases with eClinicalWorks ($155 million settlement), Practice Fusion Inc. ($145 million settlement) and Greenway Health LLC ($57.5 million settlement). The office also played a key role in the federal government’s $8 billion global settlement with Purdue Pharma for civil and criminal violations including allegations Purdue paid kickbacks to Practice Fusion for designing medical software to influence physicians to prescribe its highly addictive opioid pills.

Colette G. Matzzie, a whistleblower attorney and partner at Phillips & Cohen, and co-counsel Tristram J. Coffin, a partner at Downs Rachlin Martin PLLC, represent Long in the qui tam case.

Colette G. Matzzie represented whistleblowers in three other qui tam cases against EHR companies that have settled. They include the ground-breaking case against eClinicalWorks, which alleged the EHR vendor engaged in civil fraud and illegal kickback schemes, and a qui tam case against CareCloud, which also alleged kickbacks paid to healthcare providers to boost sales ($3.8 million settlement).

Tristram J. Coffin is the head of Downs Rachlin Martin’s white collar group and was the US Attorney for the District of Vermont under President Obama. In addition to representing Ms. Long in this qui tam case, he and Downs Rachlin Martin served as local counsel with Phillips & Cohen in the eClinicalWorks case.

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