NextGen Healthcare Agrees to $31 Million Settlement in Whistleblower Lawsuit
Washington, DC, July 14, 2023 – NextGen Healthcare, Inc. (NXGN), a provider of electronic health records (EHR) systems, has agreed to pay $31 million to the federal government to settle a whistleblower lawsuit filed in 2018 by Phillips and Cohen LLP of Washington, DC for alleged violations of the federal False Claims Act. NextGen, is a publicly owned vendor of cloud-based healthcare technology solutions, including integrated electronic health record (“EHR”) software.
Allegations Against NextGen Healthcare and the Whistleblower’s Role
Filed today, in the United States District Court for the District of Vermont, the United States’ Complaint in Intervention contends that NextGen improperly obtained certification of versions of its EHR software under the Office of the National Coordinator’s (ONC’s) Health IT Certification Program, when in fact NextGen knew that these versions of its EHR software as used by healthcare providers would not satisfy all requirements for which it was certified. DOJ further alleges that NextGen had embedded functionality into a temporary version of its separate Knowledge Based Model (KBM) product and relied on this temporary version of the KBM to pass certification testing. It further alleges that the released EHR software lacked full functionality including to: electronically record a patient’s active problem list or to electronically record a patient’s family health history; to electronically create a transition of care/referral summary for all patients; and, to electronically record vital signs or automatically calculate body mass index correctly.
The United States further alleges that NextGen knowingly caused eligible healthcare providers to falsely attest to receive Medicare and Medicaid incentive payments during certain reporting periods. These Medicare and Medicaid EHR Incentive Programs, also known as the “Meaningful Use programs,” provided incentive payments to healthcare providers who demonstrated “Meaningful Use” of certified software.
“This settlement shows the United States’ continued commitment to enforcement with the electronic health records industry. Starting with the 2017 settlement with eClinicalWorks, the United States has brought seven more successful actions against electronic health record vendors including now NextGen. Electronic health records can only aid in patient safety if they are compliant with federal regulations intended to protect the integrity of medical records and patient safety,” said Colette Matzzie, partner and whistleblower attorney at Phillips and Cohen. “Strict adherence to the terms of the government’s incentive programs is critical to realizing the promise of new health care technologies to improve patient care and ensure patient safety.”
“The settlement includes allegations that NextGen paid providers for referrals of its software in violation of the Anti-Kickback statute. The United States expects that medical providers will make decisions about which software to use free of financial influence.” said Edward Arens, a partner and whistleblower attorney at Phillips and Cohen.
The whistleblowers, Elizabeth Ringold and Toby Markowitz, brought the case while working as clinical providers with NextGen systems at the South Carolina Department of Corrections (SCDC).
NextGen’s CEO Remarks and the Ongoing Compliance Obligations for EHR Vendors
“It is critically important that electronic health record systems reliably place orders for medications, labs, and other diagnostic tests, and maintain accurate and complete patient records. This is especially important in large institutional settings like prisons where patients often require coordinated care to deal with serious, and even life-threatening, illness and conditions,” said whistleblower Ringold. “I felt compelled to bring my concerns to the United States to ensure the health and safety of my patients.”
NextGen’s former CEO, Rusty Frantz, previously acknowledged that federal subsidies created incentives for electronic health records vendors to bring software to market quickly. In an investigative piece by Fortune and Kaiser Health News titled, “Death by 1,000 Clicks: Where Electronic Health Records Went Wrong,” Frantz, said of the HITCH Act incentive programs: “The industry was like, ‘I’ve got this check dangling in front of me, and I have to check these boxes to get there, and so I’m going to do that.’” He added, “The industry was moving along in a natural Darwinist way, and then along came the stimulus. …The software got slammed in, and the software wasn’t implemented in a way that supported care,” he said. “It was installed in a way that supported stimulus. This company, we were complicit in it, too.”
In 2017, the United States and Phillips and Cohen settled the first groundbreaking whistleblower lawsuit against an electronic health record vendor, eClinicalWorks, and certain top executives, for $155 million and established a first-of-its-kind corporate integrity agreement tailored to health IT vendors. Since the 2017 eClinicalWorks settlement, Phillips and Cohen has been a leader representing whistleblowers exposing fraud in the electronic medical records industry, with successful settlements with Konica Minolta ($500,000), CareCloud ($3.8 million), Modernizing Medicine ($45 million), and now, NextGen ($31 million). Successful FCA actions also have been settled with Greenway ($57.25 million), PracticeFusion ($145 million) and AthenaHealth ($18 million).
Electronic health record vendors have continuing obligations for certification of software, including under the 21st Century Cures Act, which requires developers to ensure that certified software meets all certification criteria, to provide patient access and engagement, and to prohibit information blocking generally. Also, starting in 2017, the Medicare EHR Incentive Program was incorporated into the Merit-based Incentive Payment System (MIPS), one of Medicare’s value-based reimbursement programs rewarding cost savings and improved health outcomes.
The False Claims Act and Whistleblower Rewards
The False Claims Act empowers whistleblowers to file qui tam lawsuits to sue entities that are defrauding the government on the government’s behalf. 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 under the False Claims Act range from 15% to 25% of any recovery resulting from allegations in which the government intervenes.
Whistleblowers Ringold and Markowitz and their attorneys expressed appreciation to US Attorney for the District of Vermont Nikolas Kerest and Assistant United States Attorney Lauren Lively, and Department of Justice, Civil Frauds, including Deputy Director Edward Crooke, Trial Attorneys Christelle Klovers and Kelley Hauser, as well as the Department of Health and Human Services.
David Kirby of O’Connor & Kirby, P.C. served as local counsel in Vermont.
A copy of the complaint: https://www.phillipsandcohen.com/wp-content/uploads/1846-Complaint-NextGen-7-12-23.pdf
A copy of DOJ’s complaint in intervention: https://www.phillipsandcohen.com/wp-content/uploads/Complaint-in-Intervention-NextGen.pdf