EHR fraud: meaningful use, kickbacks, and the False Claims Act
Fraud involving electronic health records (EHR) or electronic medical records (EMR) can have serious consequences for patients and cheat the government’s EHR incentive payment program that is designed to encourage doctors, hospitals and other healthcare providers to buy and use certified EHR systems.
Whistleblowers, particularly those in the EHR or healthcare industry, are needed to expose instances where EHR software doesn’t meet “Meaningful Use” criteria. For example, meaningful use fraud could occur when the software fails to meet interoperability requirements, has defects or is gamed in some way for the financial benefit of the healthcare provider or others. Kickbacks in the electronic medical records industry also are a concern.
If serious defects with EHR or EMR software are ignored, filing a “qui tam” whistleblower lawsuit under the False Claims Act is a powerful and effective way to get the software fixed. Whistleblowers also can file qui tam lawsuits to expose other wrongdoing involving EHR fraud, such as kickbacks or healthcare providers who misuse EHR software to inappropriately prescribe more expensive or unnecessary treatment or medications.
Phillips & Cohen has brought two qui tam whistleblower cases against EHR vendors that have recovered funds for the government, including the ground-breaking case against eClinicalWorks, which settled for $155 million.
- Meaningful use fraud involving EHR certification
- Programming EHR software to overbill or influence treatment choices
- EHR fraud – kickbacks
- EHR, whistleblowers and the False Claims Act
- EHR fraud: cases and settlements
[Considering blowing the whistle on wrongdoing involving electronic health records? Contact the experienced attorneys at Phillips & Cohen.]
Meaningful use fraud involving EHR certification
EHR systems are intended to reduce errors and improve patient care, but they also have brought new opportunities for fraud and abuse, particularly because of the huge amounts of money spent on EHR and EMR technology.
Congress passed the HITECH Act (Health Information Technology for Economic and Clinical Health Act) in 2009 to encourage and promote the adoption and meaningful use of electronic health record systems by offering significant incentive payments to healthcare providers. The government has spent more than $36 billion so far on the Medicare and Medicaid EHR Incentive Programs (now known as the Promoting Interoperability Programs).
To receive EHR incentive payments, healthcare providers must demonstrate “meaningful use” of certified EHR technology based on certain objectives and measures. Meaningful use of EHR systems would include issuing electronic prescriptions and using the exchange of electronic health information to improve quality of care.
Vendors obtain certification of EHR technology from accredited testing laboratories and government-authorized certification bodies that test and certify that EHR software meets the requirements established by the HHS Office of the National Coordinator for Health Information Technology (ONC). As part of the certification process, EHR vendors attest that their software is compliant with the certification requirements.
EHR certification is important to ensure that the software safeguards patient safety and performs as promised when used for patient examinations and treatments. Certification also is important to vendors for their sales, as healthcare providers can receive government EHR incentive payments only if they purchase and use certified EHR technology.
Several False Claims Act cases have exposed EHR fraud through instances where software developers and vendors can cheat the certification test, which is highly reliant on the honor system.
For instance, developers can program EHR software so that it passes the test scripts, which identify each step the vendor will be required to take during testing and are given to vendors ahead of time. However, unscrupulous vendors may take advantage of the certification system to keep EHR flaws hidden even though vendors must attest that the software meets all of the other implementation specifications and certification criteria and that it will perform in a reliable manner.
EHR fraud also can occur when vendors fail to implement all the technological changes and updates required for certification even when they attest that they have.
Programming EHR software to overbill or influence treatment choices
There are many ways electronic health record systems can be programmed so that providers improperly increase their Medicare and Medicaid reimbursements for patient services and treatment.
EHR software can be designed to automatically “upcode” certain diagnoses and procedures, so that billing codes are assigned for a more serious (and more expensive) diagnosis or procedure.
Similarly, EHR software can facilitate “unbundling,” a fraudulent billing practice that separately bills individual procedures or tests that should be bundled into one charge. The total cost when charges are unbundled is higher than it would be if the procedures or tests were bundled for billing purposes as required.
Certain functions of EHR systems also can be programmed to automatically recommend prescriptions of more expensive drugs rather than cheaper alternatives.
For instance, clinical decision support is a useful EHR feature that can benefit patients’ quality of care by prompting healthcare providers to consider adding or including certain treatments, tests or prescriptions. However, it also can be used in EHR fraud to manipulate clinicians into ordering unnecessary tests or more expensive drugs or steering patients toward laboratories or other providers with undisclosed financial arrangements.
EHR fraud – kickbacks
The Anti-Kickback Statute (AKS) prohibits payments intended to reward or secure referrals for healthcare services or items paid for by Medicare and Medicaid. Those payments can take many forms, including money or special services.
There are many ways that kickback schemes in the EHR industry could be set up. EHR vendors might pay customers kickbacks to recommend other healthcare providers buy their products.
Vendors might receive kickbacks from drug or device manufacturers in exchange for programming the EHR clinical decision support function to prioritize certain prescriptions and treatments over others, or to suggest alternative, more expensive doses. Vendors also might have undisclosed financial arrangements with clinical laboratories, radiology facilities or other providers.
At least three settled cases against EHR companies alleged kickbacks: the qui tam case against eClinicalWorks that Phillips & Cohen brought on behalf of a whistleblower ($155 million settlement); a separate case against Practice Fusion ($145 million settlement); and two qui tam cases against athenahealth Inc. ($18.25 million total settlement).
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Electronic health records fraud, whistleblowers and the False Claims Act
When whistleblowers discover fraud by EHR or EMR developers, the False Claims Act may apply. As industry insiders, whistleblowers can play a key role in stopping EHR fraud by filing a “qui tam” lawsuit, while also protecting themselves from job retaliation and earning a reward.
The False Claims Act is a powerful anti-fraud law that allows private individuals to sue individuals, companies and other entities and recover government funds lost to fraud. If a whistleblower’s lawsuit is successful, the whistleblower can receive a portion of the recovered funds as a reward.
The False Claims Act requires the government to investigate whistleblowers’ allegations in qui tam lawsuits and decide whether to intervene in, or join, the case. If the government decides not to intervene, whistleblowers may continue litigation on their own.
Whistleblowers who file qui tam lawsuits under the False Claim Act are entitled to rewards of 15 percent to 30 percent of the funds recovered as a result of their case.
The False Claims Act also protects whistleblowers from employment retaliation. Those who are demoted, fired, harassed or suffer other forms of retaliation can sue for reinstatement and collect compensation, damages and attorneys’ fees if successful.
EHR fraud: cases and settlements
eClinicalWorks – $155M settlement (2017)
Phillips & Cohen represented the whistleblower in the landmark case against eClinicalWorks. It was the first False Claims Act case against an EHR vendor, and the $155 million eCW paid the government remains the largest settlement.
The settlement covered allegations that eClinicalWorks paid kickbacks, falsely certified its electronic health records met government criteria and violated the False Claims Act in other ways.
The whistleblower case against eClinicalWorks alleged a multitude of failures. EClinicalWorks allegedly:
- Falsely certified that its EHR met HHS criteria.
- Did not adequately test software prior to release.
- Failed to correct critical and urgent problems and bugs in the software for months and even years, possibly endangering patients.
- Paid kickbacks totaling nearly $400,000 to influential customers to boost sales of eClinicalWorks products to prospective customers. The kickbacks were disguised as “consulting” and “speaker” fees.
The eClinicalWorks whistleblower, Brendan Delaney, was working as a New York City government employee implementing eClinicalWorks’ EHR system at Rikers Island for prisoner healthcare when he began noticing numerous software problems that he alleged put patients at risk.
Delaney’s concern for the health of patients pushed him to blow the whistle. His fight to address the alleged life-threatening problems in eClinicalWorks software cost him his job and resulted in industry-wide blackballing. His journey was the subject of an episode of the CBS program, Whistleblower.
Practice Fusion Inc. – $145 million settlement (January 2020)
Practice Fusion admitted to soliciting and receiving kickback payments from an opioid company, Purdue Pharma, in exchange for adjusting its EHR software’s clinical decision support (CDS) alert functions to encourage doctors to prescribe Purdue’s instant-release opioids.
In addition to settling that criminal charge, Practice Fusion also settled civil charges that it accepted kickbacks from other pharmaceutical companies to make similar changes to the CDS alert to promote their drugs.
According to DOJ’s complaint, Practice Fusion marketed the CDS alert as a lucrative investment for pharma companies.
The government also alleged that Practice Fusion falsely obtained certification that its EHR software met federal requirements, and that as a result of the fraudulent EHR certification, healthcare providers using certain versions of Practice Fusion’s EHR platform falsely obtained EHR incentive payments from Medicare and Medicaid.
Practice Fusion agreed to pay approximately $118.6 million to settle civil charges and over $26 million in criminal fines and forfeitures.
Greenway Health LLC – $57.25 million settlement (February 2019)
The government alleged that Greenway Health obtained certification for its Prime Suite EHR software by falsely certifying that it met certain requirements.
For instance, Greenway did not incorporate the standardized clinical terminology necessary to ensure the reciprocal flow of information concerning patients and the accuracy of electronic prescriptions, according to the government’s complaint.
The government said Greenway modified its test-run software so that it appeared to meet certification requirements and could use the clinical terminology, deceiving the certification company.
In addition, the government alleged, an earlier version of Prime Suite certified to 2011 criteria did not correctly calculate the percentage of office visits for which users of the technology provided patients with clinical summaries.
To receive incentive payments, healthcare providers were required to meet certain targets for that and other EHR-related activities. Greenway was aware of this defect, the government said, but did not fix it so that its users would get incentive payments.
The government also alleged that Greenway violated the Anti-Kickback Statute by paying kickbacks in the form of money and other incentives to its healthcare provider clients so that they would recommend Prime Suite to prospective customers.
Modernizing Medicine – $45 million (November 2022)
Modernizing Medicine (ModMed), a provider of cloud-based electronic health records (EHR) systems, agreed to pay $45 million to the federal government to settle a lawsuit filed in 2017 by Phillips and Cohen LLP and Downs Rachlin Martin.
ModMed, based in Boca Raton, Florida, sells cloud-based electronic health records systems through subscription services, to specialty medical practices including dermatology and orthopedics. Medical providers use the software for clinical documentation, prescribing medications, telemedicine, billing, and more.
According to the lawsuit, ModMed engaged in multiple kickback schemes, including creating a “strategic partnership” with a clinical laboratory, Miraca Life Science, where Miraca would directly compensate ModMed when its users sent laboratory orders to Miraca. The alleged illegal conduct included providing Miraca with exclusive “enhanced” laboratory interfaces within ModMed’s EHR that would drive diagnostic testing business to Miraca. The settlement resolves the allegations against ModMed.
NextGen Healthcare, Inc. – $31 million (July 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 by Phillips and Cohen LLP for alleged violations of the federal False Claims Act.
United States’ Complaint in Intervention contends, among other things, that NextGen improperly obtained certification of versions of its EHR software and NextGen knew that these versions of its EHR software would not satisfy all requirements for which it was certified. DOJ further alleges that NextGen had embedded functionality into a temporary version of its product and relied on this temporary version to pass certification testing. The settlement also includes allegations that NextGen paid providers for referrals of its software in violation of the Anti-Kickback statute.
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).
CareCloud Health Inc. – $3.8 million (April 2021)
Phillips & Cohen LLP represented a whistleblower in a lawsuit against CareCloud Health Inc., a Miami-based healthcare technology company, which agreed to pay $3.8 million to the federal government to settle a whistleblower lawsuit that alleged CareCloud paid kickbacks to healthcare providers to boost sales of its electronic health records products.
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.
Konica Minolta Healthcare Americas – $500,000 (August 2020)
Phillips & Cohen LLP represented a whistleblower in a qui tam lawsuit against Konica Minolta Healthcare that alleged an electronic health records company Konica Minolta Healthcare acquired had cheated on certification tests to hide safety and quality issues with its software.
The EHR company, Viztek, falsely represented that its software met government certification criteria to customers, according to the whistleblower lawsuit, which the US Department of Justice joined. The whistleblower and the government alleged that Viztek’s false claims caused providers to falsely attest that they were using a certified EHR technology, as needed to get federal funds, when Viztek’s software could not support the applicable certification criteria.
Coffey Health System – $250,000 (May 2019)
The government alleged that Coffey Health System, a 25-bed critical access hospital in Burlington, Kansas, lied about having conducted security risk analyses in its electronic health records system in order to meet federal EHR requirements and to receive federal EHR incentive payments.
Coffey Health System agreed to pay $250,000 to settle the allegations.
If you know of fraud or kickbacks in the EHR industry and are considering reporting it, contact Phillips & Cohen to discuss your options, so to protect yourself and your rights to a reward.
About Phillips & Cohen LLP
Phillips & Cohen is the nation’s most successful law firm representing whistleblowers, with more than $12.8 billion recovered as a result of its cases, including $155 million from the qui tam case against eClinicalWorks. (See “Why we win.”) The firm’s whistleblower attorneys have won more than $1.1 billion in rewards for its clients. Phillips & Cohen represents whistleblowers in qui tam lawsuits (False Claims Act cases) as well as cases brought under the whistleblower programs of the Securities Exchange Commission, the Commodity Futures Trading Commission and the IRS. Contact us for a free, confidential consultation.