Florida EHR Vendor Pays $45 Million in Whistleblower Case Alleging Kickbacks, FCA Violations
Wednesday, December 7, 2022
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law
On November 1, 2022, the Department of Justice (DOJ) announced that a Florida electronic health record (EHR) vendor would pay $45 million to resolve claims that it violated the False Claims Act (FCA) and Anti-Kickback Statute (AKS). The Justice Department alleges that Modernizing Medicine, Inc. (ModMed) accepted and provided unlawful compensation in exchange for referrals and by causing its users to report inaccurate information in connection with claims for federal incentive payments.
Click here to read the press release issued by the DOJ.
The DOJ alleges that for years, ModMed, through a variety of schemes, engaged in illegal kickbacks that distorted both the EMR and pathology lab markets, in addition to providing its users with a deficient product. This settlement reflects the seriousness of the government's allegations and the determination of the DOJ to restore integrity to the EHR field.
In a complaint filed in conjunction with the settlement, the DOJ alleged that ModMed violated the FCA and the AKS through the following marketing schemes:
1. ModMed solicited and received kickbacks from Miraca Life Sciences Inc. (Miraca) in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services.
2. ModMed conspired with Miraca to improperly donate ModMed’s EHR to health care providers in an effort to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base.
3. ModMed paid kickbacks to its current health care provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMed.
The government claims that this conduct enabled the EHR developer to improperly generate sales for itself and for Miraca. This caused providers to submit false claims for reimbursement to the federal government for pathology services, and for incentive payments from the Department of Health and Human Services for the adoption and 'meaningful use' of ModMed's EHR technology.
The settlement agreement partly resolves allegations contained in a lawsuit filed on September 22, 2017, by a former vice president of product management at ModMed, the DOJ revealed. The suit was filed under the FCA's Whistleblower provisions, allowing individuals to sue on behalf of the government and share in the recovery. Therefore, the relator will receive about $9 million.
You can read the complaint in intervention by clicking here.
Continued Scrutiny of EHR Participants.
The investigation and pursuit of this matter illustrate the government’s emphasis on combating healthcare fraud, including in the healthcare technology arena. Additionally, the lawsuit's resolution with ModMed demonstrates the government's continued commitment to enforcing compliance with federal requirements for certification of health information technology.
It is also significant because it resolves allegations concerning illegal referral arrangements between an EHR vendor and a clinical laboratory. It is believed to be the first time the United States has taken enforcement action under the False Claims Act against an EHR vendor for providing preferential treatment for a clinical laboratory. It's also an important reminder for EHR vendors of the need to comply with the federal laws prohibiting kickbacks when entering into arrangements with third-party providers, including laboratory and other diagnostic services providers.
Click here to view the settlement agreement in full.
Contact Experienced Health Law Attorneys.
The Health Law Firm routinely represents physicians and medical groups on EHR issues. It also represents pharmacists, pharmacies, physicians, nurses and other health providers in investigations, regulatory matters, licensing issues, litigation, inspections and audits involving the DEA, Department of Health (DOH) and other law enforcement agencies. Its attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys. Several of our attorneys, including Mr. Indest, act as expert witnesses in attorney's fee litigation and in health law litigation.
To contact The Health Law Firm, please call (407) 331-6620 or toll-free (888) 331-6620 and visit our website at www.TheHealthLawFirm.com.
Miliard, Mike. "Modernizing Medicine to pay $45M to resolve False Claims Act allegations." Modern Medicine. (November, 4, 2022). Web.
Phillips & Cohen LLP. "EHR provider Modernizing Medicine pays $45M to settle DOJ, whistleblower case alleging False Claims Act Violations, Kickbacks." (November 1, 2022). Web.
Stephens, Reed. "DOJ Scrutiny of EHR Vendors Continues with $45 Million Settlement For Alleged Kickbacks and False Claims." November 14, 2022). Web.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law is an attorney with The Health Law Firm, which has a national practice. Its main office is in Orlando, Florida, area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Avenue, Suite 1000, Altamonte Springs, Florida 32714, Phone: (407) 331-6620 or Toll-Free: (888) 331-6620.
Current Open Positions with The Health Law Firm. The Health Law Firm always seeks qualified individuals interested in health law. Its main office is in the Orlando, Florida, area. If you are a current member of The Florida Bar or a qualified professional who is interested, please forward a cover letter and resume to: PAlexander@TheHealthLawFirm.com or fax them to (407) 331-3030.
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