EHR vendor to pay $155 million to settle False Claims Act case

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EHR vendor to pay $155 million to settle False Claims Act case
EHR vendor to pay $155 million to settle False Claims Act case

Electronic health records vendor eClinicalWorks and some of its employees will pay a total of $155 million to resolve a False Claims Act lawsuit alleging that they misrepresented the capabilities of the company's software and paid more than $392,000 in kickbacks to customers in exchange for promoting its product, the Justice Department announced Wednesday.

“This settlement is the largest False Claims Act recovery in the District of Vermont and we believe the largest financial recovery in the history of the state of Vermont,” said the acting U.S. Attorney for the District of Vermont, Eugenia A.P. Cowles.

The system is used by some physicians, nurse practitioners, nurses and other professional caregivers who care for residents in assisted living and memory care communities as well as by healthcare providers working in other settings.

The Justice Department complaint alleges that Westborough, MA-based eCW falsely obtained certification for its EHR by “hardcoding” into its software only the 16 drug codes required for the certification test. Passing the test enabled the company to receive financial incentives under the “Meaningful Use” program established by the American Recovery and Reinvestment Act of 2009 even though the company's software did not actually comply with certification criterion of being able to retrieve any drug code from a complete database, the Justice Department said.

Additionally, according to the government, the software did not accurately record user actions in an audit log, sometimes did not properly record diagnostic imaging orders or perform drug interaction checks, and did not satisfy data portability requirements intended to permit users to transfer patient/resident data from ECW's software to the software of other vendors.

“As a result of these and other deficiencies in its software, eCW caused the submission of false claims for federal incentive payments based on the use of eCW's software,” the Justice Department said.

The company disputes the Justice Department's allegations and denies any wrongdoing, saying in a statement on Wednesday that it ensured that its software met Meaningful Use program requirements before its release and addressed certification issues according to the process established by the government. The company also noted that customer referral programs are common in the industry, although eCW has discontinued its program.

The company said it decided to settle “to avoid the cost and uncertainty inherent in protracted litigation.”

Under the terms of the settlement agreements, eCW and three of its founders — CEO Girish Navani, Chief Medical Officer Rajesh Dharampuriya, M.D., and Chief Operating Officer Mahesh Navani — are liable for a $154.92 million payment to the United States. Separately, developer Jagan Vaithilingam will pay $50,000, and project managers Bryan Sequeira and Robert Lynes each will pay $15,000.

“Today's settlement recognizes that we have addressed the issues raised, and have taken significant measures to promote compliance and transparency,” Navani said in the statement provided to McKnight's Senior Living. “We are pleased to put this matter behind us and concentrate all of our efforts on our customers and continued innovations to enhance patient care delivery.”

As part of the settlement, eCW agreed to have its software quality control systems independently assessed; notify customers of safety-related issues and how to mitigate them; allow customers to obtain updated versions of their software free of charge; and give customers the option to have their data transferred to another EHR software provider without penalties or service charges.

The whistleblower who filed the original lawsuit in the case will receive approximately $30 million, the government said.

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