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A Tale of Two False Claims Act Settlements Involving EHR Vendors

Last week the Department of Justice (DOJ) announced a $57 million settlement with electronic health record (EHR) software vendor Greenway Health LLC (Greenway).  According to DOJ, Greenway violated the False Claims Act (FCA) by fraudulently obtaining certification of its software and misrepresenting its software’s capabilities to customers, thereby causing its customers to submit false attestations of “meaningful use” of EHR technology when seeking to qualify for incentive payments available through the Medicare and Medicaid EHR Incentive Program.  The complaint also alleged that Greenway illegally paid kickbacks to a customer in exchange for recommendations to prospective new customers.

This matter has strikingly similar facts to a settlement with another EHR vendor, eClinicalWorks, which was announced in 2017.  As noted in a previous post, eClinicalWorks, along with its founders and several employees, agreed to pay $155 million to settle allegations that the company caused clients to submit false statements because (like Greenway) it misrepresented its software capabilities to falsely obtain certification. The case also involved similar kickback allegations.  In the press release regarding the Greenway case, the Vermont U.S. Attorney’s Office noted that in the last two years it has resolved “two matters against leading EHR developers” involving “significant fraudulent conduct” and that the two cases are the largest recoveries in the District’s history.  While the eClinicalWorks settlement arose as a result of a qui tam case, the District apparently initiated its own investigation of Greenway, which leads one to speculate whether the District identified an opportunity following the eClinicalWorks case and chose to pursue similar (and seemingly lucrative) matters.  Given the seriousness of the government’s allegations – particularly claims of potential patient harm – it is surprising that these matters did not give rise to any criminal liability.

Both companies agreed to enter into a Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (HHS OIG), and the terms of those CIAs are arguably more burdensome than a typical CIA. In addition to including the usual compliance-related provisions and review of arrangements with health care providers, both CIAs require an independent assessment of software quality control and compliance systems, and notification to HHS OIG as well as customers regarding patient safety-related issues. In addition, both companies agreed to make customers whole by providing a free upgrade or the opportunity to migrate to another vendor at no charge. The onerous nature of these CIAs is illustrated by the fact that eClinicalWorks paid a penalty of $132,500 for failure to comply with its obligation to timely report patient safety issues.

Finally, these cases signal a trend discussed during our recent Health Care Enforcement Year in Review and 2019 webinar: the government’s increasing interest in expanding the scope of potential defendants in qui tam cases, presumably in an effort to maximize recoveries.  Another good example is DOJ’s intervention in an FCA case brought last year against a compounding pharmacy, two of its senior executives, and the private equity firm that owned a controlling interest in the pharmacy. This case – which was discussed in a previous post – received a great deal of attention because it is reportedly the first FCA case to be brought by the federal government against a private equity firm. It remains unclear whether these cases represent isolated instances or a new trend in FCA litigation, but at a minimum, they are a cautionary tale for companies doing business with or investing in the health care sector.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume IX, Number 44

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About this Author

Sarah Beth S. Kuyers, Mintz Levin, nonprofit affiliation lawyer, health care systems attorney
Associate

Sarah Beth’s practice involves a variety of regulatory, transactional, and enforcement defense matters for clinical laboratories, hospitals, pharmacies, insurers, and other health care clients.

Sarah Beth routinely advises clients on a wide variety of federal and state health care regulatory issues, including anti-kickback and self-referral laws, licensure and scope of practice rules, telemedicine, certificate of need applications, food and drug law, and HIPAA compliance. She also handles licensure and regulatory filings for clinical laboratories and other health care providers....

202.434.7453
Karen Lovitch Mintz DC Health Care Compliance, Fraud & Abuse, and Regulatory Counseling Medicare, Medicaid & Commercial Coverage & Reimbursement Health Care Transactions Health Care Transactional Due Diligence Health Care Enforcement & Investigations
Member

Karen focuses her practice on representing health care companies in regulatory, transactional, and operational matters. She has a substantial health care regulatory background and advises clients on matters pertaining to the federal anti-kickback statute, the Stark law, state statutes prohibiting kickbacks and self-referrals, the Clinical Laboratory Improvement Amendments of 1988, and the federal Physician Payments Sunshine Act. Karen often applies her strategic insight on these matters to counsel companies on regulatory issues arising in connection with mergers and acquisitions and other transactions. She also defends companies in high-stakes state and federal investigations. Karen regularly speaks and writes on challenges facing laboratories, diagnostic companies, and other health care companies.

Karen is the Practice Leader of the firm’s Health Law Practice. She counsels health care clients on regulatory, transactional, and operational issues, including Medicare coverage and reimbursement, the development and implementation of health care compliance programs, and licensure and certification matters. In addition, Karen advises clients on the legal, practical, and fraud and abuse implications of business arrangements and sales and marketing practices. Her experience includes matters related to the anti-kickback statute, the Stark law, state statutes prohibiting kickbacks and self-referrals, and the federal Physician Payments Sunshine Act.

Karen applies her compliance and regulatory experience in transactional as well as litigation contexts. In addition to counseling health care entities on regulatory matters arising in connection with mergers and acquisitions, she has successfully defended clients subject to state and federal surveys, Medicare and Medicaid overpayment and reimbursement appeals, and state licensure proceedings. Karen also represents clients subject to state and federal investigations alleging violation of the anti-kickback statute, the federal False Claims Act, and other state and federal laws.

Karen also specializes in the representation of laboratories and diagnostics companies. She regularly counsels on compliance with CLIA and state laboratory licensure laws, federal and state limitations on billing for diagnostic services, and legal restrictions on sales and marketing activities. Karen has served as regulatory counsel in a number of mergers and acquisitions involving laboratories and diagnostics companies and has represented numerous laboratories and diagnostics companies in state and federal government investigations.

202-434-7324