December 8, 2021

Volume XI, Number 342

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December 07, 2021

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December 06, 2021

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Whistleblower Rewarded over $800,000 for Reporting to the Government a Kickback Scheme of a Software Developer of Electronic Health Records

May 4, 2021.  A False Claims Act whistleblower received a nearly $800,000 whistleblower reward for reporting a kickback scheme of a software developer of electronic health records (EHR).  This software developer called CareCloud Health, Inc., based in Miami, Florida, agreed to pay the Department of Justice almost $4 million under the False Claims.  It was liable under the False Claims Act for paying unlawful kickbacks to sell its electronic health record software products and fraudulently receiving incentive payments under the Medicare and Medicaid incentive programs designed to encourage the use of EHR software.

The allegations were that the software developer created and implemented an unlawful marketing referral program.  Under its marketing referral program, the software company gave its clients who were using its EHR software incentive payments to recommend its electronic health records products to prospective clients.  Not only were these users of Defendant’s software receiving incentive payments, but they also signed contracts with the Defendant that prevented them from saying anything negative about the Defendant’s EHR software program.  As a result, Defendant earned millions of dollars not because of the effectiveness of its product, but because of hidden incentive payments and being restrained from providing any negative feedback about the EHR software.

The Anti-Kickback Statute prohibits transactions intended to reward referrals for items or services reimbursed by federal healthcare programs such as Medicare and Medicaid.  It is designed to protect healthcare beneficiaries from the influence of money on referrals and other decisions in healthcare.

The Anti-Kickback Statute prohibits transactions intended to reward referrals for items or services reimbursed by the federal healthcare programs such as Medicare and Medicaid.  It is designed to protect healthcare beneficiaries from the influence of money on referrals and other decisions in healthcare.

With a long-term goal of improving healthcare outcomes, the Centers for Medicare and Medicaid Services (CMS) established the Electronic Health Record Incentive Programs (or, the Promoting Interoperability Programs) to encourage and promote meaningful use of certified electronic health record technology (CEHRT).  Participants to the program receive payments for their successful and continuing implementation of CEHRT.

The Defendant also violated the False Claims Act because the kickback payments tainted the false claims that Defendant submitted to the government for federal incentive payments under the Medicare and Medicaid Electronic Health Records Incentive Programs and the Merit-Based Incentive Payment System (MIPS).

This settlement originated from a lawsuit filed by an individual under the qui tam, or whistleblower, provisions of the False Claims Act.  Whistleblower lawsuits allow private parties, known as “relators,” to bring suit on behalf of the government and to share in any recovery.  The Act allows the government to intervene and prosecute an action, as it did in this case.  The Whistleblower will now receive a share of the settlement.  Healthcare fraud is exposed by individuals with knowledge that the fraud is occurring.  Whistleblowers might be employees, clients, or competitors of the offending health care provider or entity.  Such individuals can use their inside knowledge to bring the fraud to the attention of the government.

© 2021 by Tycko & Zavareei LLPNational Law Review, Volume XI, Number 124
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About this Author

Jonathan K. Tycko leads the Whistleblower Practice Group of Tycko & Zavareei LLP

In recent years, the laws of the United States have undergone a whistleblower revolution. Federal and state governments now offer substantial monetary awards to individuals who come forward with information about fraud on government programs, tax fraud, securities fraud, and fraud involving the banking industry. Whistleblowers also now have important legal protections, designed to prevent retaliation and blacklisting.

The law firm of Tycko & Zavareei LLP works on the cutting edge of this whistleblower revolution, taking on even the most complex and confidential whistleblower...

202-973-0900
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