eClinicalWorks Will Pay $155M to Settle False Claims Act Allegations

Electronic health records (EHR) software vendor eClinicalWorks, and some of its employees, will pay $155 million to resolve a False Claims Act lawsuit. The company allegedly violated federal law by misrepresenting the capabilities of its software and for allegedly paying kickbacks to certain customers in exchange for promoting its product, according to the U.S. Department of Justice.

In a statement about the civil investigation settlement, eClinicalWorks stated that it would, in addition to paying $155 million, bolster its compliance program related to the development, operation and maintenance of its software.

“eCW fully cooperated with the DOJ civil investigation, which centered on technical certification requirements of the Federal government’s ‘Meaningful Use’ EHR program, and the company denies any wrongdoing. The claims settled by the agreement are allegations only and there has been no determination of liability,” the company stated.

The American Recovery and Reinvestment Act of 2009 established the Electronic Health Records (EHR) Incentive Program to encourage healthcare providers to adopt and demonstrate their “meaningful use” of EHR technology. Under the program, the U.S. Department of Health and Human Services (HHS) offers incentive payments to healthcare providers that adopt certified EHR technology and meet certain requirements relating to their use of the technology. To obtain certification for their product, companies that develop and market EHR software must attest that their product satisfies applicable HHS-adopted criteria and pass testing by an accredited independent certifying entity approved by HHS.

In its complaint-in-intervention, the federal government alleges that the Westborough, Mass.-based EHR vendor “falsely obtained that certification for its EHR software when it concealed from its certifying entity that its software did not comply with the requirements for certification.”

The Justice Department alleges in its compliant that, as a result of the deficiencies in eClinicalWorks’ software, providers using eClinicalWorks’ software submitted false claims for federal incentive payments.

Under the terms of the settlement agreements, ECW and three of its founders (Chief Executive Officer Girish Navani, Chief Medical Officer Rajesh Dharampuriya, M.D., and Chief Operating Officer Mahesh Navani) are jointly and severally liable for the payment of $154.92 million to the United States. Separately, Developer Jagan Vaithilingam will pay $50,000, and Project Managers Bryan Sequeira, and Robert Lynes will each pay $15,000.

eClinicalWorks said it disputed the DOJ's allegations, yet decided to settle to avoid the cost and uncertainty inherent in protracted litigation. “eCW has consistently maintained that it conducted testing of its software prior to release to ensure that it met applicable Meaningful Use program requirements, and that any certification issues were addressed in accordance with the administrative process established by the government. eCW’s software remains certified for use in connection with the Meaningful Use program,” the company said in a statement.

The company also said that, as is common in the industry, it previously had a customer referral program. “While eCW does not believe its customer referral program was unlawful, it has discontinued the program,” the company said.

“Today’s settlement recognizes that we have addressed the issues raised, and have taken significant measures to promote compliance and transparency,” Girish Navani, CEO and co-founder of eClinicalWorks, said in a prepared statement. “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.”

Essentially, the Justice Department accused the vendor of "gaming" the certification test. In a press release, the Justice Department wrote, "For example, in order to pass certification testing without meeting the certification criteria for standardized drug codes, the company modified its software by 'hardcoding' only the drug codes required for testing. In other words, rather than programming the capability to retrieve any drug code from a complete database, ECW simply typed the 16 codes necessary for certification testing directly into its software. ECW’s software also did not accurately record user actions in an audit log and in certain situations did not reliably record diagnostic imaging orders or perform drug interaction checks."

In addition, the Justice Department alleges that ECW’s software failed to satisfy data portability requirements intended to permit healthcare providers to transfer patient data from ECW’s software to the software of other vendors.

Special Agent in Charge Phillip Coyne of HHS-OIG said in a prepared statement, “Electronic health records have the potential to improve the care provided to Medicare and Medicaid beneficiaries, but only if the information is accurate and accessible. Those who engage in fraud that undermines the goals of EHR or puts patients at risk can expect a thorough investigation and strong remedial measures such as those in the novel and innovative Corporate Integrity Agreement in this case.”

According to the Justice Department press release, the settlement also resolves allegations in a lawsuit filed in the District of Vermont by Brendan Delaney, a software technician formerly employed by the New York City Division of Health Care Access and Improvement. The lawsuit was filed under the whistleblower provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. As part of today’s resolution, Mr. Delaney will receive approximately $30 million.

“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,” Acting U.S. Attorney Eugenia A.P. Cowles for the District of Vermont, said in a prepared statement. “This significant recovery is a testament to the hard work and dedication of this office and our partners in the Commercial Litigation Branch of the Civil Division and at HHS. This resolution demonstrates that EHR companies will not succeed in flouting the certification requirements.”

As part of the settlement, ECW entered into a Corporate Integrity Agreement (CIA) with the HHS Office of Inspector General (HHS-OIG) covering the company’s EHR software. The five-year CIA requires, among other things, that ECW retain an Independent Software Quality Oversight Organization to assess ECW’s software quality control systems and provide written semi-annual reports to OIG and ECW documenting its reviews and recommendations, according to the Justice Department press release.

Further, the agreement also requires eClinicalWorks to allow customers to obtain updated versions of their software free of charge and to give customers the option to transfer their data to another EHR software provider, without penalties or service charges. The vendor must also retain an Independent Review Organization to review its arrangements with healthcare providers to ensure compliance with the Anti-Kickback Statute.

This matter was jointly handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Vermont, the HHS Office of Inspector General, and multiple HHS agencies and components.