EHR vendor Modernizing Medicine has agreed to pay $45 million to the federal government to settle a whistleblower suit alleging that the vendor engaged in varied kickback schemes as well as causing its provider customers to submit false claims.
The lawsuit was filed in 2017 by law firms Phillips and Cohen LLP and Downs Rachlin Martin PLLC. The US Department of Justice joined the case in March 2022, which now targeted founders and executives Dan Cane and Dr. Michael Sherling as well as ModMed, after conducting its own investigation.
The whistleblower in the case is Amanda Long, who joined the company in 2014 and exited her role as vice president of product management in 2017.
The US Department of Justice complaint alleges that from January 2010 to July 2017, the vendor engaged in multiple kickback schemes, including creating a partnership with a clinical laboratory, Miraca Life Science, through which ModMed received payments whenever its users sent lab orders to Miraca. The DOJ also claims that ModMed provided Miraca with exclusive “enhanced” lab interfaces within the ModMed platform which would drive diagnostic testing to its facilities.
These financial arrangements caused healthcare providers to submit false reimbursement claims for pathology services, along with false claims for Meaningful Use incentives arising from the use of ModMed’s technology.
The complaint also alleged that ModMed paid kickbacks to its current healthcare provider customers, along with influential healthcare industry figures, if they recommended the vendor’s EHR and referred potential customers.
In addition, the suit claims that ModMed falsely told US certifying bodies that its software met the requirements for certification and incentive payments under the Meaningful Use program. According to the complaint, flaws in ModMed’s EHR made the system unable to meet the requirements for certification.
The feds also claimed that the system had flaws that could have had an impact on patient safety, including inaccurate ePrescribing of medications, inaccurately recording medical history, date and time of encounter note entries, and inaccurate association of lab results with orders.
Miraca (now known as Inform Diagnostics) agreed in January 2019 to pay the DOJ $63.5 million to resolve allegations that it violated the Anti-Kickback Status and Stark Law by giving referring physicians subsidies on EHR systems along with free or discounted technology services.
As part of the ModMed settlement, the allegations against Cain and Sherling were dismissed.
The settlement is just one of several vendors settling with the DOJ over kickback or false claims allegations.
For example, in 2021 CareCloud Health agreed to pay $3.8 million to settle allegations that it paid out illegal kickbacks to generate sales.
In early 2020, Practice Fusion agreed to pay $145 million to settle allegations that it paid out kickbacks to increase opioid prescriptions and had issues with its meaningful use EHR certification.
And in 2017, eClinicalWorks settled civil fraud and kickback charges with the government for $155 million.
