Written by, Scott R. Grubman, Esq., Gregory A. Tanner, Esq., Chilivis, Cochran, Larkins & Bever, LLP
On May 31, 2017, the U.S. Department of Justice (DOJ) announced that eClinicalWorks (ECW), one of the nation’s largest vendors of electronic health records (EHR) software, along with certain individual employees, has agreed to pay $155 million to settle allegations that ECW violated the federal False Claims Act (FCA).Under this settlement, in addition to paying $155 million, ECW has entered a corporate integrity agreement under which it must strictly comply with reporting and oversight obligations, and it will also provide its current customers with the latest version of ECW’s EHR software free of charge. The DOJ’s allegations focused on two issues: (1) claims that ECW caused its customers to submit false claims for Medicare and Medicaid meaningful use (MU) payments, and (2) claims that ECW paid kickbacks in exchange for some of its customers to promote ECW’s products.
Regarding the first category of allegations, physician practices were required to implement certified EHR technology (CEHRT) in order to qualify for incentive payments under the Medicare and Medicaid EHR incentive programs, more commonly known as meaningful use (MU). The DOJ alleged that when seeking to certify its products as CEHRT, ECW made material false statements and concealed material facts regarding the extent to which its software met the 2011 and 2014 certification criteria. For example, ECW’s software did not accurately record user actions in audit logs, and it did not perform required drug interaction checks. Based on these and other alleged deficiencies in the EHR, the DOJ alleged that ECW falsely obtained certification for its products. The falsely obtained certification then resulted in physician practices seeking incentive payments under MU after purchasing and implementing ECW’s software under the mistaken belief that the products qualified as CEHRT.
Although it was ECW’s physician practice customers who ultimately submitted the false claims, such physician practices submitted the claims without knowing that ECW’s products were falsely certified. This is important because, in order to be liable under the FCA, one must “knowingly” submit a false claim to be liable. While the term “knowingly” is defined by the FCA to include actual knowledge, reckless disregard, or deliberate ignorance, it appears clear that ECW’s physician customers lacked knowledge because they reasonably believed that ECW’s EHR products were certified.
The second category of allegations focused on claims that ECW purportedly paid kickbacks to certain influential customers who referred ECW’s EHR software to other physicians. Under ECW’s referral program, it allegedly paid up to $500 to current customers for each provider who contracted with ECW based on the current customer’s referral. Also, ECW allegedly paid some current customers to host onsite visits for prospective customers to learn about ECW’s software, and also paid some current customers to act as references whom prospective customers could contact to discuss ECW’s software. Based on the referral, hosting, and reference programs, ECW allegedly paid some current customers up to almost $144,000 to promote its products and services. Notably, ECW did not admit to any liability under the settlement agreement.