December 28, 2022

Electronic Health Record Vendor Pays $45 Million to Resolve Allegations Related to Illegal Kickback Scheme

On November 1, 2022, Florida-based electronic health record (“EHR”) vendor, Modernizing Medicine, Inc. (“Mod Med”), agreed to pay $45 million to settle claims that it violated the False Claims Act by providing and accepting illegal remuneration in violation of the Anti-Kickback Statute (AKS) and causing its users to submit false claims.

The claims arose from a federal whistleblower lawsuit filed by a former Vice President at Mod Med, Amanda Long, under the provisions of the False Claims Act (FCA). Such lawsuits are referred to as qui tam cases and allow private citizens to file a lawsuit on behalf of the federal government and allow them to share in any recovery.

The Anti-Kickback Statute prohibits any person from paying or receiving any remuneration to induce referrals of services covered by federally funded programs, such as Medicare and Medicaid. The United States alleged that Mod Med conspired with Miraca Life Sciences, Inc. (“Miraca”), a pathology lab services provider, where Mod Med solicited kickbacks from Miraca in exchange for referring its users to Miraca’s lab services, and Miraca donated Mod Med’s EHR technology to healthcare providers, which simultaneously increased Mod Med’s users and Miraca’s referrals. The government also alleged that Mod Med paid kickbacks to its established customers and influential sources in the healthcare industry to recommend its EHR, in violation of the AKS.

This is yet another instance of Miraca settling kickback allegations under the FCA, as in 2019, Miraca, now known as Inform Diagnostics, agreed to pay $63.5 million to settle claims that it violated the Anti-Kickback Statute.

Mod Med is further accused of violating the FCA by causing its users to submit false claims to receive HHS “meaningful use” EHR payments. HHS offers incentive payments to healthcare providers to adopt and engage in the “meaningful use” of EHR technology, requiring that such technology satisfy a number of requirements.

Mod Med’s EHR did not consistently allow its users to use the required standard vocabulary and thus did not comply with the conditions to receive incentive payments, causing Mod Med’s customers to submit false claims for incentive payments under the HHS program.

As part of the settlement, Amanda Long, the whistleblower in this action, will receive approximately $9 million award under the FCA.



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