When we think of False Claims Act cases, the most common examples in the news involve companies in the financial industry, government contractors and health care providers. Though these categories of companies represent typical False Claims Act cases, virtually any industry could be swept in such cases—all it takes is a desire to defraud taxpayers, or, in this case, to assist your unwitting customers in doing so.
A recent example of a False Claims Act settlement from an industry outside of the typical violators comes from the electronic health record industry and one of its biggest players, eClinicalWorks (ECW). The Department of Justice and the U.S. Attorney for Vermont recently revealed the terms of a record-setting settlement with ECW.
The terms of the settlement require ECW and several of its founders to be jointly and severally liable for repayment of $155 million to the United States. The False Claims Act case was brought by a former coder who recognized the flaws in ECW's health records system and will result in the whistleblower receiving approximately $30 million for alerting the government of the fraud.
The case involves a 2009 piece of legislation called the American Recovery and Reinvestment Act, which helped to create the Electronic Health Records Incentive Program. The program was designed to push doctors and hospitals to use electronic health records, which was seen as important to creating efficiency and accuracy in the health care industry. Health care providers were paid extra reimbursements from Medicare and Medicaid for adopting systems designed by certified software manufacturers, such as ECW.
ECW provides software for electronic health records (EHR) to its customers—physicians groups, hospitals and other health care providers. ECW and other companies providing similar EHR software obtained certifications from third party analysts as to meeting certain requirements. After obtaining those certifications, ECW could then market its EHR software as allowing its customers to receive extra reimbursements from Medicare and Medicaid under the Government’s “Meaningful Use” program, which incentivized providers to upgrade their EHR to allow more efficient transfers and accessing of EHR between providers. The problem was that ECW decided to take shortcuts rather than do the work that was required of them for the certifications. For instance, ECW designed its software to include only those things that would be tested, failing to fulfill the remaining requirements. It would be like building a house and only finishing the frame, leaving the inside filled with a bunch of exposed boards. Though ECW could pass the certification tests, the program never did what the company promised it could to meet the “Meaningful Use” standards of its customers. The result: ECW’s customers received the extra Medicare and Medicaid reimbursements under the “Meaningful Use” program, despite the software they received from ECW being deficient for such extra reimbursements.
Congress has accounted for such sleight of hand by drafting broad language in the False Claims Act. That is, the False Claims Act makes it unlawful not only to file false claims for payment from a government program, but also “to cause” another party to file a false claims for payment from a government program. In this case, the recipients of the extra reimbursements from Medicare and Medicaid had not knowingly lied to the government; they relied on the false certifications of ECW as to the EHR software. Although ECW didn’t make any submissions for payments to Medicare or Medicaid, ECW was nonetheless liable for knowingly causing tens of thousands of false submissions of its customers for the extra reimbursements under the Meaningful Use program.
As part of the recently announced settlement, ECW has agreed to enter into a Corporate Integrity Agreement with the HHS Office of Inspector General. The goal of the agreement is to partner with ECW to assess their compliance with applicable rules and ensure that they fulfill their obligations fully. ECW will have to be in close contact with government regulators and its customers and aim for greater transparency and accuracy in all its dealings.
Source: “eClinicalWorks to Pay $155 Million to Settles Suit Alleging it Faked Meaningful Use Certification,” by Tom Sullivan, published at HealthCareITNews.com on May 31, 2017
Source: “Electronic Health Records Vendor to Pay $155 Million to Settle False Claims Act Allegations,” published at Justice.gov on May 31, 2017