Health records vendor settles false-claims lawsuit for $155M

One of the country's largest vendors of electronic health records will pay a $155 million settlement to resolve allegations it caused health care providers to submit false claims to the federal government, the U.S. Department of Justice and federal prosecutors in Vermont announced Wednesday.

The acting U.S. attorney for Vermont said eClinicalWorks, of Westborough, Massachusetts, and three executives will pay the settlement to resolve allegations the company misrepresented the abilities of its software and paid kickbacks to some customers in exchange for promoting its products.

"Every day, millions of Americans rely on the accuracy of their electronic health records to record and transmit their vital health information," Acting Assistant Attorney General Chad Readler, of the Department of Justice's Civil Division, said in statement. "This resolution is a testament to our deep commitment to public health and our determination to hold accountable those whose conduct results in improper payments by the federal government."

Most of the money will go into federal Medicare and Medicaid funds in Washington, said Eugenia Cowles, acting U.S. attorney for Vermont, who said it was the largest False Claims Act recovery in the district of Vermont.

The case began as a whistleblower lawsuit filed in Vermont by a former employee of the New York City Division of Health Care Access and Improvement. The employee, Brendan Delaney, was implementing the eClinicalWorks electronic health records system at the Rikers Island jail complex when he noticed numerous software problems he alleged put patients at risk, said the Phillips & Cohen law firm, which represented him.

Vermont is among many states that had providers that used the software, prosecutors said. An attorney representing Delaney said they chose to file the lawsuit in Vermont because of the talented team of lawyers in the federal prosecutor's office.

Delaney will receive $30 million from the settlement.

Colette G. Matzzie, who represented Delaney, called the case "ground-breaking."

"It is the first time that the government has held an electronic health records vendor accountable for failing to meet federal standards designed to ensure patient safety and quality patient care," Matzzie said.

Federal prosecutors allege the company violated the false-claims act by falsely getting certification for its electronic health records software; by causing health care providers to falsely certify compliance with requirements to receive federal incentive payments; and by paying kickbacks to providers to recommend its product, Cowles said.

The company has denied any wrongdoing.

"Today's settlement recognizes that we have addressed the issues raised and have taken significant measures to promote compliance and transparency," said CEO Girish Navani, who will pay part of the settlement. "We are pleased to put this matter behind us and concentrate all of our efforts on customers and continued innovations to enhance patient care delivery."

As part of the settlement, eClinicalWorks must retain an independent organization to assess its software quality control systems.