[B]URLINGTON — A Massachusetts-based electronic health records company with numerous clients in Vermont is settling a fraud case for $155 million with the U.S. Justice Department.
The massive settlement is the largest ever in the District of Vermont, according to Eugenia Cowles, acting U.S. attorney in Vermont.
The company eClinicalWorks, one of the nation’s largest providers of electronic health records software, is alleged to have fraudulently obtained federal certification for its software, causing medical providers to submit false claims for incentive payments for using it.
A software technician for the city of New York who uncovered the alleged fraud will receive $30 million of the settlement. The rest of the money will be returned to the Medicare program, according to Cowles.
Central Vermont Medical Center in Berlin uses the software, but it is the only hospital in the UVM Health Network to do so, according to a spokesperson for the network.
The original fraud complaint listed several smaller Vermont practices as customers of eClinicalWorks.
The implications of the case for software users weren’t immediately clear.
The incentive payments to users were issued through a Centers for Medicare and Medicaid Services program called Meaningful Use, created by the Affordable Care Act to encourage the use of qualifying health records systems.
The company says on its website that its software is used by more than 125,000 physicians and nurse practitioners, 850,000 health care professionals and more than 70,000 health care facilities.
In a statement, eClinicalWorks said it fully cooperated with the Justice Department investigation and admits no wrongdoing. The company chose to settle to avoid the “uncertainty inherent in protracted litigation.”
As an example of how the alleged fraud worked, officials said that, instead of programming a complete database of standardized drug codes, eClinicalWorks “simply typed the 16 codes necessary for certification testing directly into its software” — a practice known as hardcoding.
The company’s statement says it has “consistently maintained that it conducted testing of its software prior to release to ensure that it met applicable Meaningful Use program requirements, and that any certification issues were addressed in accordance with the administrative process established by the government.”
The suit was initially brought under the False Claims Act, which allows people who uncover fraud to sue on the government’s behalf.
Brendan Delaney, a software technician, uncovered the alleged fraud while working for the New York City Division of Health Care Access implementing eClinicalWorks systems for the Rikers Island prison, according to his private attorney.
His attorney said the case could have been brought virtually anywhere in the country because of eClinicalWorks’ massive reach, but they chose Vermont. “We knew that Vermont had a dedicated interest in large health fraud cases, and we knew they had a talented team of lawyers who were ready to dig in,” said the lawyer, Colette Matzzie of the firm Phillips and Cohen, in a phone interview Wednesday.
The chief of the Civil Division of the U.S. attorney’s office, Nikolas Kerest, and Assistant U.S. Attorney CJ Foster worked on the case with Matzzie’s firm, as well as attorneys with the U.S. Department of Health and Human Services.
Vermont customers of eClinicalWorks
The original complaint, filed by Phillips and Cohen in May 2015, makes an array of allegations about the shortcomings of eClinicalWorks medical records software.
The complaint alleges that eClinicalWorks software fails to reliably document and track patient medications; fails to reliably record and track lab results; and has inadequate protections against overmedication. It also says the flaws were brought to the company’s attention but it continued to sell its software without fixing them.
The original complaint establishes that the U.S. District of Vermont had jurisdiction by pointing out that a handful of medical providers in the state were eClinicalWorks customers.
The providers listed in the filing are White River Family Practice in White River Junction; Little Rivers Health Care in Wells River, East Corinth and Bradford; and Community Health Centers of Lamoille Valley.
Community Health Centers of Lamoille Valley operates Appleseed Pediatrics, Stowe Family Practice, Morrisville Family Health Care, The Behavioral Health & Wellness Center, Neurology Clinic and the Community Dental Clinic, according to its website.
VTDigger was not immediately able to verify if any of those providers still use eClinicalWorks software.
White River Family Practice won a 2013 award for excellence while a customer of eClinicalWorks from the Healthcare Information and Management Systems Society, a global nonprofit.
The award was for “excellence in use of the (electronic health record) to successfully improve quality of care and patient safety while achieving a demonstrated return on investment.”
Central Vermont Medical Center currently uses eClinicalWorks software for its electronic health records and has since 2007, according to spokesman Hjonis Hanson.
“Today we’re learning about the settlement with our vendor, and we’re reviewing this very carefully and determining what further steps we need to take going forward,” Hanson said in a statement.
Central Vermont Medical Center is part of the University of Vermont Health Network. A spokesperson for the network, Mike Noble, said none of the other hospitals in the network use eClinicalWorks software.
A 2012 news release said CVMC received a $1.42 million incentive payment from the Centers for Medicare and Medicaid Services for meeting Meaningful Use standards — the certification eClinicalWorks allegedly flouted.
The release said the hospital received an additional $520,000 from the state of Vermont for meeting its Medicaid electronic health records adoption criteria.
State officials were not immediately able to say if the eClinicalWorks software’s apparent failure to meet federal certification requirements also means providers using it did not meet the state Medicaid standards.
Vermont passed its own version of the False Claims Act in 2015, allowing similar whistleblower suits to be brought in state courts, with the intent of curbing Medicaid fraud.
Attorney General TJ Donovan was not immediately able to say whether his office is looking at bringing its own false claims suit.
Details of the settlement
“This is a groundbreaking case. 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,” the attorney Matzzie said in a statement Wednesday.
The suit requires the settlement to be paid by three top executives at eClinicalWorks. CEO Girish Navani, Chief Medical Officer Dr. Rajesh Dharampuriya and Chief Operating Officer Mahesh Navani will pay $154.92 million of the settlement, with the remaining $80,000 coming from other company employees allegedly involved in the fraud.
As part of the settlement, eClinicalWorks will enter a five-year corporate integrity agreement with the federal government, which requires that it retain an independent software oversight company to assess quality and controls, providing the feds with regular reports.
The company must also promptly notify customers of software safety issues and provide free updated software or pay for customers to transfer their records to another vendor.
In addition to the alleged certification fraud, eClinicalWorks is also accused of paying at least $329,000 in kickbacks to influential customers in the form of speaking or consulting fees for promoting its software.
The company said customer referral programs are common in the industry and that the company believes the program was lawful. Still, it’s been discontinued.
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