Not Just for Health Care Providers Anymore: Health IT Vendor Pays $155 Million to Settle False Claims Act Case

This novel FCA settlement illustrates that health care fraud prosecution extends far beyond just the health care providers and payors that directly submit claims to Medicare, Medicaid and other federal health care programs, and can extend liability to subcontractors, agents, and vendors.

EHR Tech Must Meet “Meaningful Use” Standards

The American Recovery and Reinvestment Act of 2009 established the EHR Incentive Program to encourage healthcare providers to adopt and demonstrate their “meaningful use” of EHR technology. Currently, in order to avoid reduction in Medicare reimbursement, healthcare providers must adopt certified EHR technology and demonstrate “meaningful use” of EHRs in accordance with Office of the National Coordinator for Health Information Technology regulations (ONC is a part of the Department of Health and Human Services). In addition, healthcare providers can receive incentive payments from state Medicaid programs for demonstrating “meaningful use” of EHR technology. Companies that develop and market EHR software must attest to ONC that their product satisfies applicable “meaningful use” requirements as set forth in ONC regulations and pass testing by an ONC-approved accredited independent certifying entity.

Complaint Alleges Several FCA Violations

The complaint against ECW contains allegations that it falsely represented to the certifying entity and the United States that its software complied with the “meaningful use” requirements. ECW also allegedly caused healthcare providers to make false claims to the Medicare program due to their reliance on ECW’s EHR platform complying with the “meaningful use” requirements, as ECW certified and the certifying entity wrongly approved. In addition, ECW allegedly violated the Anti-Kickback Statute by paying customers to promote its EHR technology to other health care providers. Among other things, ECW allegedly had a referral program paying customers $50 per healthcare provider referred to ECW that executed an agreement with ECW.  

Unique Corporate Integrity Agreement Requirement

In addition to the $155 million settlement payout, ECW entered into a first-of-its-kind Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General (OIG). In addition to requiring ECW to (1) develop and maintain a robust compliance program, (2) maintain a database of referral and customer arrangements, (3) establish procedures to ensure such arrangements comply with the Anti-Kickback Statute, and (4) have an Independent Review Organization assessment, the CIA also requires that ECW retain a Software Quality Oversight Organization to assess ECW’s software quality control systems and report semi-annually to the OIG.

Who Else Is A Target?

Will there be additional FCA suits against other EHR vendors, e-prescribing companies and the like? Only time will tell. Nonetheless, this settlement serves as a wake-up call for health information technology companies as to potential FCA and Anti-Kickback Statute exposure, given their increasingly important relationships with healthcare providers and payors. Health information technology companies need to develop and maintain robust compliance programs and policies related to customer interactions.  
 
Arent Fox’s Health Care group regularly counsels health information technology companies as to compliance and regularly monitors health care fraud and abuse settlements and developments.