Electronic Health Records: The eClinicalWorks False Claims Settlement—Big Fines & Unprecedented CIA Obligations

False Claims Act actions targeting health care vendors have become more common. eClinicalWorks (ECW), one country’s biggest electronic health records software vendors, learned that lesson the hard way on May 31 when it agreed to pay $155 million to settle charges of misrepresenting the capabilities of its EHR software.

EHR Certification, 101
Starting in 2009, providers can qualify for HHS incentive payments by demonstrating their "meaningful use" of EHR technology—not just any EHR technology, but certified EHR technology. Naturally, all of this gives EHR vendors incentive to get their products certified. To do that, the vendor must:

  • Attest that the product meets HHS EHR criteria; and
  • Pass testing by an independent, HHS-approved certifying entity.

The damages are only part of the story. Arguably, the most significant and groundbreaking aspect of the settlement is the Corporate Integrity Agreement.

The ECW Case
The Justice Department claims that ECW’s cheated its way to certification by not telling the certifying entity that its EHR software didn’t meet certain HHS criteria with regard to accurate recording of user actions in audit logs, drug interaction checking and data portability. To further the deception, ECW allegedly used "hardcoding" to modify its software for certification testing to ensure it would pass the test.

Result: T he s oftware w as f alsely c ertified. A nd b ecause o f t hat, p rovider claims for "meaningful use" incentives based on ECW’s EHR software constituted false claims for which ECW was responsible.

Although it denied the claims, ECW decided that settlement was the wise course. At $154.92 million, the settlement is the largest False Claims Act recovery in the District of Vermont and may even be the largest financial recovery in the history of the State of Vermont, according to the DOJ press release. Here is how the bill will be divvied up:

  • Three of ECW’s founding members, including its CEO and medical director will be jointly and severally liable for all $154.92 million;
  • One of the software developers will pay a separate $50,000 out of his own pocket; and
  • Two of the software’s project managers will pay $15,000 apiece.

The Corporate Integrity Agreement
The damages are only part of the story. Arguably, the most significant and groundbreaking aspect of the settlement is the Corporate Integrity Agreement. Five-year CIAs are par for the course in settlements of these cases. But the ECW includes some innovative elements designed to clean up the mess and ensure it does not happen again, including ECW’s obligation to:

  • Retain an Independent Software Quality Oversight Organization to assess the firm’s software quality control systems and issue written semi-annual reports to the OIG;
  • Provide prompt notice to its customers of any patient safety issues that may result from not telling the truth about its EHR software;
  • Maintain a comprehensive list of such safety issues and steps mitigate them on its customer portal;
  • Offer customers updated versions of the EHR software free of charge;
  • Offer customers the option of having ECW transfer their data to another EHR software vendor without penalties or service charges; and
  • Retain an Independent Review Organization to ensure that its provider arrangements comply with the Anti-Kickback Statute.

[For more details about the ECW case, see United States ex rel. Delaney v. eClinialWorks LLC, 2:15-CV-00095-WKS (D. Vt.)]


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