Modernizing Medicine (ModMed), an electronic health record (EHR) technology vendor, will pay $45 million over allegations that it violated the False Claims Act (FCA) by soliciting and receiving kickbacks in exchange for referrals and by causing healthcare providers to submit false claims, the Department of Justice (DoJ) said.
The Anti-Kickback Statute (AKS) prohibits the offering or paying, directly or indirectly, of any remuneration, including money or any other thing of value, to induce referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.
In its complaint filed Nov. 1 in conjunction with the settlement agreement, the DoJ alleged ModMed violated the FCA and the AKS through the following actions:
- ModMed solicited and received kickbacks from Miraca Life Sciences in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services.
- ModMed conspired with Miraca to improperly donate ModMed’s EHR to health care providers to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base.
- ModMed paid kickbacks to its current health care provider customers and to other influential sources in the healthcare industry to recommend ModMed’s EHR and refer potential customers to ModMed.
“Electronic health records serve a critical role in informing physician decision making, and it is therefore essential that health care providers select such technology free from the influence of improper financial inducements,” said Principal Deputy Assistant Attorney General Brian Boynton, head of the Department of Justice’s Civil Division. “Vendors of electronic health records will be held to the same standards of compliance that we expect of everyone who provides health care services.”
As a result of its misconduct, ModMed allegedly improperly generated sales for itself and for Miraca, while causing health care providers to submit false claims for reimbursement to the federal government for pathology services, and for incentive payments from the Department of Health and Human Services (HHS) for the adoption and “meaningful use” of ModMed’s EHR technology, the DoJ said.
Miraca Settlement
In January 2019, Miraca (now known as Inform Diagnostics) paid $63.5 million to resolve allegations that it violated the AKS and the Stark Law by providing to referring physicians subsidies for EHR systems and free or discounted technology consulting services.
Additionally, under HHS’ EHR Incentive Programs, HHS offered incentive payments to health care providers that adopted certified EHR technology and met certain requirements relating to their “meaningful use” of that technology. Eligibility for incentive payments required health care providers to use certified EHR technology that, among other things, utilized certain standard vocabularies for drugs and clinical terminology in order to conduct certain transactions.
The government’s complaint alleges ModMed knew its EHR did not always allow physician users to electronically record medical records using the required standard vocabularies, thereby causing certain of its users to submit false claims for incentive payments under that program.
The settlement with ModMed resolves, in part, allegations in a lawsuit filed in the District of Vermont by Amanda Long, a former vice president of product management at ModMed. The lawsuit was filed under the whistleblower provisions of the FCA, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. Long will receive approximately $9 million as part of the resolution. 
Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.